Micro Technologies India Ltd - Rs 98.00

Established in 1992 and promoted by Mr. P Sekhar, Micro Technologies (India) Ltd. (MTIL), an IT based company is a global developer, manufacturer and marketer of security, safety and life-support electronic equipments & solutions. Over the years, MTIL has developed some of the high-end security products, which address areas of concern right from mobile security to automobile security & monitoring systems using its leverage over various futuristic technology platforms such as embedded, web-based and client server applications. The high-tech wireless technologies which MTIL cater through its products are the GPS(Global Positioning System), GSM(Global System for Mobile communication), CDMA(Code division multiple access), GPRS(General Packet Radio Service), RFID(Radio-frequency identification) & GIS(Geographic Information System) which is an information system for capturing, storing, analyzing, managing and presenting data. Today, MTIL boasts of having hundreds of unique, hi-tech, first of its kind and innovative security products which have huge demand & tremendous potential world wide. Considering its performance MTIL has been accorded with “Deloitte Technology Fast 500 Asia Pacific Award” & “Deloitte Technology Fast 50 (India) Award” for two consecutive years – 2007 & 2008. It has even won the Dun & Bradstreet-ECGC Indian Exporters' Excellence Award in June 2008. During 2007 it was profiled as one of the top IT innovators by NASSCOM. Recently, on 15th August 2008 Dr. A P J Kalam felicitated Dr. P Sekhar – CMD of Micro Technology (124.00), for his significant contribution in the security segment.

Few of its Blockbuster Product/Solutions
Micro VBB - Vehicle Security System
Micro HSS - House Security System
Micro LMTS - Lost Mobile Tracking System
Micro FMS - Fleet Monitoring System
Micro OSS - Office Security System
Micro SBB - Secure Bank Black Box
Micro DMS - Disaster Management System
Micro EBB - Electric Black Box
Micro VDP - Video Door Phone
Micro IBB - Intelligent Black Box

Recently launched products / solutions

Micro BSS - Bike Security System
Micro ISS - Intelligent Surveillance System
Micro WSS - Wi-fi Security Sytem
Micro LNTS - Lost Laptop Tracking System
Micro BTS - Buddy Tracking System
Micro SAMS - Students Attendance Management System

So it’s very clear from the above that these revolutionary products are the USP for the company. Infact, MTIL is one of the first company to develop security systems using SMS (Short Messaging Services) on a mobile GSM platform. Accordingly, all the products/solutions developed by the company can be fully controlled using normal mobile & computers. Infact with over 80 IPR’s, its technology has been patented in 123 countries, giving it exclusive rights in these markets. Therefore company has also got test certifications from national and internationally accredited agencies like ERTL, ARAI, FCC, CE, SYMBIAN etc for all its premium grade products. Hence after developing and having world class products in its kitty, MTIL is now focusing more on marketing and distribution to increase its presence in India as well across the world. Accordingly it has appointed more than 2000 dealers/distributors all over India, opened more than 70 Micro Shoppe franchise outlets, increased participation in exhibition and has also increased the advertisement budget substantially for brand building and product awareness. It has even launched a novell concept of Mobile Micro Shoppe i.e. Shops on Wheels and is also selling its products online thru various portals. It has been targeting to cater to a range of clients across diverse sectors such as retail, corporate, institutions, PSUs etc and has its products successfully installed at ICICI Bank, Reliance Energy, L&T, NSDL, Siemens, NMMC, FICCI, Girvan Institute, Tata Honeywell, CIDCO, HPCL, BPCL, BARC, MCGM, MSEB, MRVCL, TVS Lucas to name a few. Importantly, it has tied up with MTNL, BSNL, IDEA & AIRTEL to offer mobile security solution (Micro LMTS) at competitive rate to their subscribers. It also has a strategic tie up with FORD for installation of Micro VBB device in Ford Ikon vehicles. To segregate is business model and work efficiently MTIL has formed two subsidiaries namely Micro Secure Solutions & Micro Retail which will concentrate only on marketing and distribution aspect.

Although, India in itself is a huge market, still MTIL is also betting on international market to boost up its revenue. To increase its global presence, it has entered into marketing tie-ups with several foreign companies like Active Solutions(Nepal), Knowledge Vectar(USA), Easy Fleet Solutions(Turkey), Tokyo Software(Japan), Kreasindo Solusi(Indonesia), Pacific Solution(UK, Africa and Singapore), Status Solutions(UAE), I-System(Srilanka) etc. Of late it has entered into a strategic agreement with TWI International(South Africa) & Lazer Technology Solutions for distribution of its selected security products in Middle East and Egypt. Recently is tied up with Jicoux Datasystems, a 100% subsidiary of Mitsubishi Corporation to offer Micro LMTS (Lost Mobile Tracking System) for Chinese and Japanese market. Accordingly it has even introduced the Chinese version of its internationally acclaimed product - Micro LMTS.

Meanwhile, company continues to have a strong R&D team working on multiple innovations to ensure that company introduces five to six new products in the market every year. At the same time it is constantly expanding its hardware/equipment manufacturing capacity and improving its infrastructure to meet the rising demand. Presently, Indian electronic security market is at a very nascent stage and growing at rate of more than 25% per annum. Moreover it is dominated by unorganized sector with organized players enjoying less than 10% market share. With handful of Indian manufacturers, the security equipments are largely imported from China, USA, UK, Germany, Singapore, Italy, Hong Kong, Israel, Japan, Korea, and Taiwan. With India having the largest mobile subscriber base and highest number of two wheeler / four wheelers on road, the potential market for company’s product is very huge. Due to rising terror incidence across India, corporates, households & govt have understood the need/importance of premise security. These all factors are eventually leading to increased business for the company. Recently, company reduced the price of its products by up to 30% to cash on the fear sentiment post Mumbai terror attack.

As far as financial are concerned, MTIL is doing exceedingly well as it has reported a CAGR of 85% in top line and 95% in bottom line in last three years. Even for H1FY09 it has posted 60% growth in revenue to Rs 117 cr and 50% increase in net profit to Rs 34 cr. It has a strong balance sheet with low debt equity ratio of 0.35x and huge reserves of Rs 192 cr on small equity of Rs 10 cr leading a healthy book value of Rs 190. On the margin front it has been consistently registering an OPM of more than 40% and NPM of 30% for last three years. For current year, it may record total revenue of Rs 275 cr & PAT of Rs 55 cr which leads to an EPS of Rs 50 on current equity of Rs 11 cr. Considering the CMP, chances of conversion of balance FCCB & warrants into equity seems bleak. With an EV/EBITDA of less than 2x times, Market Cap/Sales of merely 0.40x times and having Cash EPS of Rs 75, scrip is trading extremely cheap at a market cap of Rs 115 cr. Investors are strongly recommended to buy at current levels as share price can triple in 15~18 months.

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STOCK WATCH

Tera Software (22.00) is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. In the first two quarters, company has already posted an EPS of more than Rs 4 and is expected to end FY09 with topline of Rs 75 cr and PAT of Rs 10.50 cr i.e. EPS of Rs 8 on equity of Rs 12.50 cr. It may declare 15% dividend for FY09 which gives a yield of 7% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Scrip can double in 12~15 months.

Hitachi Home & Life Solutions (45.00), a 68% subsidiary of Hitachi-Japan is amongst the top airconditioning companies in India with an installed capacity of 250,000 units per year. It maufactures high technological home and commercial air conditioners like window AC, split AC, concealed splits, ductables, chillers and specific telecom cooling solutions. To capitalize its brand equity and strong distribution network in India. company has also ventured in the business of trading for the refrigerators and washing machines. Its plant at Kadi, Gujarat is among the seven Hitachi room air conditioner facilities worldwide. Being a technology driven company, it has introduced several innovative products such as “ACE, IOTA, ATOM Square, Takumi” which are doing extremely well in the market. Its refrigerator and washing machines sales are also picking up. On the other hand its commercial air conditioning division is also on a rampant growth mainly due to the retail sector and mall culture expanding in a big way. Although there is general slowdown but demand for consumer durable continues to be satisfactory. Hence, company has planned a capex of Rs 45 cr for the current year to expand its line of business. After registering an EPS of Rs 9 for H1FY09, company is poised to report sales of Rs 525 cr and profit of Rs 35 cr i.e. EPS of Rs 15 on equity of Rs 23 cr for FY09. With such a strong brand value this debt free MNC is available extremely cheap at an EV of merely Rs 100 cr.

IMP Power (50.00) is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has been manufacturing transformers ranging from 10 KVA to 100 MVA upto 220 kV class. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has recently doubled its production capacity from 3600 MVA to 7000 MVA. With this company mow list among the top 10 EHV and power transformers manufacturing companies in India. Besides last fiscal, company has also upgraded its Kandivali plant to manufacture complete range of analog meters such as ammeter, voltmeter frequency meter, dynamometer type watt meter, power factor meter, phase sequence indicator, KVA Meter etc. in addition to high end meters like maximum demand indicator, trivector Meter, multifunctional and kWh Meters. After ending FY08 on quite a buoyant note, it has reported terrific nos for the Q1FY09. For the year ending June’09 it may clock a turnover of Rs 185 cr and PAT of Rs 11 cr i.e EPS of Rs 16 on current equity of Rs 7 cr. Scrip may shoot upto Rs 75 within a year.

