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IMP Power (125.00) has come out with good set of nos for the June’09 quarter. Sales as well as PBT increased by 70% to Rs 52 cr and Rs 7.2 cr respectively. Due to lower tax provisioning its PAT quadrupled to 6.30 cr for the quarter. Thus for the full year ending June 2009 it recorded 40% growth in sales to Rs 190 cr and 70% increase in NP to Rs 15.70 cr posting an EPS of Rs 19 on equity of Rs 8.10 cr. Company is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. 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 last year doubled its production capacity from 3,600 MVA to 7,000 MVA. Further its in the midst of expanding it to 10,000 MVA in the current fiscal itself. Post this completion, company will be among the very few transformer manufacturers having the capability to make EHV power transformer up to 200 MVA in 330 kV class. Besides, company has also upgraded its Kandivali plant to manufacture complete range of analog meters in addition to high end meters like maximum demand indicator, trivector meter, multifunctional and kWh Meters. Recently company converted the preference share into equity shares @ Rs 161 per share thereby diluting the equity by 20% to Rs 8.14 cr. For FY10 ending June’10 it may report sales of Rs 250 cr and NP of Rs 18.25 cr i.e. EPS of Rs 22 on current equity. For FY11 it has the potential to post an EPs of Rs +30. A good bet for medium to long term.

For the June’09 quarter Vivimed Lab (90.00) has reported decent set of nos as sales was up 45% to Rs 48 cr and profit doubled to Rs 4.70 cr, thereby registering an EPS of Rs 5 on a standalone basis. Even on a consolidated basis its performance was encouraging with an EPS of Rs 7.40 for the quarter. Company is a speciality chemical manufacturer catering to segments including oral care, sun care, skin care, hair care, natural extracts, preservatives, anti microbial, anti oxidants, anti-aging molecule etc. Infact it is world’s 2nd largest manufacturer of Triclosan - an antibacterial used for oral care and one of the top three companies for Avis – a chemical which improves UV absorbing ability of Sunscreen. Earlier it acquired 100% stake in M/s James Robinson,UK which is an international manufacturer and supplier of speciality chemicals used in hair dyes, pharmaceuticals and photographic films/prints to ophthalmic sunglasses thereby making it a multinational company. Of late to increase its global presence, it has decided to acquire Har-met International Inc a small importer of pharmaceutical & cosmetic product, based in USA. Organically as well company has been expanding its capacity and has chalked out Greenfield expansion plan in Uttaranchal and Hyderabad. Presently it boasts of having five manufacturing facilities spread across Karnataka, Andhra Pradesh & Uttaranchal. For FY10 on a consolidated basis it may report a topline of Rs 325 cr and bottomline of Rs 25 cr i.e. EPS of Rs 25 on current equity of Rs 10 cr. Last month in Aug 2009, company completed the buy back of US$ 12.50 million FCCB and issued 5.6 lac equity shares for the balance US$ 2.50 million FCCB @ Rs 185 per share leading to equity dilution to Rs 10 cr. A solid bet.

Having an equity venture with Specialty Process LLC of USA and technical collaboration with Lubrizol Inc (formerly known as BF Goodrich), Astral Polytechnik (120.00) is the leading manufacturer of CPVC (chlorinated poly vinyl chloride) & PVC (lead free) pipes & fittings India. Due to inherent better properties, CPVC is replacing various traditional piping systems like galvanized iron and other metal pipes world over. Company being the pioneer in India and backed by reputed international brands like FlowGuard, Corzan etc is all set to rule the Indian market. Infact all the frontline organized players like DLF, Sobha, JP group, Kalpataru, Unitech, Parsvanath, etc are its regular customers. To cater the rising demand company has last fiscal doubled its pipe manufacturing capacity from 11,800 to 26,000 TPA. Further to enhance its product range company has recently launched underground drainage pipes, foam core pipes, drinking water pipes etc under various brand names. It is also planning to add Blazemaster Fire Sprinkler System, SWR Variants, Manholes and Inspection chambers in the current fiscal. Meanwhile company is also thriving to increase its export revenue and has even formed a JV with a Kenyan company. For FY09, company’s bottomline was hit due to rupee depreciation but for FY10 it may clock a turnover of Rs 275 cr and PAT of Rs 22.50 cr. This translates into EPS of Rs 20 on current equity of Rs 11.24 cr. Scrip can shoot up to Rs 200 within a year

