MUHURAT Picks (MT)
HBL Power System (150.00) is the engaged in design, development and manufacture of industrial & specialized batteries, allied electronic products and DC systems in India. Infact it is the market leader in VRLA (valve regulated lead acid) and NCPP (nickel cadium pocket plate) batteries and enjoys 50% market share of domestic telecom market. Moreover it is among the very few companies in the world making ultra high specialties batteries for military use like thermal, reserve and torpedo batteries. Ironically, it stands 3rd globally for Nicad Passenger aircraft batteries and ranks 2nd for industrial alkaline batteries. Apart from supplying various batteries for train lighting, air conditioned coaches etc, of late company has designed and developed wide range of microprocessor based signaling products and power systems to cater to the needs of Indian Railways. Recently company has put up two new factories at Vizianagaram and SEZ Vizag in Visakhapatnam under a capex of Rs 150. After posting an EPS of Rs 28 for FY08, company is set to clock an EPS of Rs 45 for FY09 with sales of around Rs 1250 cr and PAT of Rs 110 cr. It’s a screaming buy at current levels.
Aban offshore (750.00) is engaged in providing oil field services for offshore exploration and production of hydrocarbons in India and abroad. With 21 offshore assets it is among the top ten offshore drilling asset owners in the world. It possesses fifteen jack-up offshore drilling rigs, three drill ships, one floating production platform and a jack-up rig & drill ship each on bareboat charter. It is among the few global companies to facilitate oil exploration at water depths ranging from 250 ft to 7000 ft and drilling depths ranging between 20,000 ft and 30,000 ft. Having its footprint globally across 10 nation, company boast of serving leading global and domestic E&P companies such as ONGC, Shell Brunei, Shell Malaysia, Cairn Energy, Petronas Carigali, Exxon Mobil, Chevron, Hardy Exploration, Oriental Oil Dubai, ROC Oil China, and GSPC to name a few. Due to new vessel deployment and higher charter rate, it may clock a consolidated turnover of Rs 3250 cr and NP of Rs 500 cr. This translates into EPS of Rs 129 cr on diluted equity of Rs 7.75 cr. Meanwhile, maybe due to distress selling by FII’s share price of company has tumbled down to Rs 1000 levels from a high of Rs 5500 in Jan’08. Hence currently scrip is trading at a P/E multiple of merely 8x times which is grossly cheap for a company with such caliber. Keep accumulating at sharp declines.
Emco Ltd (45.00) is the third largest manufacturer of transformers in India and a leading player in electronic energy meters and turnkey electrical projects It offers widest transformers range from 5 kVA, 11kV right up to 315 MVA, 400 kV for power generation, transmission & distribution. It is one of the leading players in manufacturing special application transformers like furnace transformers (for Steel Industry), large rectifier transformers (for Chemical Industry) and traction and locomotive transformers (for Railways). With acquisition of Urja Engineers Limited, company can now construct EHV Power Transmission Lines upto 765 kV on a total turnkey basis and boasts of having a tower manufacturing facility up to 45000 MT/Annum. To maintain its growth momentum, company has decided to set up a transformer manufacturing plant in South Africa to meet the growing demand in the African region and neighboring countries. Presently company has an impressive order book position of Rs 1300 cr. For the latest Sept qtr sales grew by 25% to Rs 231 cr and net profit improved by 10% to Rs 11.30 cr. Accordingly it is expected to clock a turnover of Rs 1250 cr and PAT of Rs 70 cr for FY09. This translates into EPS of Rs 12 on current equity. At a modest discounting by 8x times share price can double within a year.
Bharati Shipyard (70.00), second largest private shipyards in India is engaged in design and construction of bulkers, cargo/container ships, tankers, dredgers, passenger vessels, chemical carriers etc. It has special expertise in construction of offshore support vessel required for oil exploration industry and is the sole Indian player with order of an oil rig. Currently, company boast of having an all time high order book position of Rs 4800 cr which is almost 7x times its FY08 revenue, thereby ensuring a strong revenue visibility. Apart from operating thru four shipyard as of today, company in the midst of Greenfield expansion of setting up two new yards at Dabhol (Maharashtra) & Mangalore (Karnataka) with an investment of more than Rs 1000 cr. Besides, it has entered into a 50:50 JV with the diversified Apeejay group to set-up a 250,000DWT large scale shipyard on the east coast of India catering primarily to cargo vessels. To fund its expansion plan, during 2005 BSL raised around Rs 450 cr in two tranches thru FCCB route to be convertible into equity at the rate of Rs 422 & Rs 498 respectively. Out of these more than 50% has already been converted and considering the current market price the chances for conversion of the balance bonds in near future are quite bleak. For FY09, BSL is estimated to clock a turnover of Rs 825 cr and PAT of Rs 65 cr without taking govt subsidy into consideration. This translates to an EPS of 24 on current equity of Rs 27.60 cr.