Gayatri Project (85.00) is engaged in execution of major civil works including concrete/masonry dams, earth filling dams, national highways, bridges, canals, aqueducts, ports, etc. Although the company has executed various projects in different sectors of infrastructure, its expertise lies mainly in the road and irrigation sectors. Of late company has moved up the value chain and is executing five lucrative BOT road projects having very healthy IRR of around 14%. It has also entered into joint ventures with DLF for construction of road on BOT basis and with ION Exchange for water transport projects. For the Sept’08 quarter its revenue increased by 45% to Rs 207 cr and PAT grew by 25% to 8.50 cr. Incidentally, it has already posted an EPS of Rs 20 for H1FY09. And as of now, it boasts of having a massive order book position of more than Rs 3000 cr which is 4x times its FY08 turnover thereby providing strong revenue visibility. Notably, irrigation projects constitute 30%, transportation projects 60% and industrial building constitutes the balance 10% of order book. Thus for FY09 it may register a topline of Rs 950 cr and profit of Rs 30 cr i.e. EPS of Rs 30 on current equity of Rs 10.10 cr. However, the huge debt of Rs 450 cr on its book is a cause of concern.

Small & Beautiful

Tera Software (22.00) is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. In the first two quarters, company has already posted an EPS of more than Rs 4 and is expected to end FY09 with topline of Rs 75 cr and PAT of Rs 10.50 cr i.e. EPS of Rs 8 on equity of Rs 12.50 cr. It may declare 15% dividend for FY09 which gives a yield of 7% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Scrip can double in 12~15 months.

Jupiter Bioscience (40.00) is poised to become a global peptide solutions group having a broad canvas of peptide chemistry products, peptide reagents, coupling reagents, protective agents and supplier of key ingredients used in peptide based pharmaceuticals. It is operating in a very niche segment and is among the few companies in the world to have competency in synthesis of peptides. The technology focus of the company has enabled it to develop more than 400 products in its catalogue and establish a leadership position in the peptide business internationally. For H1FY09 it has already clocked an EPS of Rs 9 as it reported 15% growth in sales to Rs 60 cr and 10% increase in PAT to RS 14 cr. Last year company invested considerable resources in developing the processes for manufacture of generic peptide APIs. It has also finalized to acquire a manufacturing facility of Merck Life Sciences, Switzerland and has even signed a long term business contract with them. Besides company entered into a 10-year product purchase agreement with Ranbaxy on peptide pharmaceutical for gloabal market and as per contract allotted 31.77 lakh warrants @ Rs 147. Last fiscal it raised 100 cr thru QIP route @ Rs 153 per share. Further it has allotted 40 lakh warrants to be converted @ Rs 182 to strategic investors. For FY09 on a standalone basis, it can report sales of Rs 150 cr and NP of Rs 30 i.e. EPS of Rs 20 on current equity of Rs 15.40 cr. A strong buy.

Orient Papers & Industries (21.00) is a diversified company engaged in manufacturing of cement, paper and electrical appliances. It derives 60% of total revenue and 90% profit from cement segment which has an installed capacity of 3.40 million tonne. With its popular brands 'BIRLA A1’ and ORIETAL GOLD’ and having main market as Maharashtra and AP, company’s cement division is reportedly doing well. Infact to increase its market share, company is in the midst of augmenting its capacity to 5 million TPA by April 2009. It is also setting up a 50 MW captive power plant to bring down its power cost. At the same time on the back of strong demand for tissue paper, it is expanding its tissue paper manufacturing capacity from current 10,000 TPA to 30,000 TPA by April 2009. Having a market share of over 17% in the organized sector, its ORIENT PSPO brand of fans are quite popular. To cash on this brand, company has ventured into lighting products also and is now setting up a up a modern manufacturing facility for Compact Fluorescent Lamps at its Faridabad. Financially, in the last two years company has repaid most of its loan and has significantly brought down its total debt to Rs 165 cr from Rs 435 cr in 2006. As a result, it has a very healthy debt equity ratio of 0.16x times. For FY09, it may clock a turnover of Rs 1350 cr and PAT of Rs 150 cr i.e. EPS of Rs 8 on equity of Rs 19.30. Scrip can easily appreciate 50% within a year.

Blue Bird (18.00) is one of the leading manufacturers of paper based notebook products and office stationery. Although notebook forms the core business, company has also ventured into publishing academic textbooks and self study books for children apart from general publications in subjects such as ayurveda and biographies. It also offers end to end solutions for commercial printing. The marketing and sales team at company supports the distribution network of over 600 dealers and distributors spread across 18 cities in India, as also overseas representatives in many countries. In order to cater the central and south India market efficiently, company has put up two new plants at Indore and Bangalore apart from having its main plant in Pune. Financially, company is weak in managing receivables as it has very high debtor equivalent to four months of sales. This has led to huge debt of its book to the tune of Rs 325cr. Hence its annual interest cost (approx Rs 45 cr) is the biggest drag on company’s financial. For H1FY09, it registered marginal 5% growth in sales to Rs 254 cr whereas NP declined by 10% to Rs 12.50 cr posting half yly EPS of Rs 3.50. Accordingly, it may clock a turnover of Rs 500 cr and profit of Rs 19 cr for FY09 i.e. EPS of Rs 5 on current equity of Rs 35 cr. Scrip can double in 12~15 months.

Smart Investments

Sujana Towers Ltd
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Vakrangee Software Ltd
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Vakrangee Software Ltd - Rs 32.00

Incorporated in 1990, Vakrangee Software Ltd (VSL) is a leading provider of complete document and data management solutions encompassing large-scale data capturing & management, scanning, digitization and printing. It has three business segments, viz - document management services, printing management services and IT enabled services. Over the years, VSL has emerged as the only provider of document management and printing management solutions in the organized sector. With more than 15 years of experience in servicing various government organizations, company forayed into the private sector for the first time during last year, which includes large companies from the banking and financial service, retail, power and telecom sector in both its document management and printing management vertical. Its IT enabled services comprise software development, system requirement study, tailored software development, system integration and election-related services. To meet the growing customers need in the printing management segment, VSL tied up with Eastman Kodak and has installed one large scale variable colour data printer which is the largest in Asia. Hence company boast of having the largest scanning and variable data printing capacity in India with 6 million pages per day. Presently, VSL derives 55% of total revenue from document management solutions and balance 45% from printing management solutions.

Till date, VSL has executed several prestigious projects including digitization of land records in Uttar Pradesh, managing electoral rolls for the Election Commission of India in Maharashtra, Gujarat, Rajasthan, MP and UP, delimitation exercise (redrawing boundaries of LokSabha and assembly constituencies) for Maharashtra state and handling documents in 22 offices of the Registrar of Company (RoCs) across different locations. It has also been associated with the Ministry of Corporate Affairs for the digitization of critical records under the MCA 21 project, the largest successful e-governance project in India so far. Company enjoys a pan-India footprint through 32 site offices. From 100% dependence on govt contracts, company has remarkably, within a year de-risked its business model with nearly 40% revenues now coming from private sector. It competently manages the printing of statements (monthly/quarterly/yearly), bills and mass communication collaterals of these private service providers. VSL’s service matrix includes secured data hosting in the Vakrangee Data Centre, data composition/mining from the data dump like CRM data, transaction data, billing data, design of a one-to-one communication layout and superimposing the relevant text data of each customer of the client to make an effective and efficient personalized communication statement, followed by printing the data stream so prepared in a physical format or SMS/e-mail it to the end customer.

To maintain its growth momentum, VSL is focusing more on private sector and is constantly adding new clients to its list. Accordingly, it has entered into a strategic alliance with Eastman Kodak to offer mass customization & personalization of customer communication practices in India and has been granted with the Kodak Gold Plus accreditation status. Besdies, it is setting up a new hub office at Gurgaon with another large scale variable colour data printer followed by 100 other small offices across the country. Further, it is contemplating to open a mega global client-servicing centre at Navi Mumbai, by the end of 2010-11. At the same time it will continue to execute government projects and is soon expected to manage all the inbound documents related to passport issue. In near futures it will be busy managing and printing new voting lists as well as voters' cards and slips with 2009 being s an election year. It will also benefit with various upcoming e-governance projects and increased budgetary allocation towards it.

Today, e-Governance is the fastest growing business opportunity as well as a major social responsibility initiative in India. It is further fuelled by the implementation of Right to Information Act (RTI) by govt of India, which makes it mandatory for all govt departments to have all the information in digital form. This includes not only conversion of historical data but also to keep present as well as future information in digital form. In view of the innumerable ministries, departments, offices at center and state level and other authorities, e-Governance has emerged as a huge opportunity for the IT industry in general and for the company in particular. On the other hand the BFSI and the telecom companies are also offering customized statements and other means of communications to retain its customers, opening up a sea of opportunity for VSL. Moreover the need for a paperless work environment across the globe enhances future prospect of the company.

