STOCK WATCH

Tera Software (22.00) 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. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. In the first two quarters, company has already posted an EPS of more than Rs 4 and is expected to end FY09 with topline of Rs 75 cr and PAT of Rs 10.50 cr i.e. EPS of Rs 8 on equity of Rs 12.50 cr. It may declare 15% dividend for FY09 which gives a yield of 7% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Scrip can double in 12~15 months.

Hitachi Home & Life Solutions (45.00), a 68% subsidiary of Hitachi-Japan is amongst the top airconditioning companies in India with an installed capacity of 250,000 units per year. It maufactures high technological home and commercial air conditioners like window AC, split AC, concealed splits, ductables, chillers and specific telecom cooling solutions. To capitalize its brand equity and strong distribution network in India. company has also ventured in the business of trading for the refrigerators and washing machines. Its plant at Kadi, Gujarat is among the seven Hitachi room air conditioner facilities worldwide. Being a technology driven company, it has introduced several innovative products such as “ACE, IOTA, ATOM Square, Takumi” which are doing extremely well in the market. Its refrigerator and washing machines sales are also picking up. On the other hand its commercial air conditioning division is also on a rampant growth mainly due to the retail sector and mall culture expanding in a big way. Although there is general slowdown but demand for consumer durable continues to be satisfactory. Hence, company has planned a capex of Rs 45 cr for the current year to expand its line of business. After registering an EPS of Rs 9 for H1FY09, company is poised to report sales of Rs 525 cr and profit of Rs 35 cr i.e. EPS of Rs 15 on equity of Rs 23 cr for FY09. With such a strong brand value this debt free MNC is available extremely cheap at an EV of merely Rs 100 cr.

IMP Power (50.00) is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has been manufacturing transformers ranging from 10 KVA to 100 MVA upto 220 kV class. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has recently doubled its production capacity from 3600 MVA to 7000 MVA. With this company mow list among the top 10 EHV and power transformers manufacturing companies in India. Besides last fiscal, company has also upgraded its Kandivali plant to manufacture complete range of analog meters such as ammeter, voltmeter frequency meter, dynamometer type watt meter, power factor meter, phase sequence indicator, KVA Meter etc. in addition to high end meters like maximum demand indicator, trivector Meter, multifunctional and kWh Meters. After ending FY08 on quite a buoyant note, it has reported terrific nos for the Q1FY09. For the year ending June’09 it may clock a turnover of Rs 185 cr and PAT of Rs 11 cr i.e EPS of Rs 16 on current equity of Rs 7 cr. Scrip may shoot upto Rs 75 within a year.

Gayatri Project (85.00) is engaged in execution of major civil works including concrete/masonry dams, earth filling dams, national highways, bridges, canals, aqueducts, ports, etc. Although the company has executed various projects in different sectors of infrastructure, its expertise lies mainly in the road and irrigation sectors. Of late company has moved up the value chain and is executing five lucrative BOT road projects having very healthy IRR of around 14%. It has also entered into joint ventures with DLF for construction of road on BOT basis and with ION Exchange for water transport projects. For the Sept’08 quarter its revenue increased by 45% to Rs 207 cr and PAT grew by 25% to 8.50 cr. Incidentally, it has already posted an EPS of Rs 20 for H1FY09. And as of now, it boasts of having a massive order book position of more than Rs 3000 cr which is 4x times its FY08 turnover thereby providing strong revenue visibility. Notably, irrigation projects constitute 30%, transportation projects 60% and industrial building constitutes the balance 10% of order book. Thus for FY09 it may register a topline of Rs 950 cr and profit of Rs 30 cr i.e. EPS of Rs 30 on current equity of Rs 10.10 cr. However, the huge debt of Rs 450 cr on its book is a cause of concern.