Ratnamani Metals & tubes (110.00) has emerged as a single stop provider for the steel piping solutions for an array of applications required for the large projects in oil & gas and power sector in India as well as internationally. Further it is striving to be a major player for the titanium welded tubes which find applications in power plants, desalination plants and various other critical applications. Thus company is basically engaged in manufacturing welded and seamless stainless steel (SS) pipes & tubes, carbon steel (CS) LSAW, HSAW and ERW pipes. Apart from being a active player in domestic market, it also exports to USA, Canada, Chile, Germany, France, Japan, South Korea, Saudi Arabia, Oman, Qatar, UAE, Egypt, Kuwait, Italy, etc. Last fiscal company added 3,000 TPA of capacity in stainless steel tubes and pipes segment and 50,000 TPA of HSAW capacity through brown field expansion. It is further adding 50,000 TPA of HSAW in the current fiscal to take the total installed capacity to 4,20,000 TPA. Besides, as a part of forward integration, company has already set up a 3 layer polyethylene and epoxy coating line with capacity of 2.7 million sq mtrs. For FY10 company is expected to clock a turnover of Rs 900 cr and PAT of Rs 75 cr i.e. EPS of Rs 17 on equity of Rs 9 cr having face value as Rs 2/- per share. Keep accumulating at sharp declines.

Genus Power Infrastructure Ltd - Rs 200.00

Founded in 1994 Genus Power Infrastructure Ltd (GPIL) erstwhile Genus Overseas Electronic Ltd is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. It manufactures wide range of high-end programmable multi-functional intelligent single phase & three phase electronic meters with in-built advanced security and anti-tamper features such as AMR enabled meters, trivector meters, panel meters, time of the day meters, audit meters, etc. But importantly, over the last few years GPIL has significantly transformed itself from only a meter manufacturer to an entrenched power infrastructure player. It now derives more than 50% revenue from EPC power T&D projects where it provides absolute solutions for power transmission & distribution system. As a step forward, GPIL has also launched IT enabled distribution transformer metering system, feeder monitoring and management system, smart street light management system with value added software application for providing end to end solutions for energy management. Catering to giants like Reliance Energy, Tata Power, BSNL, BEL, DRDO, ITI and several state electricity boards, GPIL currently operates in following four verticals.

· Metering Solutions: GPIL manufactures high end programmable, multi functional & intelligent single phase and three phase meters with in-built advanced security and anti tamper feature. It deals in all types of electronic meters such as residential meters, industrial meters, agricultural meter, substation meters, audit meters, grid meters, group meters, special meters (prepaid / rail mounted) etc. It specializes in providing AMR solutions for comprehensive billing using PLCC, RF, GSM and GPRS technologies which ensures drastic reduction in power pilferage, less AT&C losses, effective load management, improvement in quality of power supplied, customer satisfaction and maximization of revenue generation.

· Engineering Construction & Contracts: GPIL has vast technical expertise for commissioning new substations (design, engineer, supply, installation, erection, testing and commissioning sub-stations) or working out capacity augmentation, renovation and modernization of existing substations. Being an EPC contractor it also executes turnkey T&D projects like setting up transmission towers, execution of civil work, laying of cables, installation of transformers etc. Company also undertakes rural electrification projects, energy accounting and auditing at all distribution levels, comprehensive billing solutions for utilities etc. Apart from power sector, company also provides SCADA solutions for water suppliers and industrial automation.

· Power Backup Solutions: GPIL boast of successfully introducing most advanced Sure Sine Wave inverter technology in India. Its revolutionary ASIC technology customizes wave form needed by different appliances hence ensuring 100% of their safety. It makes several inverters in the range of 400 VA to 100 KVA and for high load electronic system, it provides home UPS, online UPS and high frequency & line interactive UPS in the range of 3 KVA to 100 KVA. Although on a small scale, GPIL has also forayed into renewable energy segment with products like solar panel, solar inverters and solar water heater. Getting itself backward integrated and to offer complete power backup solutions, it is contemplating to launch a full range of batteries (lead acid, tubular, SMF) under the “GENUS” brand name.

· Hybrid Microcircuits: GPIL manufactures superior hybrid microcircuits which are used in all electronic components and find vast application across all the industries. The bulky printed circuit boards are becoming outdated and are now aggressively getting replaced with miniature hybrid microcircuits. Company has advanced design software such as VISULA, OrCAD for design of hybrid microcircuits and PCBs.

GPIL perhaps has one of the biggest manufacturing units of energy meters and power electronics in the country with its two plants located at Jaipur (Rajasthan) and Haridwar (Uttranchal). With a production capacity of 2 million pieces, company has till now installed more than 10 million electronic meters globally. Of late, to integrate its EPC business company has set up a new facility at Alwar (Rajasthan) for manufacturing of poles, distribution transformers, etc. with an investment of Rs 50 cr. It also entered into two joint ventures in Brazil to manufacture electronic energy meters & provide state-of-art AMR technology. Meanwhile it continues to export its product to over 20 countries and is now focusing meter export to SAARC, Middle East, African and Latin American countries, where power reforms are taking place in a big way. Thus GPIL has become a global player with manufacturing facilities in India & Brazil, marketing offices in Singapore & USA and a full fledged sourcing office in China.