Since last three years, VSL’s topline and bottomline has been growing at an impressive CAGR of 90% and 160% respectively. Moreover, company has been consistently registering an OPM of more than 40% & NPM of 20%. For FY08 its revenue jumped up 90% to Rs 224 cr whereas its PAT more than doubled to Rs 50 cr posting an EPS of Rs 23 on equity of Rs 21.40 cr. Incidentally, despite a substantial fall coupled with bearish sentiment in the stock market, warrant holders (including promoters) still exercised their option and got their 22.50 lakh warrants converted into shares @ Rs 241 per share in March 2008. For the latest Sept’08 quarter, VSL registered 60% and 50% growth in topline as well as bottomline respectively and has accordingly already posted an EPS of Rs 14 for H1FY09. For entire FY09 it is expected to clock total revenue of Rs 275 cr and net profit of Rs 50 cr i.e. EPS of Rs 23 on current equity of Rs 21.40 cr. Its EV/EBIDTA stands at merely 0.60x times. Unfortunately this debt free company which generated positive cash flow of Rs 150 cr thru operating activities is today available at a market cap of merely Rs 70 cr. Having a book value of Rs 127 cr, Cash EPS of more than Rs 50, dividend yield of 6%, VSL is available for a song at an EV of Rs 70 cr. Although, promoters hold only 19% and doesn’t enjoy that good reputation in the stock market still it’s a screaming buy at current levels. Sarcastically, scrip which hit a high of Rs 300 in May’08 is now trading at 10% valuation, maybe due to distress selling by some FII’s. Hence investors are strongly recommended to buy this multibagger as it can quadruple in 15~18 months.

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Sujana Towers Ltd 22.00

Incorporated in 2006, Sujana Towers Ltd (STL) was actually formed on demerger of the tower division from Sujana Metal Products Limited pursuant to the scheme of arrangement and amalgamation. It belongs to the well known Sujana group which has diversified interest in steel, domestic appliances, engineering, transmission towers etc. Hence STL is basically into designing and manufacturing of telecommunication and hi-tension transmission towers. Its main products include power transmission line towers (from 11 KV to 400 KV) and telecom towers (selfsupporting lattice towers upto 100 metres height, triangular/square cross-section, hybrid towers, angular/tubular towers, lattice Guyed masts and monopoles). It is the only integrated tower manufacturer in south India having an in-house re-rolling facility for structural steel & fabrication of tower and tower parts. Thus it has the capability to deliver ready-to-erect structures in customer-specified sizes in the shortest time spans. Notably STL is India’s largest galvanized steel tower manufacturer as it has a galvanizing plant which makes only galvanized tower to impart strength, longevity and resistance against atmospheric impact and peeling. Lately, to cash on its engineering skills and sound technical knowledge, STL has forayed into providing services like Engineering & Consultation, Turnkey Installation and Inspection & Maintainance. Thru joint venture with EPC companies like Deepak Cables, Annapurna Const, company is already executing turnkey EPC projects in power segment and aims to emerge as turnkey contractor in next couple of years.

Presently, STL has the manufacturing plant at Hyderabad, Andhra Pradesh with a galvanized tower manufacturing capacity of 128,125 MTPA while its heavy structural steel product capacity stands at 70,000 tonne per annum. Notably, the unit boasts of manufacturing transmission towers on turnkey basis (i.e. surveying, civil foundations, supply and erection of towers, stringing of conductors, commissioning and charging of lines) to electricity boards of Andhra Pradesh, Karnataka and Tamil Nadu and Power grid. Besides it has a huge clientele in private sector including Reliance energy, BHEL, Subhash Project and all the telecom companies like Rcom, Bharati, Idea, BSNL, GTL, Essar, Tata tele, Erricson etc. India currently has about 200,000 telecom towers and is estimated to need about 350,000 more towers in next five year. On the other hand power sector is undergoing a massive expansion coupled with rural electrification to achieve power for all by 2012. Hence to cater to the rapidly increasing demand, company is in the midst of setting up a Greenfield plant in Chennai with an installed galvanized tower manufacturing capacity of 100,000 MTPA. This plant will also have the facilities to manufacture high mast light poles, railway electrification structures etc and will also cater to export requirements. Due to liquidity crunch, project is expected to start operation by mid 2009 thereby taking company’s total capacity to 228,000 MTPA.

For future STL is looking to put up a new plant in Gujarat to produce galvanized steel parts with a capacity of 75,000 MTPA. Company is also contemplating to acquire a company in China for manufacturing of tower parts and set up a subsidiary in Hong Kong for sourcing cheaper raw material. Recently STL has acquired 51% shareholding in Telesuprecon Ltd a Mauritius based company, undertaking telecom infrastructure contracts in various cast/central African countries. Earlier in Oct 2007, company made a pref allotment of 80 lac warrants to be converted into equity @ 137 per share, out of which 25 lac warrants have been converted. For the trailing twelve months ending June 2008, it earned a NP of Rs 46 cr on sales of Rs 582 cr leading to an EPS of Rs 11 on current equity of Rs 20.80 cr having a face value of Rs 5/- per share. However, company has recently taken the extension to end the financial year in Sept 2008 with 15 months performance. With govt special thrust on power sector and strong growth in telecom sector, the future prospect of STL is very optimistic. Secondly the recent fall in steel and other raw material prices will relieve some pressure on profit margin going forward. Ironically, the scrip which hit a high of Rs 235 in Jan’08 has now collapsed by more than 90% due to poor market sentiment. Although company is facing difficulties in raising fresh capital to fund its expansion and working capital still investors are strongly recommended to buy at current levels as scrip can triple within 15 months.

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STOCK WATCH

J Kumar (65.00) is a Mumbai based EPC company with a primary focus on construction of roads, flyovers, bridges, railway over bridges, subways, irrigation projects, commercial and residential buildings, railway buildings and piling works. It also has a ready mix concrete plant for captive use. Its operations are largely confined in the state of Maharashtra with majority in Mumbai itself. The company is a class I A contractor with PWD, Government of Maharashtra. Importantly, company owns a large fleet of modern construction equipments like Hydraulic piling rigs, Putmiester Mobile boom placer concrete pump and stationery concrete pumps, RMC plants, transit mixers, various capacity cranes, poclains, front end loaders, JCBs and tippers. Due to govt’s special focus & aggressive spending on infrastructure, company is witnessing best of its time and boast of having an all time high order book position to the tune of Rs 1200 cr executable in next two years. Importantly major chunk of this order book has been recently bagged by the company with Rs 560 cr contract from MMRDA & MSRDC to construct 16 Skywalks in Mumbai. Company has earned an EPS of Rs 7 for H1FY09 and may report total revenue of Rs 375 cr and PAT of Rs 25 cr for entire FY09 which leads to an EPS of Rs 12 on current equity of Rs 20.70 cr. Accumulate at sharp declines only.

XL Telecom & Energy (55.00) has been the pioneer in solar module manufacturing since last 15 years. Due to gaining popularity of this non conventional energy, company is in advanced stage of implementing the 120 MW solar cell manufacturing facility in Rajiv Gandhi Nano Technology Park SEZ, Hyderabad with a capital outlay of Rs 360 cr. For this it has also inked a five-year contract with Chinese firm LDK Solar to supply multi-crystalline solar wafers which is a key component for solar cell and panel manufacturing. Remarkably, company has also got itself forward integrated in solar value chain by entering into EPC segment of solar farm establishment and has recently setup its first solar farm in Majorca, Spain with an installed capacity of 1.6 MW. With this it has become the world’s first and only solar company to capture the complete solar value chain from manufacturing of solar cell to solar module to setting up of solar farm. After getting this success, company is now exploring the opportunities to establish such solar farms in Italy, southern France and other European countries in next 3 years totaling about 300 MW. For the Sept’08 qtr, company derived 98% revenue from energy & only 2% from telecom (against 55% & 45% respectively in FY08), which indicates that company is betting high on energy segment. On the back of terrific Q1FY09 nos, it may clock a turnover of Rs 850 cr and PAT of Rs 25 cr for FY09 ending June 2009. This translates into EPS of Rs 13 on current equity of Rs 18.80 cr. Although the conversion price for FCCB has been reset downwards to Rs 160 from Rs 260 earlier, still bond holder may not opt for conversion in near future. A good bet in renewable energy sector.

Aban offshore (750.00) is engaged in providing oil field services for offshore exploration and production of hydrocarbons in India and abroad. With 21 offshore assets it is among the top ten offshore drilling asset owners in the world. It possesses fifteen jack-up offshore drilling rigs, three drill ships, one floating production platform and a jack-up rig & drill ship each on bareboat charter. It is among the few global companies to facilitate oil exploration at water depths ranging from 250 ft to 7000 ft and drilling depths ranging between 20,000 ft and 30,000 ft. Having its footprint globally across 10 nation, company boast of serving leading global and domestic E&P companies such as ONGC, Shell Brunei, Shell Malaysia, Cairn Energy, Petronas Carigali, Exxon Mobil, Chevron, Hardy Exploration, Oriental Oil Dubai, ROC Oil China, and GSPC to name a few. Although company may witness a fall in charter rate due to slowdown in E&P activities and lower demand, still it can clock a consolidated turnover of Rs 3250 cr and NP of Rs 500 cr. This translates into EPS of Rs 132 cr on current equity of Rs 7.60 cr. Buy at sharp declines only.