Numeric Power (280.00) is India’s leading manufacturer of uninterrupted power supply (UPS) systems, stabilizers and power conditioners. It also undertakes turnkey projects and offers end to end solution for SCADA/EMS package, large network of industrial process, power transmission support systems and distribution management. It has been ranked as No.1 online UPS manufacturer & power electronic company of the year for the last 15 years in a row by Soft Disk journal. It has also been ranked as No 1 offline UPS manufacturer for second consecutive year by the same magazine. Recently, it ventured into solar power generation using Photo Voltaic Modules and initially intends to develop solar hybrid UPS systems. Accordingly, it walked out of JV with SOCOMEC SA of France as it primarily prevented the company to tap the solar 3 phase UPS products. But at the same time it has developed its own products in higher range of 3 phase category which are fairly successful in the market. Considering its robust performance for Q1FY09, it may clock a turnover of Rs 450 cr and profit of Rs 45 cr i.e. EPS of Rs 89 for FY09. Fundamentally, company has very low debt on its book and has huge reserves making it a strong bonus candidate.
Sunil Hitech (65.00) is engaged in the niche segment of fabrication, erection & testing and commissioning of bunkers, ESPs, boilers, TG sets in the power plants, both in private & public sector. With a client list spanning BHEL, NTPC, Reliance Energy, Jindal Steel and Power, the SEBs of Maharashtra, Chhattisgarh and Madhya Pradesh, Sunil Hitech is also engaged in overhauling and maintenance to ensure proper functioning of plants, post-installation. The company also undertakes projects in the transmission and distribution segments. As on today it has an all time high order book position of more than Rs 1300 cr which is 4x times its FY08 turnover. Incidentally, company has an under leveraged balance sheet with a low debt equity ratio of 0.60x times and can raise more debt comfortably. So despite taking into consideration higher interest cost it may end FY09 with a topline of Rs 500 cr and PAT of Rs 20 on conservative basis. This translates into EPS of Rs 16 on current equity of Rs 12.30 cr. Secondly it has huge reserves to the tune of Rs 145 cr on small equity leading to a healthy book value of Rs 128. Against the net current assets of Rs 120 cr, company is available at a market cap of less than Rs 100 cr, making it a steal.
Aban offshore (750.00) is engaged in providing oil field services for offshore exploration and production of hydrocarbons in India and abroad. With 21 offshore assets it is among the top ten offshore drilling asset owners in the world. It possesses fifteen jack-up offshore drilling rigs, three drill ships, one floating production platform and a jack-up rig & drill ship each on bareboat charter. It is among the few global companies to facilitate oil exploration at water depths ranging from 250 ft to 7000 ft and drilling depths ranging between 20,000 ft and 30,000 ft. Having its footprint globally across 10 nation, company boast of serving leading global and domestic E&P companies such as ONGC, Shell Brunei, Shell Malaysia, Cairn Energy, Petronas Carigali, Exxon Mobil, Chevron, Hardy Exploration, Oriental Oil Dubai, ROC Oil China, and GSPC to name a few. Due to new vessel deployment and higher charter rate, it may clock a consolidated turnover of Rs 3250 cr and NP of Rs 500 cr. This translates into EPS of Rs 129 cr on diluted equity of Rs 7.75 cr. Meanwhile, maybe due to distress selling by FII’s share price of company has tumbled down to Rs 1000 levels from a high of Rs 5500 in Jan’08. Hence currently scrip is trading at a P/E multiple of merely 8x times which is grossly cheap for a company with such caliber. Keep accumulating at sharp declines.
