STOCK WATCH

Krone Communications (120.00) is a 62% subsidiary of US based ADC Telecommunications, which is world leader in communications network infrastructure and has presence in over 150 countries worldwide. Thus, Krone provides the connections for wireline, wireless, cable, broadcast and enterprise networks in India. Its innovative network infrastructure equipment and professional services enable high-speed Internet, data, video, and voice services to residential, business and mobile subscribers. Besides structured cabling solution, it also offers Wi-Fi and Wi-max solutions. In addition, the company enables wireless carriers to get more from their networks with its Digivance™ radio frequency transport solutions and ClearGain® tower-mounted amplifiers. Because of its hi-tech professional service its clientele includes corporate giants like Bharti Televentures, Reliance Infocom, Tata Teleservices, Siemens, HFCL Infotel, TCS, Alcatel, Cognizant, Lucent, etc to name a few. For FY07 ending Oct 2007, it reported 15% growth in topline as well as bottomline to Rs 93 cr and Rs 8 cr which translates into EPS of Rs 17 on small equity of 4.60 cr. Even for Q1 FY08, it registered 20% growth in NP despite 35% lower sales. Accordingly it is expected to post an EPS of Rs 20 for FY08. That means this debt free MNC is available at a very cheap discounting of 6x times.

Belonging to Duncan Goenka group, Stone India (98.00) is undisputed leader in locomotive brake systems and has a huge range of mechanical and electrical products for the railroad industry. It boasts of having its own patented beam mounted brake system for all types for freight wagons. Off late, it has ventured into the railway electronics business through introduction of a slew of high value power electronic products like inverters, converters and power supply system for coaches, locomotives, EMUs and metros. Currently, company generates about 90 per cent of its revenue from railways and has a market share of about 25-30 per cent. It has appointed Telewira Tegas SDN BHD, Malaysia, as an exclusive agent for turnkey project work relating to freight car, passenger coach and locomotive up gradation and maintenance for Malaysian railways. Recently, it has partnered with Sumitomo group Japan for manufacturing of air springs which are technically far superior to the existing mechanical suspension system. Importantly, to diversify its product portfolio, it has set up a greenfield facility at Nalagarh, Himachal Pradesh which is likely to go on stream shortly. Hence for entire FY08 it is expected to register sales of 100 cr and PAT of 13.50 cr i.e. EPS of Rs 18 on equity of 7.60 cr. Scrip has the potential to double in 12~15 months

Promoted by Delhi based Bali family, Mount Shivalik (65.00) specializes in production of strong as well as mild beer and markets then under various brands across India. ‘Thunderbolt’, ‘Torpendo’, ‘Punjab Extra Strong’& ‘Stroh super strong’ are its popular brand under strong beer category, whereas ‘Golden Peacock’ & ‘Stroh’s Premium Lager’ are its mild beer brands. It also has the privilege to brew and market “Cobra” beer which is one of the most popular beer brands in the UK. With an intalled capacity of 300,000 hecto litres per annum it is the single largest manufacturing unit of beer in Rajasthan. Looking at its first nine months performance, company may this fiscal with sales of Rs 100 cr and PAT of Rs 6 cr. This translates into EPS of Rs 10 on current equity of Rs 6.05 cr. Despite such strong brand value and encouraging performance, company is available at an enterprise value of less than Rs 50 cr. Moreover, several foreign and domestic majors are looking to acquire majority stake in Mount Shivalik group and hence to get better valuation company is considering to restructure and consolidate its brewery business and may even merge its unlisted entity with itself. Keep accumulating at declines

Tera software (48.00) 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. In consortium with Electronics Corporation of India Ltd, company has bagged huge e-governance order, taking its total order book position to around 250 crore to be executed in next five years. Recently, company has been selected as empanelled vendor for rollout of IT services in govt sector through National Informatics Centre Services Inc. for a period of one year which can be extended for another one year. Considering its excellent nine month figures, company is estimated to report total revenue of Rs 75 cr and PAT of Rs 16 cr i.e. EPS of Rs 13 on equity of Rs 12.50 cr for FY08. Whereas for FY09 it has the potential to report an EPS of Rs 16. Despiite such strong fundamentals investors are selling the scrip in fear of rupee appreciation without knowing that company derives 100% of its revenues from the domestic markets. Hence it is totally unaffected by any sort of rupee appreciation against US dollar. Moreover company has few acres of surplus land in Hyderabad, which it plans to either sell or enter into JV with infrastructure company. A total risk free bet at current levels.