Ratnamani Metals (58.00) is basically engaged in manufacturing welded and seamless stainless steel (SS) pipes & tubes, carbon steel (CS) LSAW, HSAW and ERW pipes. To cater the rising demand company is adding 3,000 TPA of capacity in stainless steel tubes and pipes segment, which is to be operational shortly thereby taking the total stainless steel pipe capacity to 22,000 tonne. In carbon steel segment, it is adding 100,000 tonne of HSAW capacity through brown field expansion in current fiscal, which will double its HSAW capacity of 200,000 TPA and take the total carbon steel capacity to 400,000 TPA. It meets its 100% power requirement from its own 24 windmills generating 20.54 MW of green power. It has also got itself partly backward integrated by establishing hot extrusion line which has reduced its dependence on imported material to some extent. As a part of forward integration, RTML has recently set up a 3 layer polyethylene and epoxy coating line with capacity of 2.7 million sq mtrs. About 50% of company’s turnover comes from oil, gas, petrochemical industry followed by 20% from power and rest from others. As of now RTML has a decent order book of more than Rs 500 cr to be executed over the next 6~9 months. The recent fall in steel and other metal prices augurs well for the company. Accordingly it may register sales of Rs 1000 cr and profit of Rs 80 cr for FY09 i.e. EPS of Rs 18 on equity of Rs 9 cr having face value as Rs 2/- per share. A solid bet.

Small & Beautiful

Gayatri Project (85.00) is engaged in execution of major civil works including concrete/masonry dams, earth filling dams, national highways, bridges, canals, aqueducts, ports, etc. Although the company has executed various projects in different sectors of infrastructure, its expertise lies mainly in the road and irrigation sectors. Of late company has moved up the value chain and is executing five lucrative BOT road projects having very healthy IRR of around 14%. It has also entered into joint ventures with DLF for construction of road on BOT basis and with ION Exchange for water transport projects. For the Sept’08 quarter its revenue increased by 45% to Rs 207 cr and PAT grew by 25% to 8.50 cr. Incidentally, it has already posted an EPS of Rs 20 for H1FY09. And as of now, it boasts of having a massive order book position of more than Rs 3000 cr which is 4x times its FY08 turnover thereby providing strong revenue visibility. Notably, irrigation projects constitute 30%, transportation projects 60% and industrial building constitutes the balance 10% of order book. Thus for FY09 it may register a topline of Rs 950 cr and profit of Rs 30 cr i.e. EPS of Rs 30 on current equity of Rs 10.10 cr. However, the huge debt of Rs 450 cr on its book is a cause of concern.

XL Telecom & Energy (55.00) has been the pioneer in solar module manufacturing since last 15 years. Due to gaining popularity of this non conventional energy, company is in advanced stage of implementing the 120 MW solar cell manufacturing facility in Rajiv Gandhi Nano Technology Park SEZ, Hyderabad with a capital outlay of Rs 360 cr. For this it has also inked a five-year contract with Chinese firm LDK Solar to supply multi-crystalline solar wafers which is a key component for solar cell and panel manufacturing. Remarkably, company has also got itself forward integrated in solar value chain by entering into EPC segment of solar farm establishment and has recently setup its first solar farm in Majorca, Spain with an installed capacity of 1.6 MW. With this it has become the world’s first and only solar company to capture the complete solar value chain from manufacturing of solar cell to solar module to setting up of solar farm. After getting this success, company is now exploring the opportunities to establish such solar farms in Italy, southern France and other European countries in next 3 years totaling about 300 MW. For the Sept’08 qtr, company derived 98% revenue from energy & only 2% from telecom (against 55% & 45% respectively in FY08), which indicates that company is betting high on energy segment. On the back of terrific Q1FY09 nos, it may clock a turnover of Rs 850 cr and PAT of Rs 25 cr for FY09 ending June 2009. This translates into EPS of Rs 13 on current equity of Rs 18.80 cr. Although the conversion price for FCCB has been reset downwards to Rs 160 from Rs 260 earlier, still bond holder may not opt for conversion in near future. A good bet in renewable energy sector.

Ratnamani Metals (58.00) is basically engaged in manufacturing welded and seamless stainless steel (SS) pipes & tubes, carbon steel (CS) LSAW, HSAW and ERW pipes. To cater the rising demand company is adding 3,000 TPA of capacity in stainless steel tubes and pipes segment, which is to be operational shortly thereby taking the total stainless steel pipe capacity to 22,000 tonne. In carbon steel segment, it is adding 100,000 tonne of HSAW capacity through brown field expansion in current fiscal, which will double its HSAW capacity of 200,000 TPA and take the total carbon steel capacity to 400,000 TPA. It meets its 100% power requirement from its own 24 windmills generating 20.54 MW of green power. It has also got itself partly backward integrated by establishing hot extrusion line which has reduced its dependence on imported material to some extent. As a part of forward integration, RTML has recently set up a 3 layer polyethylene and epoxy coating line with capacity of 2.7 million sq mtrs. About 50% of company’s turnover comes from oil, gas, petrochemical industry followed by 20% from power and rest from others. As of now RTML has a decent order book of more than Rs 500 cr to be executed over the next 6~9 months. The recent fall in steel and other metal prices augurs well for the company. Accordingly it may register sales of Rs 1000 cr and profit of Rs 80 cr for FY09 i.e. EPS of Rs 18 on equity of Rs 9 cr having face value as Rs 2/- per share. A solid bet.

J Kumar (65.00) is a Mumbai based EPC company with a primary focus on construction of roads, flyovers, bridges, railway over bridges, subways, irrigation projects, commercial and residential buildings, railway buildings and piling works. It also has a ready mix concrete plant for captive use. Its operations are largely confined in the state of Maharashtra with majority in Mumbai itself. The company is a class I A contractor with PWD, Government of Maharashtra. Importantly, company owns a large fleet of modern construction equipments like Hydraulic piling rigs, Putmiester Mobile boom placer concrete pump and stationery concrete pumps, RMC plants, transit mixers, various capacity cranes, poclains, front end loaders, JCBs and tippers. Due to govt’s special focus & aggressive spending on infrastructure, company is witnessing best of its time and boast of having an all time high order book position to the tune of Rs 1200 cr executable in next two years. Importantly major chunk of this order book has been recently bagged by the company with Rs 560 cr contract from MMRDA & MSRDC to construct 16 Skywalks in Mumbai. Company has earned an EPS of Rs 7 for H1FY09 and may report total revenue of Rs 375 cr and PAT of Rs 25 cr for entire FY09 which leads to an EPS of Rs 12 on current equity of Rs 20.70 cr. Accumulate at sharp declines only.

Smart Investments

Savita Chemicals Lts
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Lloyd Electric & Engineering Ltd
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Savita Chemicals Ltd - Rs 140.00

Incorporated in 1961, Savita Chemicals Ltd (SCL) specializes in manufacturing of petroleum specialty products like transformer oil, liquid paraffin, petroleum jelly, white mineral oil, automotive and other industrial lubricants. With 40% market share, it is the leading supplier of transformer oil in India. It is also India’s largest exporter of petroleum specialty products to South Africa, Australia, Middle East & South East Asia. SCL also operates wind power plants in Maharashtra, Karnataka and Tamil Nadu. Presently, company derives 98% of revenue from petroleum products whereas the rest comes from wind power. Of the total petroleum products sales, transformer oil constitutes around 45% of sales, white oil & liquid paraffin’s around 35% and lubricating oil around 20%. Hence company caters to several varied industries as transformer oil is predominantly used in transformer, utilized in power industry and liquid paraffins/white oils are used in cosmetics, pharmaceutical, personal care products, printing & plastics. While automotive sector and industrial units are major markets for its lubricants. In short company’s fortune is not dependent on one particular industry. Its clientele includes several SEB’s and almost all major power equipment manufacturers like ABB, BHEL, Crompton Greaves, Areava T&D, Bharat Bijlee, Reliance Power etc, FMCG players like Johnson & Johnson, HLL, Dabur, Marico etc and Pharma companies like Pfizer, GSK and others.

SCL’s ultra modern manufacturing facilities are located at Navi Mumbai and Silvassa where it has been regularly expanding its capacity to cater more efficiently to the growing domestic as well as foreign demand. Presently, it has a total installed capacity of 216,000 KL per annum against which it made a production of 205,122 KL for FY08, representing 95% of capacity utilization. As a part of its growth strategy, SCL is working on a Greenfield project with an investment of Rs. 15-20 crore for petroleum products to augment the capacity by around 25~30%. Last year it introduced a new brand named SAVSOL in lubricating division which is doing very well and is expected to generate sales revenue of more than Rs 100 cr in the current year. It also has a tie-up with Idemitsu, Japan to market its “Idemitsu”range of automotive lubricant and “Daphne” range of industrial lubricants which rated one of the best in the world. On the other hand, to avail tax benefits along with good realizations for power being sold to SEBs after captive consumption, SCL, last fiscal increased the installed capacity for wind energy generation to 26.3 MW from 21.8 MW. Further it has planned a capex of Rs 40 crore, so as to augment the capacity to 34.9 MW in the current year.