Presently, GPIL has an order book position of Rs 1100 cr which is almost twice its FY09 turnover. Besides it has participated in tenders of nearly Rs 1200 cr, out of which it is ´L1´ bidder in tenders worth Rs 89 cr only. Sarcastically, these figures are way lower than last year bidding of Rs 8000 cr and L1 bidder of Rs 650 cr. As per unconfirmed reports, due to some execution as well as payment problems, company has cut down the bidding process significantly. This comes on the back of the fact that company recently wrote off Rs 36 cr as various deduction made by its customers on earlier sales of multiple years. As company provided this extraordinary expense only in audited accounts, the NP plummeted to merely Rs 13 cr against Rs 51 cr as unaudited net profit. So according for FY09 it reported audited sales of Rs 556 cr and audited PAT (after extraordinary item) of Rs 13 cr leading to an EPS of Rs 8.50 on equity of Rs 14.80 cr. However for Q1FY10 it reported 20% growth in revenue to Rs 120 cr but bottomline remained flat at Rs 8.00 due to higher interest cost. Thus it is expected to clock a turnover of Rs 700 cr and PAT of Rs 50 cr for FY10 i.e. EPS of Rs 34 on current equity. As scrip doesn’t look very cheap at current EV of Rs 600 cr, investors are advised to buy at sharp declines for a price target of Rs 280 in 12~15 months.

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Recently, Rama Paper (18.00) has started the commercial production at its new fourth unit with an installed capacity of 16320 TPA for tissue and poster paper. With this the production capacity of the company has now increased by nearly 40% from 44000 TPA to 60000 TPA. Currently company is working at almost 100% capacity utilization and has targeted to achieve 80% utilization for the new plant. So for FY10, it is estimated to overall record a ~25% volume growth. Moreover, company is already in the midst of modernization and up gradation of its existing three units. Further company is planning to get itself backward integrated and has accordingly bid for UP Co-operative sugar mill. For long term future growth company has aggressive plans, as it intends to double its total capacity by setting up 54,750 TPA Kraft paper manufacturing facility. Against the gross block of Rs 115 cr it has debt to the tune of Rs 63 cr leading to a debt equity ratio of 1.55x times. Last week company also took the shareholders approval to convert the preference shares into equity @ Rs 15 per share. This will lead to 35% equity dilution taking the equity share capital to Rs 13 cr. Although management claims to achieve a sales of Rs 150 cr and PAT of Rs 10 cr for FY10, but on a conservative estimate of 15% OPM it may register sales of Rs 130 cr and PAT of Rs 5 cr leading to an EPS of Rs 4 on diluted equity of Rs 13 cr. Ironically, management has not included the “Additional information pursuant to the provisions of Part IInd of Schedule VI of the Companies Act,1956” which is mandatory and relates to production, sales, raw material cost etc in the Annual Report 2008-09. Aggressive investors can buy for short term gain.

International Combustion (230.00) is a leading manufacturer of sophisticated plant and machineries like vibrating screens, feeders, sizers, conveyors, spiralling belt elevators, scooping belt conveyers, apron feeder, mining haulages etc for the core industries such as mining, steel, cement, petrochemical, construction, sugar, power, textile, paper, rubber, pharma, chemicals etc. It also offers complete grinding, classfication and drying system which can reduce many products by 95~98% or refine them below 10 microns. Under license from Danfoss Bauer, Germany, company markets comprehensive range of geared motors, gear boxes and electric motors. For FY09 it reported a topline of Rs 99 cr (up 5%) and bottomline of Rs 10 cr (down 15%) posting an EPS of Rs 41 on a very tiny equity of Rs 2.40 cr. Recently, company has acquired the global patent rights for the "Omni Screens" for all countries except South America from the collaborator M/s IMS of South Africa. Besides it has entered into a new agreement with ECUTEC to manufacture various new models of micro fine classifiers and Ball Mills for micro fine grinding, thereby enhancing the product range. However the management is not so aggressive and doesn’t have any major capex plan. Hence it’s a debt free company and infact holding liquid cash to the tune of Rs 18 cr that is equivalent to Rs 75 per share. So eventually one is getting the company at an EV of Rs 37 cr i.e. Rs 155 per share. To conclude although company may grow a CAGR of 10% still it’s a value buy at current levels. It’s a strong bonus candidate as well. Only long term investors are advised to keep accumulating at declines.

