Small & Beautiful (Guj)
Avantel Softtech (67.00) designs and manufacturers repeaters, filters, splitters, tappers, combiners, couplers & amplifiers to enhance the capacity and coverage of wireless communication networks for use in GSM, CDMA and 3G networks. Interestingly, it has developed customized solutions for INSAT based mobile satellite services with advance microwave, digital wireless communication and signal processing products for defence and commercial market. Hence it offers mobile satellite services for messaging, tracking and all locations based services with appropriate network security. Using this same technology it provides specialized products like Ship borne terminal, handheld terminal, S-band receiver, UHF transmitter, burst demodulator etc which are one of its kind. It has also signed a Transfer of Technology (TOT) agreement with ISRO for supply of hubs and satellite interactive terminals for EduSat networks. Thru its govt recognized R&D division, company has developed a number of products for defence sector by ensuring compliance of stringent defence standards. Being Q4 the best quarter for company traditionally, it may end FY08 with sales of Rs 35 cr and profit of Rs 5 cr i.e. EPS of Rs 10 on equity of Rs 5.15 cr.
La Opala (31.00) is among the very few well-established domestic crockery brand in the country with a range of 100 products including dinner sets, tea sets, coffee sets, soup bowls & spoons, mugs, plates, casseroles, flower vases and other table wares. Infact, it is the market leader with 50% market share in opal ware and 20% market share for crystal ware. It is having good distribution network with approx 50 distributors & 9300 dealers. Apart from having pan India presence company is also exporting to 30 countries across the globe including US, UK, Spain, Belgium, France, Germany, Japan, Dubai etc. In order to meet the growing demand and increase its market share company has recently set up a new fuel efficient unit of opal ware at tax free zone of Uttrankhand with a capacity of 4,000 MTPA at a cost of Rs. 35 cr. Hence company has more than doubled its opal ware capacity to 7500 MT from 3500 earlier. However, although company has started trial production in Sept 2007, but due to synchronization problem, this new plant is yet to operate its full fledge production. Hence FY08 will not be a great year but for FY09 it is estimated to clock sales of 75 cr and PAT of Rs 7.50 cr i.e. EPS of Rs 7 on current equity of 10.60 cr. A risk free bet.
KEI Industries (80.00), the second largest power cable company in India is engaged in manufacturing of high and low tension cables (HT and LT), control and instrumentation cables, house wires and stainless steel wires. In near future it plans to manufacture Extra High Tension cables which will serve the modern power transmission segment. It is also contemplating to move up the value chain from manufacturing and supplying cables to executing EPC contracts and manufacturing and supplying transformers. Last week company started commercial production at its new 100% EOU unit in Alwar-Rajasthan for manufacturing of HT and LT power cables. Hence it has increased its capacity by 10,000 Kms thereby taking the total cable manufacturing capacity to 50,000 kms per annum. Company has already registered excellent performance for the first three quarters and may clock a turnover of Rs 900 cr and PAT of Rs 52~55 cr for FY08. This translates into EPS of Rs 7 on fully diluted equity (post conversion of all FCCB) of around Rs 15.75 cr. But considering company’s recent expansion and future growth plans it is estimated to report an EPS of more than Rs 10 for FY09. Scrip can appreciate 50% in 12~15 months.
Shanthi Gears (70.00) is engaged in the manufacture of gears, gearboxes, geared motors and gear assemblies both standard and custom-made. Its product portfolio includes a range of worm gear boxes, helical & bevel gear box, geared motor, custom built gear box, mill gear box, open gearing, CNC machine tools and products for the textile industry. It also manufactures high precision gears for marine and aviation industries. It has recorded 25% growth in sales to Rs 176 cr and 30% rise in net profit to Rs 32 cr for nine months ending Dec 2007. Notably, company makes gearboxes of 250 KV for windmills and is looking for technical collaboration to manufacture higher capacity gears for windmills. On the back of strong industrial and economic growth company is sitting on a strong order book of more than Rs 100 cr currently. For FY08 it can clock a turnover of Rs 250 cr and profit of Rs 45 cr which leads to an EPS of Rs 5.25 on fully diluted equity of Rs 8.60 cr with a face value of Rs 1/- per share. Moreover for FY09 it has the potential to register an EPS of Rs 6.50 which means scrip is trading fairly cheap at P/E ratio of 10x times. Besides, company is having around 18 acres of surplus land in prime location of Coimbatore which can fetch handsome value once sold.
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