With ambitious targets set for the power sector and massive investments lined up in generation, transmission and distribution segment, the demand for transformer oil will continue to grow substantially in coming years. Automotive lubricant being a consumable item is expected to do well as the number of vehicles on road has shot up significantly in past few years. Similarly, the market for liquid paraffins and white oils will also grow in line with the growing importance for personal hygiene amongst the masses. However despite the promising future ahead, SCL’s profitability mainly depends upon the price of base oil which is the major raw material for all its petroleum products and is a refined fraction derived from crude oil. Hence, company’s margin was under tremendous pressure when crude oil price shot up to US$ 130 per barrel. But with the recent fall in crude oil prices to below US$ 50 levels, company is expected to report improved margin and healthy bottomline in coming quarters. Accordingly it may clock a turnover of Rs 1000 cr and NP of Rs 45 cr for FY08 which leads to an EPS of Rs 31 on equity of Rs 14.60 cr. Having a healthy book value of Rs 171, promoter holding of 71%, dividend yield of around 6~7% & very low debt equity ratio of 0.14x this company is available fairly cheap at a market cap of less than Rs 200 cr. Investors are recommended to buy at current levels and add on declines for a 50% return in 9~12 months.

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Balaji Amines Ltd - Rs 72

Balaji Amines Ltd (BAL) was setup in 1988 for manufacturing of aliphatic amines in India to cater the growing requirements of value based specialty chemicals. Since then, it has emerged as the leading producer of methylamines, ethylamines and their derivatives. Importantly, BAL is among the few handful manufacturers across the world as amine manufacturing technology is a closely guarded process. And ironically company is using indigenously developed technology i.e. without any technical foreign collaboration. And remarkably, its one of the lowest cost producers of methylamines in the world. Today, it also produces specialty chemicals which are import substitutes like Morpholine, hydroxylamine, N-Methyl Pyrrolidone etc and few natural products (herbal extracts) such as solanesol, calcium sennosoid, coleus forskohlii, camptothesin etc. Company’s products find application in various important industries including like pharmaceuticals, agro chemicals, water treatment, rubber chemicals, dyes & pigment, paper, explosives, rocket fuel oil refineries, photography etc. Besides, Morpholine - which is being manufactured by company for the first time in India through indigenously developed technology, finds extensive application in manufacture of corrosion protection compounds used in refineries, ships, steel plants etc. Being ISO 9001-2000 certified, company’s product are very well accepted in international market and it derives nearly 15% of total revenue from export to several countries such as UK, USA, Canada, Latin America, Germany, Italy, Middle East, South Africa, France, Brazil, Mexico etc

Presently, BAL has two manufacturing facilities - one at Sholapur-Maharashtra for amines & derivatives and second one at Hyderabad – AP for natural products. On the back of regular expansion, it has capacity of 18000 MTPA of methyl amines, 3000 MTPA of ethyl amines & 13000 MTPA of intermediates. Last fiscal, company has successfully enhanced capacities for methyl amines, ethyl amines, NMP and other derivatives by revamping the production facilities. It has strong presence in domestic market with major clients from pharma sector including Aurobindo, Aventis, Clariant, Dr. Reddy’s, Glaxo, Merck, Ranbaxy, Sun Pharma, Wyeth, Wockhardt, etc. Earlier it also entered into a long term strategic arrangement with BASF for supply of N-methyl-2-pyrrolidone. Notably, company is the only manufacturer for Morpholine and N-methyl-2-pyrrolidone (NMP) with a monopoly status in India and hence, has of late set up a separate dedicated plant at Solapur to manufacture them with a capacity of 2000 MTPA & 3000 MTPA respectively. Company has also established a hydrogen plant in house to cater to the needs of captive requirement and is successfully running chlorine chloride plant (solutions & solid) with a capacity of 5000 MTPA. Last fiscal it also put up a plant for manufacture of Co-Enzyme Q10.

Meanwhile, BAL boasts of having two state-of-the-art R&D centers at both its plants. Infact, its Hyderabad R&D unit which has is approved by Department of Science and Technology, Govt. of India has identified some new products under natural products and processes are being developed. It has also successfully carried out R&D activities in process automation of various plants to reduce the consumption of raw materials and utilities. Financially, company has been reporting very encouraging nos and has recorded 45% growth in sales to Rs 145 cr and 70% jump in PAT to Rs 11.80 cr for the first six months ending Sept 2008. Accordingly it is expected to clock a turnover of Rs 260 cr and PAT of Rs 13 cr for FY09. This leads to an EPS of Rs 20 on equity of Rs 6.50 cr. Incidentally, BAL is not affected by rupee appreciation or depreciation as its raw material import is almost equivalent to export revenue. Despite BAL being vulnerable to commodity price cycle still it is expected to improve its profit margin going forward due to various initiatives taken by the company. Notably, promoters have bought 2% stake from open market in the last three quarters. Investors are advised to buy at sharp declines with a price of Rs 120 (i.e. 50% appreciation) in 9~12 months.

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STOCK WATCH

Man Industries (35.00) is one of India's largest producers and exporter of large diameter Longitudinal submerged arc welded (LSAW) pipes and Helically submerged arc welded (HSAW) pipes. Infact it is the only company in India to manufacture 18 mtr long HSAW pipe. Recently, company has started a new production line for HSAW pipes with a name plate capacity of 200,000 MTPA thereby equalizing the total production capacity to 500,000 MTPA each for LSAW as well as HSAW. Remarkably it has also bagged new orders to the tune of Rs 1100 craking the current order book position to Rs 1500 cr. To become a global player, company is setting up a HSAW pipe manufacturing plant with an capacity of 300,000 MTPA in USA under a capex of Rs 400~450 cr. Despite company posted disappointing nos for Q1FY09, still on the back of expanded capacity it may report a topline of Rs 1650 cr and bottomline of Rs 60 cr i.e. EPS of Rs 11 on current equity of Rs 26.60 cr. As FCCB is convertible at much higher price than the CMP, bond holders may not opt for conversion thereby eliminating the risk of equity dilution in near future. With the high of Rs 177 in Jan’08, scrip is now available at cheap valuation with a market cap of less than Rs 200 cr

Jyoti Structure (55.00) has an expertise to take on turnkey projects for transmission lines from 33 kV to 800 kV and substations upto 400 kV irrespective of terrain, location and requirements of power utilities within and outside India. In order to provide end-to-end solutions company has two manufacturing facilities which are capable of making proto types, fabricating and galvanizing transmission towers and structures, microwave towers, wind mill tower, railway electrification structures, etc up to 76,000 MTPA. Besides, its wholly owned subsidiary JSL Structures is having a capacity to manufacture another 19800 tons of transmission line towers. On the back of huge flow of investments in the power transmission and distribution segment, its current order book stands at an all time high value of more than Rs 3500 cr. Meanwhile, company has reported encouraging set of nos for both Q1 & Q2, and is expected to end FY09 with topline of Rs 1650 cr and PAT of Rs 75 cr leading to an EPS of Rs 9 on current equity of Rs 16.20 cr with face value as Rs 2/- per share. Apart from above company is betting on international market and has formed a couple of joint venture companies in UAE and South Africa. Keep accumulating at sharp declines.

For the Sept’08 qtr, JMC Projects (55.00) reported 75% rise in revenue to Rs 323 cr and 60 increase in operating profit to Rs 24.70 cr. But due to higher interest and depreciation cost, PAT remained flat at Rs 6.80 cr. Being a part of Kalpataru group is among the top seven players for building and factory construction in India & has also been recognized as India’s sixth fastest growing company by the latest “Business Today” June’08 edition. It has successfully ventured into fields of turnkey execution involving civil, mechanical, electrical, HVAC, fire fighting, architectural and landscaping works. Lately, it has started focusing on infrastructure and power projects and is aggressively bidding for contracts to construct bridges & flyovers, roads & highways, railways stations, marine work, water supply & irrigation projects and construction of power plant. This has resulted into massive order in hand position of more than Rs 2000 cr as on March 2008 which is twice its FY08 turnover. For H1FY09 it has already posted an EPS of Rs 8 with 75% rise in sales to Rs 636 cr and 20% increase in NP to Rs 14.70 cr. In future company intends to up railways, airports and water management projects on an EPC basis which will further add to its bulging order book. For FY09 it may clock a turnover of Rs 1350 cr and profit of Rs 25 cr for FY09 leading to an EPS of Rs 14 on current equity of Rs 18.14 cr. A screaming buy.

Voltamp Transformer (310.00) has special expertise in production of dry type vacuum resin impregnated (upto 3 MVA/11 kV class) and cast resin transformers (upto 7.5 MVA/33 kV class) apart from manufacturing regular oil filled power & distribution transformers, induction furnace transformers & unitized substations. Infact, company is the market leader in dry type transformers with around 40% market share. Currently company is in the midst of putting up a Greenfield plan with an installed capacity of 4000 MVA thereby taking the total transformer manufacturing capacity to 13000 MVA. This plant being set up with an investment of Rs 35 cr is expected to get ready by April 2009. For the Sept’08 company reported 15% growth in sales to Rs 170 cr whereas PAT jumped up 50% to Rs 27 cr. Incidentally it has already posted an EPS of Rs 50 for H1FY09. And with the recent fall in copper prices, its margin is expected to improve which will positively impact the bottomline going forward. So for the entire FY09 it may clock a turnover of Rs 650 cr and profit of Rs 85 cr i.e. EPS of Rs 84 on equity of Rs 10.10 cr. Being debt free and having huge reserves of more than Rs 150 cr, liquid cash worth Rs 60 cr, ROCE of 95% and ROE of 60% it’s a screaming buy.