ICSA (205.00) boasts of developing innovative products suitable for power utilities in the field of energy management, energy audit, control application which identifies distribution losses, and help the power utilities reduce their costs & streamline their operations. The list of its popular product includes Intelligent Automatic meter reading, Distribution transformer monitoring system, Theft detection device, Energy audit services, Pole top & Micro remote terminal unit to name a few. Notably, products developed by the company also find application in other sectors including oil, gas, water, irrigation and mining which has thrown open a big opportunity for the company. On the other hand company has the capabilities in designing, supplying, transporting, erecting, testing & commissioning of 400/220/132 kV transmission lines & sub stations, outdoor & GIS sub stations on EPC. Whereas on the Turnkey basis it executes HVDC (High Voltage Direct Current) Distribution works, Rural Electrification works, Industrial Electrification works & construction of 33/11 kV Indoor & Outdoor Sub Stations. Meanwhile, government has undertaken incentive financing to enhance the commercial viability of SEBs which has forced the SEB to cut down their T&D losses thereby automatically creating huge demand for company’s product. Moreover, govt has also enhanced the allocation under APDRP scheme by 160% to Rs.2080 cr which augurs well for the company. Lately it has bagged huge orders to the tune of Rs 460 cr from Bihar and Maharashtra State Electricity Boards. It is expected to a turnover of Rs 1350 cr and PAT of Rs 165 cr for FY10. This works out to an EPS of Rs 35 on current equity of Rs 9.40 cr having face value as Rs 2/- per share. Keep accumulating at every declines.

Shanthi Gears (40.00) is a leading manufacturer of industrial gears, gearboxes, geared motors and gear assemblies. Infact, it is the second largest player in industrial gear segment with 20% market share. It caters to wide range of industries like power, sugar, paper, material handling, construction equipment, steel and cement industries with products ranging from worm gear boxes, helical & bevel helical gear box, geared motor, custom built gear box, mill gear box, open gearing, CNC machine tools to products for the textile industry. It also manufactures high-precision gears for the marine and aviation industry. lately, company has even started manufacturing gearboxes of 250 KV for windmills which has great potential. As company is in the process of revamping and restructuring the entire operational and organisational structure, it faced some labor problem which has been sorted out. Due to economic slowdown and revamping of operation its FY10 performance is expected to be lackluster. Moreover there are also rumors going on for quite long time that promoter has kept the company on the block and is looking for correct price to exit. For FY09, company had taken an exceptional hit of nearly Rs 7 cr as interest and forex loss towards redemption of FCCB during the Dec Qtr. Hence for the entire FY09 its sales was well as profit remained almost flat at Rs 253 cr and Rs 44 cr leading to an EPS of more than Rs 5 on the equity of Rs 8.20 cr having face value as Rs 1/- per share. Even for FY10, on a conservative basis it may report sales of Rs 200 cr and PAT of Rs 35 cr i.e. EPS of Rs 4.30. However for FY11 company is expected to be back on track and record an EPS of Rs 6.50. Buy only at sharp declines

Aditya Birla Chemicals (India) Ltd - Rs 75.00

Aditya Birla Chemicals Ltd (ABCIL), formly known as Bihar Caustic & Chemicals Limited was incorporated in 1976 as a joint venture between the Aditya Birla Group and the Bihar State Industrial Development Corporation, primarily with the objective of catering to the caustic soda requirements of Hindalco and to contribute towards the economic development of the backward region of Palamau district in Jharkhand. Today, it is among the leading caustic soda producer in the northern and eastern region of the country. Apart from caustic soda it also produces liquid chlorine, hydrochloric acid, sodium hypochlorite, compressed hydrogen and has recently ventured into aluminum chloride. In India, about 45% of the chemical industry depends upon the caustic soda industry as essential inputs for a host of industries like soap and detergent, aluminum, paper & newsprint, fibre, glass, tyre, chemicals & petrochemicals, pharmaceuticals, water treatment, dyes, textiles, oils, etc. However being a subsidiary of Hindalco Industries, ABCIL is having an added advantage of assured off-take of caustic soda by the parent company. It also has a hydrogen bottling facility which provides an additional stream of revenue. ABCIL is a member of several chemicals manufacturers' associations including Alkali Manufacturers Association of India (AMAI), Indian Chemical Council (ICC) and American Chemistry Council.

