Small & Beautiful (Guj)

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In the last few months, price of newsprint have shot up nearly 40% and is being sold at more than Rs 35000 per tonne. This augurs well for Rama Paper (25.00) as it derives nearly 60% revenue from newsprint segment. Its 6 MW co-generation captive power plant is fully operational now. Further company has undertaken expansion project of putting MG Machine to manufacture Tissue / Poster Paper thru a capex of Rs 24 cr. In the last two years, promoter have infused more than Rs 15 cr of their own money by taking preferential allotment of 45 lac equity shares @ 35 Rs per share. However, despite 500 basis point improvement in operating margin, company reported flat numbers for FY08 due to substantial increase in interest & depreciation cost. Its sales and PBT remained flat at Rs 84.50 cr and Rs 8 cr respectively. But, on the back of lower tax provisioning its PAT was up 90% to Rs 7 cr posting an EPS of Rs 7 for FY08. It is expected to declare 10% dividend which means a good yield at CMP. But at sharp declines.

Pondy Oxides (23.00) is one of the India's leading metallic oxides and plastic additives producers. It is basically engaged in manufacturing of Zinc oxide, Lead sub Oxide, Litharge Red lead and solid and liquid stabilizers of PVC. Infatc it boasts of number one position in the industry with a market share of about 30% in Plastic Additives division. Recently company declared robust nos for the March quarter. Sales jumped up 30% to Rs 41 cr whereas net profit increased by 60% to Rs 1.30 cr. Accordingly it ended FY08 with sales of Rs 170 cr and PAT of Rs 4.50 cr registering an EPS of Rs 4.50 on equity of Rs 10 cr. To concentrate on its core business it has decided to dispose of its battery unit in Tamilnadu. Last year company got itelf backward integrated by setting up manufacturing unit for Lead smelter thereby minimizing the cost of input to the optimum level. For FY09 it may clock a turnover of Rs 200 cr and profit of Rs 6 cr i.e. EPS of Rs 6 on current equity. Its trading fairly cheap at an EV of around 40 cr.

Belonging to IFB Group, IFB Agro (65.00) is engaged in the production of Extra Neutral Alcohol (Rectified Spirit), IMFL and Marine Products. It boasts of having very successful and leading brands like Volga Vodka, Gold Cup Brandy, Blue Lagoon Gin & IFB Select Whisky under the IMFL segment. Company is also a pioneer in 50* UP category with bestselling brands like Baluba Rum, 3 Cheers Whisky & Russki Vodka. On the other hand its marine division, last year, launched its first ready to fry product "PRAWN POPS" and has plan to introduce more such products in the ready to cook and ready to eat segment. Infact its marine division is poised to become an integrated business and serve all the inputs from the farm to the final consumer. Although it reported poor nos for Dec qtr still for the first nine months sales increased by 15% to Rs 156 cr and NP stood at Rs 6.40 cr. Hence it may end FY08 with topline and bottomline of Rs 200 cr and Rs 10 cr respectively i.e. EPS of Rs 13 on equity of Rs 7.70 cr. Buy at sharp declines.

Notably, Ind Swift Lab (51.00) has already received the USFDA approval in Sept 2007 for its API manufacturing facility at Derabassi Punjab for Clarithromycin. Presently, exports constitute around 45% of sales with company having presence in 45-50 countries across globe. For future growth the company has a robust product pipeline of 25 products which includes few blockbuster drugs as well. It has successfully filed over 72 DMFs with the US, Canadian, UK and European Drug Authorities. Hence company has been aggressively expanding its capacity and has quadrupled its Gross Block to nearly 400 cr from 100 cr two years back. Accordingly it may end FY08 with sales of Rs 450 cr and PAT of Rs 25 cr i.e. EPS of Rs 11 on current equity of Rs 22.80 cr. To fund its growth plan, company made a pref allotment of 28 lac warrants @ Rs 70 in March 2007 and recently allotted another 25 lac warrants @ 70 to promoter group. With a book value of whopping Rs 93 and expected CEPS of 18~20 Rs, scrip is trading extremely cheap at a P/E ratio of less than 5x times. It has the potential to double in 12~15 months.

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