Small & Beautiful

With over four decades of experience, the real estate portfolio of Ansal Buildwell (20.00) includes residential complexes, townships, commercial buildings, group & row housing projects, hospitality and various other infrastructural projects. Although company’s activity is mainly concentrated in Gurgaon but gradually it has spread its wings across the length and breadth of the nation in Banglore, Kochi, Dehradun, Moradabad, Punjab, Jhansi, Gwalior, Jammu and across the border in Kathmandu (Nepal). Presently it is developing integrated township under the banner “Ansal City” in several tier –II cities including Kochi, Gwalior, Jaipur, Amritsar, Jhansi etc. Company also specializes in constructing luxurious row houses and has dozen of projects going on in Gurgaon and Ernakulam. Ironically, company holds an Island (52 acres) at Vachoor, which is about 40 kms away from Cochin down town. On the hospitality front its Harmony Club & Florence Club is fully operational whereas the Riverdale Club in Kochi is under construction. Recently, it has also launched commercial complexes project called 'Boom Plaza' and 'Boulevard Centre' in Gurgaon. Notably, its debt equity ratio stands at 1.2x which is relatively not very high. Considering its track record and ongoing project, company is trading grossly cheap at a market cap of merely Rs 15 cr.

Hind Rectifiers (35.00) operates in the niche space of power electronics and DC wound products with two major product segments namely equipment and components. The equipment division having products like rectifiers, invertors, converters and traction transformers and components includes semiconductors like diodes and thyristors etc which are basically used in converting the current from AC to DC and vice versa. Incidentally, it derives more than 50% of its revenues from railways and 20% from power industry. Offlate, company has set up two new units in tax free zone of Uttranchal, which started commercial production only from June 2008. Moreover, in Oct 2007 company has signed a technical collaboration agreement with M/s. Infineon Technologies AG, Germany for manufacturing of IGBT based primeSTACK which will complement its existing products. Since company caters to Railway segment as well as power generation and pollution control capital equipment segment, the future prospect looks good. Infact, it boasts of having an all time high order book position of more than Rs 80 cr. However, as it didn’t report encouraging nos for the H1FY09 it is expected to register sales of Rs 110 cr and profit of Rs 11 cr i.e. EPS of Rs 7 on tiny equity of Rs 3 cr with face value as Rs 2/- per share for entire FY09. Scrip can easily appreciate 50% within 9~12 months

On the back of encouraging Sept’08 quarter nos, Roto Pumps (30.00) has registered 40% rise in topline to Rs 25 cr and 30% growth in profit to Rs 1.50 cr for H1FY09. Company is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. Couple of months ago, it bagged approx Rs 4 cr order from L&T which is the single largest value order in the history of the company. To maintain its growth momentum, company is implementing an expansion cum modernization program for which it has been recently allotted an industrial land of 20,000 sq mtr by Greater Noida Industrial Development Authority in Sector ECOTECH – XII. For FY09 it may register a topline of Rs 50 cr and bottom-line of Rs 2.75 cr which translates into EPS of Rs 9 on a small equity of 3.09 cr. At the current enterprise value of Rs 15 cr, scrip is trading fairly cheap.

IMP Power (48.00) is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has been manufacturing transformers ranging from 10 KVA to 100 MVA upto 220 kV class. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has recently doubled its production capacity from 3600 MVA to 7000 MVA. With this company mow list among the top 10 EHV and power transformers manufacturing companies in India. Besides last fiscal, company has also upgraded its Kandivali plant to manufacture complete range of analog meters such as ammeter, voltmeter frequency meter, dynamometer type watt meter, power factor meter, phase sequence indicator, KVA Meter etc. in addition to high end meters like maximum demand indicator, trivector Meter, multifunctional and kWh Meters. After ending FY08 on quite a buoyant note, it has reported terrific nos for the Q1FY09. For the year ending June’09 it may clock a turnover of Rs 185 cr and PAT of Rs 11 cr i.e EPS of Rs 16 on current equity of Rs 7 cr. Scrip may shoot upto Rs 75 within a year.

Smart Investments

Gremach Infrastructure Equipment & Projects Ltd
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JK Paper Ltd
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Gremach Infrastructure Equipment & Projects Ltd - Rs 22.00

Incorporated in 1991, Gremach Infrastructure Equipment & Projects Ltd’s (GIEPL) main activity is to provide rental of construction/earthmoving machineries to medium & large construction companies who are engaged in the business of infrastructure developments like constructing of roads, airports, dams, power projects, mining activities, housing & civil construction and other related activities. GIEPL’s business is flourishing rapidly as it makes business sense for the construction companies to take these costly construction equipments on a rental basis instead of blocking their capital in procuring equipments which may not be used for executing other projects. The other advantage of taking the equipment on rental basis is the availability of quality equipments without the hassle of their maintenance. Thirdly, with rapid technological developments, the cost of replacement of these equipments is also very high and hence the developers now prefer to take equipments on rent rather to own them. Over the year, GIEPL has pursued a strategy of diversifying the selection of machinery/equipment according to different business segments in the infrastructure sector. In addition to renting its owned equipments, company also hires equipments owned by other parties and rent it out to its own clients. Infact, GIEPL has been deriving majority of revenue from renting of equipment which are exclusively owned by third parties. This is possible due to the fact that, company has established a very strong network so as to have a geographical reach as well as a diversified industrial and project segment.

Remarkably, GIEPL is among the handful of large player in the organized sector, which is presently being dominated by small unorganized players. But as the project location are diverse and the equipment requirement at various sites may vary, only bigger companies with strong financial muscle like GIEL can fulfill the requirement. Secondly, company has an edge over its peers as it has huge asset bank of heavy equipments ranging from compacters, rollers, concrete mixers, dozers, forklifts, loaders to excavators, PTR, dumpers, electronic sensor pavers, kerb laying machine, tunneling boomer, concrete batching and mixing plant. Moreover it also has a vast pool of skilled labour that include mechanical engineers, civil engineers, mechanical experts, technicians, and operators etc. who operate and maintain the equipment. Because of all these factors, GIEPL boats of having a very strong clientele base that includes all the major infrastructure players in the country such as L&T, Punj Lloyd, Shapoorji Pallonji, Gammon India, HCC, Gannon Dunkerley etc. Incidentally, company adopts direct marketing approach and has set-up a separate Tender department to procure contracts from public sector undertaking as well as from private clients. As of now, company has a centralized maintenance department & workshop in Kalamboli, Navi Mumbai spread over an area of 450 sq. mtrs each.

As a part of its diversification plan, GIEPL has taken 75% controlling stake in 11 Coal mine licenses in Mozambique having an aggregate 13,520 hectares (appx. 13,52,00,000 sq. mts) of land in prime region of Moatize, Africa. With the global shortage and crisis of hard coking coal, the future prospect of this business looks terrific. To cash on the real estate boom, company has also ventured into setting up of SEZ and has received formal approval for 100 hectares Metal SEZ at Kolhapur & another at Dhule in Maharashtra. Witnessing a sharp jump in E&P activities across the globe, company has planned to enter into the business of renting of oil & gas drilling rigs. Accordingly it has signed the MOU with China's biggest oil & gas rig manufacturer and has placed order for design and manufacture of four rigs. Although in short term both the above diversification looks a risky venture, but in long term it may emerge as a sustainable and profitable business.

To conclude, with govt’s special emphasis on creating physical infrastructure and massive investment being planned in coming years, GIEPLS core business of renting equipment will continue to do exceedingly well. This concept is growing rapidly and gaining wide acceptance as the penetration level in India is quite low at 2%, compared to UK at 80% and North America at 35%. In order increase its equipment bank, GIEPL has raised almost Rs 200 cr in Feb 2008 thru FCCB route to be converted into equity @ Rs 376 per share. However, considering the CMP, the bond holders may not opt for conversion and hence company has to redeem the bond. The only saving grace is that, redemption is due by Jan 2013. Fundamentally, GIEPL has reported an EPS of Rs 24 for FY08 whereas for H1FY09 it has already earned an EPS of Rs 13. Despite such performance its share price which hit a high of Rs 500 in Jan’08 is not finding any buyer even at Rs 25. The share price of its other recently listed group company “Austral Coke” has also fallen sharply from Rs 300 to Rs 100 presently. Even after taking a slowdown into consideration, GIEPL may end FY09 with topline of Rs 300 cr and NP of Rs 24 cr i.e. EPS of Rs 16 on current equity of Rs 15.20 cr. However company has huge debt on its book despite excluding FCCB of Rs 200 cr. Hence although company doesn’t look cheap at an Enterprise Value of Rs 400 cr still the downfall from current level looks minimal. Only aggressive investors can buy at current levels as share price can double in 12~15 months.

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Orient Paper & Industries Ltd - Rs 18.00

Incorporated in 1936, Orient Paper & Industries Ltd (OPIL), flagship company of the renowned CK Birla Group is a diversified company having interest in papers, cement and electric fans.