After shifting the manufacturing process of its plant from mercury technology to the energy efficient state-of-art membrane cell technology, ABCIL has been constantly expanding it capacity albeit at slow pace. Presently it boasts of having an installed capacity of caustic soda (300 TPD), liquid chlorine (250 TPD), hydrochloric acid (125 TPD), sodium hypochlorite (4 TPD) & compressed hydrogen gas (18,25,000 Nm3/A). Secondly, as caustic soda production is power intensive, ABCIL has put up its own 30 MW coal based captive power plant due to which its energy costs are lower than its peers. For value addition and effective utilization of chlorine, the company has commissioned 12,000 TPA aluminium chloride plant in the year 2007 and 17,500 TPA stable bleaching powder (SBP) plant in the year 2008. SBP is marketed under brand name of SHAKTIMAN and is basically used in textile mills for bleaching, sanitation, sewage systems, tanning process, organic synthesis and other applications. On the other hand aluminum chloride is mainly used as an input for manufacturing of aluminum apart from being used in pharmaceuticals, chemical intermediates, agrochemicals, dyestuffs and pigments, hydrocarbon resins, flavors and fragrances. Most importantly, with nearly 70% its production being taken by Hindalco, company has an assured and ready market for its product

Fundamentally, ABCIL is doing quite well as for FY09 it reported 20% growth in sales to Rs 205 cr although the PAT remained flat at Rs 46 cr. During the Sept’08 quarter the boiler of the power plant tripped due to mal functioning of safety device hence the power cost shot up for that period which dented its bottomline for time being. However the problem was rectified in the same quarter and post that company has been churning out good set of nos. Notably, ABCIL enjoys the highest operating margins among it peers - even better than Gujarat Alkalies and Chemfab Alkali. Even for the latest June’09 quarter its topline grew by 15% to Rs 60 cr and PAT improved by 20% to Rs 16 cr. It is one of the few companies which have been consistently reporting an OPM of ~40% and NPM of ~25%. For FY10 it is expected to clock a turnover of Rs 240 cr and PAT of Rs 60 cr leading to an EPS of Rs 26 on equity of Rs 23.40 cr. But despite belonging to such a reputed group and having strong fundamentals like high profit margin, low debt equity ratio, huge reserves, good dividend yield, consistent growth etc, scrip has been always poorly discounted by the marketmen. Currently it is trading at a forward PE multiple of 2.5x times and EV/ EBIDTA of 2x times. There is also a possibility of ABCIL getting merged with Hindalco industries. But if this happens, the true value of ABCIL wont be unlocked, as the merger ratio will more favorable to the parent rather than subsidiary. Still investors are recommended to buy at current levels as scrip can easily double within a year.

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To fund its future growth plans MIC Electronics (50.00) has decided to make preferential allotment of 1.65 cr warrants to promoters and others at the rate of Rs 44 per warrant. It is further contemplating to raise nearly Rs 150 cr thru QIP or FCCB route. Although this may lead to ~40% equity dilution but it will put the company on the fast track growth for coming years. MIC is a pioneer in design, development, manufacture & supply of true color LED Video Displays, LED Lighting products and solutions. Infact, it is the only integrated LED display manufacturer in India with design-to-manufacture capabilities. To cater the rising demand company is in the midst of tripling its total capacity to 50,000 modules from 15,000 modules. It is setting up a manufacturing unit for LED true colour displays, LED lighting solutions and solar based LED lighting products at Fab City SEZ near Hyderabad for which it has already been allotted 50 acre of land on lease. Lately, company has got the RDSO approval for its unique & innovative video cum train info display system thereby becoming the first and only company to get such approval. Couple of months ago it signed an MOU with IOC for marketing high efficiency Solar LED Lantern thru their rural retail outlets. Earlier company bagged a long term contract for display of advertisement thru 50 nos of LED display system in Delhi. For FY10 it may clock a turnover of Rs 275~300 cr and profit of Rs 60 cr leading to an EPS of Rs 6 on current equity of Rs 20 cr having Rs 2 as face value. However for the next 3~4 years, company has the potential to record a CAGR of ~30%. A solid bet with a nominal risk of downfall.

HBL Power (300.00) is a technology focused manufacturer of several ranges of specialized application batteries i.e. nickel cadmium (pocket, fibre, and sintered plate), lead acid (VRLA, Tubular, LMLA), silver oxide zinc, lithium, thermal, etc. 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 the world’s second largest player in nickel cadium alkaline batteries and stands 3rd for Nicad Passenger aircraft batteries. It also manufactures other power electronics such as thyristor controlled battery chargers, earth leakage monitors, battery monitoring systems, industrial chargers, uninterrupted power systems, distribution boards etc. It even has a dedicated railway division to execute end-to-end turnkey railway signaling works, starting from yard design, estimation, procurement, installation and commissioning. Recently it has put up two new factories at Vizianagaram and SEZ Vizag in Visakhapatnam under a capex of Rs 150 cr and is now setting up a small facility in Mahape, New Mumbai. It is also planning to set up of JV Company in Saudi Arabia to manufacture Industrial Batteries. For FY09 its topline grew by 30% to Rs 1244 cr and bottomline increase by 35% to Rs 91 cr leading to an EPS of Rs 37. It reported satisfactory nos for Q1FY10 and is expected to register sales of Rs 1200 cr and PAR of Rs ~85 cr i.e. EPS of Rs 35 on current equity of Rs 24.30 cr. At a reasonable discounting by 12x times, scrip can move up to Rs 420 within a year. Meanwhile just to improve the liquidity company has decided for stock split into face value of Rs 1/- per share.

