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!!! W E L C O M E !!!
In INDIA, people generally relate to stock market as “EASY MONEY” or “SATTA BAZAAR”. For them it’s purely a GAME or matter of sheer LUCK and nothing more than that. But seldom do they know, by following certain PRINCIPLES and taking INFORMED decision, this same platform has the power to take them from rags to riches. No doubt, it has a certain amount of RISK attached to it. But every business or investment has it. What more, the Finance Ministry has already made the long term capital gain as TAX FREE whereas the short term capital gain is taxed at merely 10%. On the economic front, India’s GDP is growing and is expected to grow at scorching pace of more than 8%. Unfortunately, even today our market is being ruled and dominated by FIRANGI’s money. But I can see, the day is not far when our general PUBLIC will change its perception and start putting MOST of their savings in equities as an ** Investment **.
Remember, "K N O W L E D G E" and "P A T I E N C E" are the key to success.
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SAARTHI

Sensex (LIVE- Intraday)

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Thursday, October 16, 2008

Elecon Engineering Company Ltd - Rs 48.00

Established in 1951, Elecon Engineering Company Ltd (EECL) is a leading manufacturer of bulk Material Handling Equipment (MHE) and Asia’s largest producer of industrial gear. From a modest start of design and manufacture of Elevators and Conveyors from which incidently, the company derives its corporate identity viz. "Elecon", it has grown over the years to be known as a pioneer of the concept of mechanized way of bulk material handling equipment in India. For more than 5 decades, EECEL 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. It has reputed clientele including NTPC, BHEL, NMDC, Tata Steel, ACC, Grasim, Jindal group, L&T etc. Having its manufacturing facility only in Gujarat, EECL operates thru following two business segments:

  • Material Handling Equipment Division (55%): Under this division, company is engaged in design, engineering, manufacture, supply, erection and commissioning of several MHE including trippers, wagon tipplers, stakers, reclaimers, crushers, feeders, scrapers, conveyors, roller screen, ship loaders, wagon loaders etc. Over the years EECL has gained special expertise in designing and execution of turnkey contracts for crushing, screening, stacking, blinding and reclaiming plants for bulk materials such as coal, limestone, iron-ore, bauxite, overburden, rock phosphate and fertilizer.
  • Industrial Gear Unit (45%): In India, EECL is the largest player in industrial gear with 26% market share. It manufacturers exhaustive range of helical gears, worm gears, planetary gears, hi-speed gears, coupling etc apart from gears motors for precision applications. Its product find application in virtually every industry engaged in manufacturing or in power generation field. It also has technical skill in providing customized gear boxes for steel mills, high speed turbines, sugar mills, marine vessels, coast guard ships, plastic extrusions, antena drives and for satellites in the Indian Space programme.
  • Wind Mill Division (New Business): With a strategy of diversification, last fiscal EECL started a new business of setting up of Wind Turbine Generator (WTG) farms and manufacturing of WTG gear boxes. It has signed technology tie-up agreement with Turbowinds NV, Belgium for the windmill farms. For certification of windmills upto 600-KW the company has signed an agreement with C-WET. Company has already executed couple of orders by setting up a 6 WTG wind farm in Gujarat and 4 WTG wind farm in Maharashtra. It has also 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. Apart from tax benefits corporate entities are now getting more & more conscious about green power and global warming. Since it’s a new venture, EECL is yet to prove its credentials but this sector holds tremendous potential for future growth and the management is betting on the same.

As on 30th Sept 2008, EECL 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. More importantly, management says that company is having live enquiries of around Rs 2500 cr which may get converted into firm order in coming months. Incidentally, company came out with its Sept’08 quarter result last week only. Sales improved by impressive 35% to Rs 252 cr but PBT remained flat at Rs 24 cr. After higher tax provision PAT declined by 7% to Rs 16 cr. Similarly for the H1FY09 it registered 35% growth in sales to Rs 421 cr but NP remained flat at Rs 28 cr. So on conservative basis, 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. Last year, company gave 2:1 bonus due to which its equity got expanded to 18.60 cr from Rs 6.20 cr. In line with general market sentiment, share price of this company has also collapsed to sub Rs 50 levels from high of Rs 340. Despite this investors are advised to buy at declines in the range of 35~40 Rs for a price target of Rs 75 in 15 months.

Posted by S A A R T H I at Thursday, October 16, 2008

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