· CEMENT DIVISION (60%):- OPIL’s main cement plant is located at Devapur, Andhra Pradesh, and a split grinding unit in Jalgaon, Maharashtra, leveraging the proximity to limestone, coal and fly ash sources on the one hand and fast-growing markets of Maharashtra, Andhra Pradesh and Gujarat on the other. With current installed capacity of 3.40 million tonne, it manufactures and markets portland pozzolana cement under the brand 'BIRLA A1 and ordinary portland cement under the brand name of 'ORIENT GOLD'. Ironically, cement contributes 60% to total revenue but more than 90% of the company’s profit comes from this division only. Incidentally, company cement division is amongst the most cost-efficient units in the country with one of the highest EBIDTA percentage. Hence to take advantage of the market growth and success of its brands and distribution network, company is in the midst of further augmenting its capacity to 5 million TPA by April 2009. As demand supply situation for cement is favorable in Maharashtra and Andhra Pradesh, cement prices are expected to remain stable with no substantial correction. It is also setting up a 50 MW captive power plant at Devapur plant to achieve further economy in the cost of energy consumed. This is also expected to become operational by April 2009. Meanwhile, last year company generated more than Rs 10 cr on sale of 107353 units of CERs and is entitled to get similar CERs each year until 2012 based upon its performance under the CDM project.

· PAPER DIVISION (20%):- OPIL manufactures a wide range of writing and printing paper specially photocopying and office paper category apart from being a market leader in tissue paper with more than 40% market share. Its paper mill is located at Amlai in M.P having an installed capacity of 95,000 TPA. Notably, the demand for tissue paper is growing at around 15% per year and to meet this rising demand, company is expanding its tissue paper manufacturing capacity from current 10,000 TPA to 30,000 TPA by April 2009. To provide sustainability in raw material availability, the company has been undertaking farm-forestry programmes across 18 proximate districts of Madhya Pradesh and Chhattisgarh. Last year it assisted 4500 farmers to plant 5 lac clonal plants and 128 lac seed rooted plants in a land area of over 5000 hectares. It recently constructed sixth mist chamber is contemplating to further build two more mist chambers to double the clonal propagation capacity to 20 lac seedlings. Oh the other hand, its second plant in Orissa at Brajrajnagar which is spread across 850 acres is non operational since 1999. If disposed off it can fetch revenue of Rs 100 cr.

· ELECTRICAL APPLIANCES (20%):- OPIL is India’s largest manufacturer of electric fans in terms of in-house manufacturing capacity with its two plants at Kolkata and Faridabad having an installed capacity of 35 lakhs fans per year. Having a market share of over 17% in the organized sector, it offers entire product chain including fans, portable fans and exhaust fans - across price points, colours and designs with its ‘ORIENT PSPO’ brand as one of the most visible and respected names. Having global presence across 20 nations such as USA, Egypt, South Africa, Saudi Arabia etc, company enjoys the status of being the largest exporter of fans from India. Interestingly, company has expanded its product range by launching lighting products in few states from Feb 2008 and intends to gradually expand its reach across the country. In the meantime, it is setting up a modern manufacturing facility for Compact Fluorescent Lamps at its Faridabad plant.

To summarize, OPIL is implementing a total capex of around Rs 800 cr for all its expansion plan. Out of this company raised Rs 160 cr thru right issue in the ratio of 3:10 @ 360 per share. The balance amount will be funded thru internal cash generation and a minor debt from bank, if required. Importantly, in the last two years company has repaid most of its loan and has significantly brought down its total debt to Rs 165 cr from Rs 435 cr in 2006. As a result, it has a very healthy debt equity ratio of 1: 0.16 as at 31st March 2008. Due to sharp rise in input cost of coal, metals, chemicals, wood pulp etc, OPIL has reported dismissal performance for H1FY09. But with the recent sharp fall in the price of all these raw materials, OPIL may clock a turnover of Rs 1350 cr and PAT of Rs 150 cr for FY09. This leads to an EPS of Rs 8 on equity of Rs 19.30 cr having face value as Rs 1/- per share. As company is available fairly cheap at an EV of Rs 525 cr, investors are recommended to buy at current levels for a price target of Rs 30 in 9~12 months.

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STOCK WATCH

Shanthi Gears (32.00) is the second largest player in industrial gear segment with 20% market share and at the same time is the undisputed leader in the customized product segment where the manufacturing is as per clients’ requirements. Remarkably, it is also the only listed manufacturer of gears for helicopters and light combat aircrafts to Hindustan Aeronautics Ltd. Of late, company has even started manufacturing gearboxes of 250 KV for windmills. For six months ending Sept’08, it recorded nearly 15% growth in sales and NP to Rs 126 cr and 23 cr respectively. Incidentally, the recent fall in steel and other metals will reduce its input cost considerably and may give a good fillip to its bottomline in coming qtrs. Accordingly it may end FY09 with sales of Rs 260 cr and PAT of Rs 40 cr i.e. EPS of Rs 5 on fully diluted equity of Rs 8.60 cr having face value as Rs 1/- per share. Moreover if rumors are to be believed then India’s largest windmill manufacturer Suzlon, through its subsidiary Hansen Transmission (world’s fifth largest maker of gearbox), was interested in taking a stake in SGL. If it happens, this may lead to re-rating of the company and share price may see a vertical rise

Elecon Engineering (30.00) is a leading manufacturer of bulk Material Handling Equipment (MHE) and Asia’s largest producer of industrial gear with 26% market share in India. For more than five decades, it has been supplying hi-tech equipment to core sectors such as steel, fertilizer, cement, coal, petrochemicals, lignite and iron are mines, power stations, defense and port mechanization in India and abroad. With a strategy of diversification, last fiscal company started a new business of setting up of Wind Turbine Generator (WTG) farms and manufacturing of WTG gear boxes. It has started manufacturing of WTG gear box having capacity of 1 MW to 2 MW, which is the import substitute, thereby becoming the first Indian company to manufacture gearboxes of such sizes. As on 30th Sept 2008, it has an pending order in hand of Rs 1772 cr comprising of Rs 1527 cr for MHE division and Rs. 245 cr for gear division. On the back of satisfactory H1FY09 nos, it is estimated to clock a turnover of Rs 950 cr and net profit of Rs 55 cr for FY09. This translates into EPS of almost Rs 6 on current equity of 18.60 having face value as Rs 2/- per share. Moreover the promoters are constantly buying shares from open market to increase their stake thru creeping acquisition. A solid bet.

Bharati Shipyard (60.00), second largest private shipyards in India is engaged in design and construction of bulkers, cargo/container ships, tankers, dredgers, passenger vessels, chemical carriers etc. It has special expertise in construction of offshore support vessel required for oil exploration industry and is the first Indian player to bag an order of an oil rig. However, the shipyard sector is going thru rough phase as Baltic freight index has crashed dramatically and no shipping company is placing fresh order for ships. On the contrary, there is the great risk of order cancellation if the current situation persists for longer duration. Secondly the crude oil prices have also fallen substantially forcing the oil companies to reduce their E&P activities. Meanwhile, company has an all time high order book position of Rs 4800 cr which is almost 7x times its FY08 revenue, thereby ensuring a strong revenue visibility. Although company hasn’t got any order cancellation, still it may have to renegotiate some orders with lower realization. Due to slump in business, it has slowed down its Greenfield expansion and other capex plan. Notably, 50% of its FCCB has already been converted into equity and the balance FCCB of more than Rs 200 cr may come up for redemption in Dec 2010. For FY09, company is estimated to clock a turnover of Rs 825 cr and PAT of Rs 65 cr without taking govt subsidy into consideration. This translates to an EPS of 24 on current equity of Rs 27.60 cr. It seems all the negative has already been factored in the share price and technically also scrip seems to have bottomed out.

Till now cement industry was facing double whammy with falling cement prices and rising input cost. Now, although the input cost have soften but at the same time demand has also taken a hit due to slowdown in construction activities. Despite this JK Lakshmi (30.00) appears to be one of the safest & cheapest bet in current sentiment. It has recently expanded its production capacity to 3.65 million TPA and is in the midst of taking it further to 4.75 million tonne by end of this fiscal. The recent fall in coal and pet coke prices augurs well for company as it has fully stabilized the working of the 36MW captive thermal power plant. To maintain its margin, company has increased the sale of blended cement which now constitutes more than 75% of total sales. Secondly it is also constantly expanding its RMC business and currently has a total of 9 RMC plants in operation with an overall production capacity of 5.58 lacs cu.mtr. Depending upon the market situation, company is also contemplating to setup a new cement plant in Chattisgarh with a capacity of 2.7 million tonne of cement. Last year company got nearly Rs 40 cr on allotment of 41 lac shares @ 97.50 Rs against convertible warrants. Incidentally, company has already posted an EPS of Rs 11 for H1FY09 and is expected to end FY09 with sales of Rs 1050 cr and PAT of Rs 85 cr i.e. EPS of Rs 14 on equity of Rs 61.20 cr. However, a huge of debt of Rs 700 cr on its books is a cause of concern.