KLG Systel (200.00) specializes in offering technological solution for entire business life cycle i.e. right from concept and creation, through plant design, project execution and management operations & optimisation to expansion/ revamp. It offers knowledge solutions mainly to oil & gas, process, power, metal, manufacturing and infrastructure sectors in India by providing a unique mix of industry domain expertise, software solutions, consultancy and training. It also provides on-line IT solutions to distribution utilities, using its self-developed software Vidushi, SG61 Technology and solution for determining the transmission & distribution losses, fixing the areas of power theft, on-the spot billing & cheque collection, increasing revenue collection efficiency of the utilities and addressing consumer grievances. Having partnered with world leaders like Autodesk, COADE, IBM, Invensys, Microsoft, Oracle, Primavera and SAP, company boast of having close to 1500 customers that include Top 500 Indian companies (both from the government and private sector) and the Indian arms of Fortune 500 companies. Notably, KLG is among the thirteen companies who have been empanelled as an IT Implementation Agency for three roles, System Integrator (SI), GIS Solution Provider (GSP) and Meter Data Acquisition Solution Provider (MDASP) for the implementation of Restructured Accelerated Power Development and Reforms Programme of Government of India. On the other hand company is creating a new Enterprise business unit to address enterprise projects management, asset management and optimization needs of large enterprise who design, create or maintain asset intensive infrastructure. For FY10 on a standalone basis, it may report total revenue of Rs 275 cr and NP of Rs 32 cr i.e. EPS of Rs 25 on current equity of Rs 12.60 cr. Accumulate only at sharp declines.

Panama Petrochem (120.00) is one of India’s leading manufacturers and exporters of petroleum specialty products with an installed capacity of 69000 MTPA. It manufactures more than 80 product variants consisting of transformer oil, liquid paraffin, petroleum jelly, cable jelly, ink oil, rubber process oil, and antistatic coning oil. It even has collaboration with Lubcon, Germany for distribution of their specialized products as well. Incidentally, company’s import of raw material is much larger than export of product. Hence during FY09, company was negatively impacted by the depreciation in rupee and took a hit of massive Rs 17 cr for full year. Because of this it’s PAT declined by 20% to Rs 11.60 cr despite sales improved by 60% to Rs 367 cr for FY09. On the other hand company’s tax outgo also increased since it enjoyed Income Tax exemption on profit of Daman unit only up to March 31, 2008. Thus, for future growth company is contemplating to set up a Greenfield plant at another tax free zone like Uttarakhand or Baddi. At the same time, it has also gone for an inorganic growth and has acquired a related private company called “Mobil Petrochem” by allotting equity shares. Accordingly, company’s equity got expanded to Rs 5.84 cr from 4.76 cr. However for Q1FY10 it reported 25% decline in net profit to Rs 5.40 cr whereas topline fell by 35% to Rs 62 cr. With rupee stabilization, company is not expected to take any further hit on forex loss in FY10 and is further slated to register sales of atleast Rs 325 cr and PAT of Rs 18 cr i.e. EPS of Rs 38 on expanded equity of Rs 5.84cr. Keep accumulating at declines.

Balaji Amines Ltd - Rs 105.00

Balaji Amines Ltd (BAL) was setup in 1988 for manufacturing of aliphatic amines in India to cater the growing requirements of value based specialty chemicals. Since then, it has emerged as the leading producer of methylamines, ethylamines and their derivatives. Importantly, BAL is among the few handful manufacturers across the world as amine manufacturing technology is a closely guarded process. And ironically company is using indigenously developed technology i.e. without any technical foreign collaboration. And remarkably, its one of the lowest cost producers of methylamines in the world. Today, it also produces specialty chemicals which are import substitutes like Morpholine, hydroxylamine, N-Methyl Pyrrolidone (NMP) etc and few natural products (herbal extracts) such as solanesol, calcium sennosoid, coleus forskohlii, camptothesin, Co-Enzyme Q-10, Tocopherols, Tocotrienols & SoyIsoflavones etc. Company’s products find application in various important industries including like pharmaceuticals, agro chemicals, water treatment, rubber chemicals, dyes & pigment, paper, explosives, rocket fuel oil refineries, photography etc. Besides, Morpholine - which is being manufactured by company for the first time in India through indigenously developed technology, finds extensive application in manufacture of corrosion protection compounds used in refineries, ships, steel plants etc. Being ISO 9001-2000 certified, company’s product are very well accepted in international market and it derives more than 20% of total revenue from export to several countries such as UK, USA, Canada, Latin America, Germany, Italy, Middle East, South Africa, France, Brazil, Mexico etc