Emco Ltd (45.00) is the third largest manufacturer of transformers in India and a leading player in electronic energy meters and turnkey electrical projects It offers widest transformers range from 5 kVA, 11kV right up to 315 MVA, 400 kV for power generation, transmission & distribution. It is one of the leading players in manufacturing special application transformers like furnace transformers (for Steel Industry), large rectifier transformers (for Chemical Industry) and traction and locomotive transformers (for Railways). With acquisition of Urja Engineers Limited, company can now construct EHV Power Transmission Lines upto 765 kV on a total turnkey basis and boasts of having a tower manufacturing facility up to 45000 MT/Annum. To maintain its growth momentum, company has decided to set up a transformer manufacturing plant in South Africa to meet the growing demand in the African region and neighboring countries. Presently company has an impressive order book position of Rs 1300 cr. For the latest Sept qtr sales grew by 25% to Rs 231 cr and net profit improved by 10% to Rs 11.30 cr. Accordingly it is expected to clock a turnover of Rs 1250 cr and PAT of Rs 70 cr for FY09. This translates into EPS of Rs 12 on current equity. At a modest discounting by 8x times share price can double within a year.
Bharati Shipyard (70.00), second largest private shipyards in India is engaged in design and construction of bulkers, cargo/container ships, tankers, dredgers, passenger vessels, chemical carriers etc. It has special expertise in construction of offshore support vessel required for oil exploration industry and is the sole Indian player with order of an oil rig. Currently, company boast of having an all time high order book position of Rs 4800 cr which is almost 7x times its FY08 revenue, thereby ensuring a strong revenue visibility. Apart from operating thru four shipyard as of today, company in the midst of Greenfield expansion of setting up two new yards at Dabhol (Maharashtra) & Mangalore (Karnataka) with an investment of more than Rs 1000 cr. Besides, it has entered into a 50:50 JV with the diversified Apeejay group to set-up a 250,000DWT large scale shipyard on the east coast of India catering primarily to cargo vessels. To fund its expansion plan, during 2005 BSL raised around Rs 450 cr in two tranches thru FCCB route to be convertible into equity at the rate of Rs 422 & Rs 498 respectively. Out of these more than 50% has already been converted and considering the current market price the chances for conversion of the balance bonds in near future are quite bleak. For FY09, BSL is estimated to clock a turnover of Rs 825 cr and PAT of Rs 65 cr without taking govt subsidy into consideration. This translates to an EPS of 24 on current equity of Rs 27.60 cr.
Numeric Power (280.00) is India’s leading manufacturer of uninterrupted power supply (UPS) systems, stabilizers and power conditioners. It also undertakes turnkey projects and offers end to end solution for SCADA/EMS package, large network of industrial process, power transmission support systems and distribution management. It has been ranked as No.1 online UPS manufacturer & power electronic company of the year for the last 15 years in a row by Soft Disk journal. It has also been ranked as No 1 offline UPS manufacturer for second consecutive year by the same magazine. Recently, it ventured into solar power generation using Photo Voltaic Modules and initially intends to develop solar hybrid UPS systems. Accordingly, it walked out of JV with SOCOMEC SA of France as it primarily prevented the company to tap the solar 3 phase UPS products. But at the same time it has developed its own products in higher range of 3 phase category which are fairly successful in the market. Considering its robust performance for Q1FY09, it may clock a turnover of Rs 450 cr and profit of Rs 45 cr i.e. EPS of Rs 89 for FY09. Fundamentally, company has very low debt on its book and has huge reserves making it a strong bonus candidate.
Sunil Hitech (65.00) is engaged in the niche segment of fabrication, erection & testing and commissioning of bunkers, ESPs, boilers, TG sets in the power plants, both in private & public sector. With a client list spanning BHEL, NTPC, Reliance Energy, Jindal Steel and Power, the SEBs of Maharashtra, Chhattisgarh and Madhya Pradesh, Sunil Hitech is also engaged in overhauling and maintenance to ensure proper functioning of plants, post-installation. The company also undertakes projects in the transmission and distribution segments. As on today it has an all time high order book position of more than Rs 1300 cr which is 4x times its FY08 turnover. Incidentally, company has an under leveraged balance sheet with a low debt equity ratio of 0.60x times and can raise more debt comfortably. So despite taking into consideration higher interest cost it may end FY09 with a topline of Rs 500 cr and PAT of Rs 20 on conservative basis. This translates into EPS of Rs 16 on current equity of Rs 12.30 cr. Secondly it has huge reserves to the tune of Rs 145 cr on small equity leading to a healthy book value of Rs 128. Against the net current assets of Rs 120 cr, company is available at a market cap of less than Rs 100 cr, making it a steal.
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