STOCK WATCH

Shree Ganesh Forgings (40.00) specializes in producing complete line of stainless steel, carbon steel and alloy steel forgings for various industries including automotive. Infact it boasts of making more than 2500 varieties of specialized items on piecemeal production and manufactures different variety of flanges and fittings weighing from 0.5 kg to 1000 kg. Last year company had acquired 100% stake in Hertecant N V Belgium & ELFE France from Outo Kumpu – Sweden which are reportedly doing well. Importantly its project to double the capacity from 11,000 tonnes to 22,800 tonne is almost completed. Two press machines with 2500 tonne and 4000 tonne capacity and 48 computer numerically controlled (CNC) robotic machining lines has been already installed. On a consolidated basis company is estimated to clock a turnover of Rs 225 cr and bottomline of Rs 17 cr for FY08 thereby posting an EPS of Rs 14 on current equity of Rs 12.50 cr. Scrip has corrected sharply from a high of Rs 135 and hence can easily appreciate 50% from current levels. Despite being a commodity scrip buy and hold it patiently.

Last week, TNPL (98.00) came out with decent ste of nos for the March qtr. Sales improved by 10% to Rs 250 cr and PAT increased by 25% to Rs 27.40 cr. For the full year also it registered 10% growth in turnover to Rs 939 cr and 30% rise in net profit to Rs 113 cr, thereby posting an EPS of Rs 16 on equity of Rs 69.20. Despite having significant debt on its book, company follows good dividend payout ratio and declared 45% dividend (incl. interim) for FY08 giving a yield of 4.5% on CMP. Notably, company has completed the phase-I of its mill development plan and its current production capacity stands at 260,000 TPA for pulp and 245,000 YPA for paper. By putting up a turbo generator of 20 MW and taking its total power generation capacity to 86 MW, company has made itself sel-reliant for entire power needs including additional power requirements for anticipated growth for the next few years. In order to further de-risk its exposure to volatile wood pulp prices, company is estimated to have raised its pulpwood plantation by another 12000 acres thereby taking the total to around 31000 acres. Moreover it is setting up a mini cement plant having a capacity of 400 tpd for producing high grade cement using the lime sludge and fly ash generated in the process of manufacture of paper. It is also contemplating to construct an IT Park measuring an office area of 4 lakhs sq. ft. on its surplus land in suburb of Chennai. A good bet in paper sector.

SEAMEC (150.00) is expected to register good growth in revenue for FY08 ending Dec 2008, as there will be no dry dock and all vessels will be working. Its first vessel is deployed with Dolphin offshore for two years @ US$ 23,333 per day, third vessel is hired by M/S Superior Offshore @ US$ 55,555 per day whereas fourth vessel has been let out @ US$ 105,555 per day to M/s Sime Darby Engineering, Qatar. However its second vessel is under dry dock due to explosion / fire and is expected to be ready shortly. Meanwhile company has reported poor performance for the first qtr ending March 2008 as it reported a loss of Rs 17 cr with a decline in revenue by 40% to Rs 35 cr. Still it is expected to register total revenue of Rs 250 cr and PAT of Rs 55 cr on conservative basis for CY08. On the back of robust outlook company is planning for 1 more acquisition of vessel by end of this calendar year. Due to strong cash flow and debt free status funding the acquisition is not an issue for the company. Although company is operating in a cyclical industry, still it deserves much better valuation and is bound to get re-rated on announcement of its June qtr nos. keep accumulating 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.