BAL has two manufacturing facilities - one at Sholapur-Maharashtra for amines & derivatives and second one at Hyderabad – AP for natural products. Recently it has set up a third unit in Chincholi-Solapur, for production of Gamma Butyro Lactone (GBL), a raw material for manufacture of NPM with a name plate capacity of ~6500 TPA. With the commencement of this plant in July 2009, now BAL has, not to depend on import of GBL as its requirement can be fully met from captive production. This would reduce the cost of production of NMP and also enhance the product range to serve the domestic and export market. Interestingly, this GBL plant is first of its kind in India and is a 100% import substitute. Moreover, company has developed the manufacturing process in-house thru R&D with catalytic dehydrogenation. The hydrogen produced by dehydrogenation is further being utilized, for the first time in India for running the boilers. On the other hand due to constant expansion, company boast of having total combined installed capacity of 50,500 TPA for aliphatic amines and derivatives of amines. Against this company is working at less than 80% capacity utilization. It has strong presence in domestic market with major clients from pharma sector including Aurobindo, Aventis, Clariant, Dr. Reddy’s, Glaxo, Merck, Ranbaxy, Sun Pharma, Wyeth, Wockhardt, etc. Earlier it also entered into a long term strategic arrangement with BASF for supply of NMP. Notably, company is the only manufacturer for Morpholine and NMP with a monopoly status in India and hence, has set up a separate dedicated plant at Solapur to manufacture them.

Meantime, for future growth BAL is setting up Poly Vinyl Pyrrolidone (PVP) plant at Chincholi, Solapur, which will be again the first in India. Simultaneously it is also setting up 2.5 MW co-generation power plant at Tamalwadi, Solapur. Last fiscal it started power generation through windmill by establishing 1.5 MW windmill at Satara, Maharashtra. Further, it has always been the company's endeavour to continuously seek knowledge into newer products and technologies. It boasts of having two state-of-the-art R&D centers at both its plants. The R&D initiatives undertaken over the years have been one of the largest contributories in making the company a major player in speciality chemicals. Infact, for FY09 it has spent more than 5% of its revenue for R&D. Thus because of its strategic backward & forward integration, BAL has been able to maintain its status of one of the lowest cost producers.

Financially, company has been reporting very encouraging nos as sales has grown at a CAGR of 25% and PAT at a CAGR of 35% for the last five years. For FY09, its sales improved by 15% to Rs 252 cr and profit increased by 20% to Rs 15 cr. Thus it posted an EPS of Rs 24 on equity of Rs 6.50 cr. Incidentally, company is negatively impacted by the depreciating rupee as it imports lot of raw material, although to a great extent it gets mitigated due to exports. Most importantly, despite such volatility in raw material prices based on crude, BAL has been successful in maintaining a more or less stable operating margin. Even for Q1FY10 its PAT remained flat at Rs 5 cr despite reporting nearly 25% fall in sales. Accordingly for FY10 it may clock a turnover of Rs 250 cr and net profit of Rs 17 cr i.e. EPS of Rs 26 on current equity. At a modest discounting by 6x times, the share price can shoot up Rs 160 within 12~15 months. Investors are advised to buy keep accumulating at declines.

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Although Mazda Ltd (60.00) is not expected to record spectacular growth in coming year, still it’s a value buy at current levels. For FY09 it reported 35% rise in sales to Rs 80 cr and 40% increase in PAT to Rs 9.25 cr thereby posting an EPS of Rs 22 for FY09. Company is among the few engineering companies in the world, manufacturing very specialized, high technology and critical equipments for various industries like power, refineries, fertilizers, chemicals, nuclear, sugar, paper, food, pharma etc. Broadly its product profile is segmented into vacuum system, valve division, air pollution control equipment, crystallizers and evaporators. Notably, it has a technical collaboration with world renowned Croll-Reynolds Inc. USA, who holds 12% stake in the company. Besides engineering, it also has a Biotechnology division dealing in carbohydrates, rare sugars and miscellaneous bio-chemicals. Lately, it has diversified into business of manufacturing and exporting soft drink drink concentrates, essence, jams etc in a small scale. However for Q1FY10 it recorded 15% fall in sales and profit to Rs 15 cr and 1.70 cr respectively. Accordingly it may end FY10 with sales of Rs 80 cr and profit of Rs 8.75 cr i.e. EPS of Rs 20 on tiny equity of 4.26 cr. Fundamentally, company is on a strong footing with very low debt equity ratio and good reserves. At an Enterprise value of Rs 30 cr scrip and at a P/E multiple of 3x times, scrip is trading fairly cheap. Considering the market sentiment, one can even buy for good short term gains as well.