Small & Beautiful

Bharati Shipyard (60.00), second largest private shipyards in India is engaged in design and construction of bulkers, cargo/container ships, tankers, dredgers, passenger vessels, chemical carriers etc. It has special expertise in construction of offshore support vessel required for oil exploration industry and is the first Indian player to bag an order of an oil rig. However, the shipyard sector is going thru rough phase as Baltic freight index has crashed dramatically and no shipping company is placing fresh order for ships. On the contrary, there is the great risk of order cancellation if the current situation persists for longer duration. Secondly the crude oil prices have also fallen substantially forcing the oil companies to reduce their E&P activities. Meanwhile, company has an all time high order book position of Rs 4800 cr which is almost 7x times its FY08 revenue, thereby ensuring a strong revenue visibility. Although company hasn’t got any order cancellation, still it may have to renegotiate some orders with lower realization. Due to slump in business, it has slowed down its Greenfield expansion and other capex plan. Notably, 50% of its FCCB has already been converted into equity and the balance FCCB of more than Rs 200 cr may come up for redemption in Dec 2010. For FY09, company is estimated to clock a turnover of Rs 825 cr and PAT of Rs 65 cr without taking govt subsidy into consideration. This translates to an EPS of 24 on current equity of Rs 27.60 cr. It seems all the negative has already been factored in the share price and technically also scrip seems to have bottomed out.

Supreme Infrastructure’s (28.00) core competency lies in construction/widening of roads & highways, but it also undertakes other infrastructure projects like integrated nallah development, drainage work, laying of railway tracks, construction of minor bridges, development of IT Park, residential tower, RCC building, strengthening of sea wall and laying of tetra pods etc. Its area of operation is mainly concentrated in Mumbai region and few parts of Maharashtra & Bangalore with major clients like NHAI, MCGM, MMRDA, MSRDC, MUTP, PWD, BMC, AAI, BPT, TMC and also private agencies like Hiranandani, K. Raheja, Pratibha Ind, BARC, Sadbhav Eng, Mundra Port etc. Importantly, company has its own captive ready mix concrete plant, asphalt mix plant, quarrying and crushing unit & paver block manufacturing unit. For the latest Sept’08 qtr it posted revenue of Rs 66 cr and profit of Rs 6 cr against Rs 18.50 cr & Rs 1.50 cr last year. It has already clocked an EPS of Rs 11 for six month ending Sept’08. To cater the increasing demand for RMC, company is contemplating to almost double its RMC capacity to 300 cum. per hour by adding two new RMC plants in Mumbai and other city. With a massive order in hand of more than Rs 500 cr, it may register a topline of Rs 250 cr and NP of Rs 18 cr. This translates into EPS of Rs 13 on equity of Rs 13.90 cr. A decent buy for agressive investors.

From a high of more than Rs 1000 early this year, share price of KLG Systel (70.00) has become one fifteenth and is still hitting new lows. Company specializes in offering technological solution for entire business life cycle i.e. right from concept and creation, through plant design, project execution and management operations & optimisation to expansion/ revamp. It also provides on-line IT solutions to distribution utilities, using its self-developed software Vidushi, SG61 Technology and solution for determining the transmission & distribution losses, fixing the areas of power theft, on-the spot billing & cheque collection, increasing revenue collection efficiency of the utilities and addressing consumer grievances. Recently it has demerged the power systems solutions business into a new subsidiary named KLG Power in which IBM group company has invested Rs 12 cr for taking 1.20% stake, thereby putting the valuation of KLG Power Ltd to whopping 1000 cr. Ironically against this, KLG systel - the parent company which is holding the rest 98.80% is available at a market cap of Rs 90 cr. For FY09 on a standalone basis it is expected to clock a turnover of Rs 240 cr and profit of Rs 30 cr i.e. EPS of Rs 24 on current equity of Rs 12.60 cr.

Till now cement industry was facing double whammy with falling cement prices and rising input cost. Now, although the input cost have soften but at the same time demand has also taken a hit due to slowdown in construction activities. Despite this JK Lakshmi (30.00) appears to be one of the safest & cheapest bet in current sentiment. It has recently expanded its production capacity to 3.65 million TPA and is in the midst of taking it further to 4.75 million tonne by end of this fiscal. The recent fall in coal and pet coke prices augurs well for company as it has fully stabilized the working of the 36MW captive thermal power plant. To maintain its margin, company has increased the sale of blended cement which now constitutes more than 75% of total sales. Secondly it is also constantly expanding its RMC business and currently has a total of 9 RMC plants in operation with an overall production capacity of 5.58 lacs cu.mtr. Depending upon the market situation, company is also contemplating to setup a new cement plant in Chattisgarh with a capacity of 2.7 million tonne of cement. Last year company got nearly Rs 40 cr on allotment of 41 lac shares @ 97.50 Rs against convertible warrants. Incidentally, company has already posted an EPS of Rs 11 for H1FY09 and is expected to end FY09 with sales of Rs 1050 cr and PAT of Rs 85 cr i.e. EPS of Rs 14 on equity of Rs 61.20 cr. However, a huge of debt of Rs 700 cr on its books is a cause of concern.

Genus Power Infrastructure Ltd - Rs 76.00

Founded in 1994 Genus Power Infrastructure Ltd (GPIL) erstwhile Genus Overseas Electronic Ltd is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. It manufactures wide range of high-end programmable multi-functional intelligent single phase & three phase electronic meters with in-built advanced security and anti-tamper features such as AMR enabled meters, trivector meters, panel meters, time of the day meters, audit meters, etc. But importantly, over the last few years GPIL has significantly transformed itself from only a meter manufacturer to an entrenched power infrastructure player. It now derives more than 50% revenue from EPC power T&D projects where it provides absolute solutions for power transmission & distribution system. As a step forward, GPIL has also launched IT enabled distribution transformer metering system, feeder monitoring and management system, smart street light management system with value added software application for providing end to end solutions for energy management. Today, GPIL operates in following four verticals.

· Metering Solutions: GPIL deals in all types of electronic meters such as residential meters, industrial meters, agricultural meter, substation meters, audit meters, grid meters, group meters, special meters (prepaid / rail mounted) etc. It specializes in providing AMR solutions for comprehensive billing using PLCC, RF, GSM and GPRS technologies which ensures drastic reduction in power pilferage, less AT&C losses, effective load management, improvement in quality of power supplied, customer satisfaction and maximization of revenue generation.

· Engineering Construction & Contracts: GPIL has vast technical expertise for commissioning new substations (design, engineer, supply, installation, erection, testing and commissioning sub-stations) or working out capacity augmentation, renovation and modernization of existing substations. Being an EPC contractor it also executes turnkey T&D projects like setting up transmission towers, execution of civil work, laying of cables, installation of transformers etc. Company also undertakes rural electrification projects, energy accounting and auditing at all distribution levels, comprehensive billing solutions for utilities etc

· Power Backup Solutions: GPIL boast of successfully introducing most advanced Sure Sine Wave inverter technology in India. Its revolutionary ASIC technology customizes wave form needed by different appliances hence ensuring 100% of their safety. It makes several inverters in the range of 400 VA to 100 KVA and for high load electronic system, it provides home UPS, online UPS and high frequency & line interactive UPS in the range of 3 KVA to 100 KVA. Although on a small scale, GPIL has also forayed into renewable energy segment with products like solar panel and solar water heater. Getting itself backward integrated and to offer complete power backup solutions, it is contemplating to launch a full range of batteries (lead acid, tubular) under the “GENUS” brand name.

· Hybrid Microcircuits: GPIL manufactures superior hybrid microcircuits which are used in all electronic components and find vast application across all the industries. The bulky printed circuit boards are becoming outdated and are now aggressively getting replaced with miniature hybrid microcircuits. Company has advanced design software such as VISULA, OrCAD for design of hybrid microcircuits and PCBs.

GPIL perhaps has one of the biggest manufacturing units of energy meters and power electronics in the country with its two plants located at Jaipur (Rajasthan) and Haridwar (Uttranchal). In order to sustain the growth momentum, last year company has set up a new facility at Alwar (Rajasthan) for manufacturing of poles, distribution transformers, etc. with an investment of Rs 50 cr. It also entered into two joint ventures in Brazil to manufacture electronic energy meters & provide state-of-art AMR technology. Meanwhile it continues to export its product to over 20 countries and is now focusing meter export to SAARC, Middle East, African and Latin American countries, where power reforms are taking place in a big way. Thus GPIL has become a global player with manufacturing facilities in India & Brazil, marketing offices in Singapore & USA and a full fledged sourcing office in China.

As of now, GPIL has an order book position of more than Rs 700 cr which is 1.5x times its FY08 turnover. Besides it has participated in tenders of more than Rs 6000 cr, out of which it is already a ´L1´ bidder in tenders worth Rs 1400 cr. Thus its order book will keep ticking as an when the order gets confirmed. Moreover, with continuous thrust of govt on power sector reforms through its various programmes, schemes, policies and regulations the future prospects of power sector looks very encouraging. Ironically, during last year company has raised Rs.84 crore by way of issue of 15 lac equity shares @ Rs 560 per share on preferential basis to fund its organic and in-organic growth and long-term working capital requirements. After this, share price went up to hit a high of Rs 1000/- in Jan’08 but has now been slaughtered down by 90% to sub Rs 100 levels. Considering its encouraging performance for Sept’08 and H1FY09, GPIL may report sales of more than Rs 500 cr and PAT of Rs 35 cr on conservative basis. This translates into EPS of Rs 24 on diluted equity of Rs 14.80 cr. Although GPIL has a debt on higher side and scrip may continue to witness distress selling from Citigroup, Morgan Stanley & Merrill Lynch, still long term investors are recommended to buy at current levels as share price can double in 15~18 months.

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