Accurate Transformers (80.00) is engaged in manufacturing of power as well as distribution transformers ranging from 1 MVA to 40 MVA - in up to 220 KV class. It is looking to venture into manufacturing of higher capacity power Transformers of 160 MVA in near future. It has expertise to carry out rural electrification project which involves the complete setting up of electricity in remote areas including the laying of lines, poles and substations. As per management company is working at very low capacity utilization due to high working capital requirement and shortage of funds. On a gross block of Rs 11 cr company claims of having 5 manufacturing plants with an installed transformer production capacity of 8000 MVA, of which 3000 MVA in Dehradun and Haridwar are relatively new and enjoy income tax and excise exemptions. For FY09 its sales improved by 10% to Rs 195 cr whereas net profit remained flat at Rs 7 cr thus posting an EPS of Rs 24 on a very tiny equity of Rs 3 cr. For Q1FY10 also it posted 10% improvement in sales as well NP to Rs 27 cr and 1.10 cr respectively. Sarcastically, company seems to have borrowed the funds at high interest rate resulting into substantial interest cost which eats up more than 50% of operating profit. Accordingly it may clock a turnover of Rs 210 and NP of Rs 8.50 for FY10 i.e. EPs of Rs 29 on current equity. Buy for short term gains.

Continuously for the last three quarters, SEAMEC (180.00) has been reporting terrific performance. For Q2FY09 i.e. June’09 quarter its revenue shot up 65% to Rs 100 cr whereas net profit increased 8 fold to Rs 60 cr from Rs 7.50 cr in the corresponding period last year. For H1FY09 company has already clocked an EPS of Rs 36 till now. Despite such powerful performance, marketmen are skeptical of its future profit margin, as to at what rate company will hire out its vessels. But considering the current trend and improvement in demand for such vessels, it seems that company will be able to clock some long term deals at healthy charter rates. As of now, company’s all four vessels are deployed and none of its vessel is expected to go for dry dock in the current fiscal. Even for next fiscal, chances of dry dock of any vessel are quite negligible. Fundamentally, its not only a debt free MNC but also a cash rich company having potential to generate Rs 60 ~ 70 cr cash thru core business operation. Although H2FY09 may not be as good as H1FY09 still it may clock a turnover of Rs 350 cr and PAT of Rs 170 cr for FY09 ending Dec’09. This translates into EPS of Rs 50 on equity of Rs 33.90 cr. Investors can accumulate this scrip at sharp declines for a price target of Rs 280 within 15 months

Cosmo Films (100.00) is one of the dominant players in the Bi-axially Oriented Polypropylene Films (BOPP) market in India with a 23% market share and also one of the lowest cost producers of BOPP films in the world. It currently boast of having an installed capacity of 56000 MTPA of BOPP films, 21000 MTPA of thermal lamination films & 3000 MTPA of metallized films. Importantly, company is the only Indian player to manufacture thermal laminated films which is a high margin business. Despite demand supply mismatch, company is working at 100% capacity and is further expanding its BOPP capacity to 136000 MTPA & metalized films to 10500 in phases. It has even started a coating film with a capacity of 12000 MTPA last year. Recently company acquired GBC, a USA based company for Rs 80 cr. This company provides thermal lamination films and equipment in Europe, North America, Japan and the Pacific region and has sales of nearly Rs 500 cr. Post this acquisition, Cosmo Films has emerged as the global leader in thermal lamination segment. However considering its not so encouraging performance for Q1FY10 and fall in BOPP prices, it may end FY10 with sales of Rs 650 cr and profit of Rs 35 cr i.e. EPS of Rs 18 on current equity of Rs 19.40 cr. Meanwhile, the promoter group didn’t opt to convert the 31 lac convertible warrants which were allotted to them @ Rs 107 in Feb’08.

Gremach Infra Equipment & Projects Ltd - Rs 35.00

Incorporated in 1991, Gremach Infrastructure Equipment & Projects Ltd’s (GIEPL) main activity is to provide rental of construction/earthmoving machineries to medium & large construction companies who are engaged in the business of infrastructure developments like constructing of roads, airports, dams, power projects, mining activities, housing & civil construction and other related activities. GIEPL’s business is flourishing rapidly as it makes business sense for the construction companies to take these high cost construction equipments on a rental basis instead of blocking their capital in procuring equipments which may not be used for executing other projects. The other advantage of taking the equipment on rental basis is the availability of quality equipments without the hassle of their maintenance. Thirdly, with rapid technological developments, the cost of replacement of these equipments is also very huge and hence the developers now prefer to take equipments on rent rather to own them. Over the year, GIEPL has pursued a strategy of diversifying the selection of machinery/equipment according to different business segments in the infrastructure sector. In addition to renting its owned equipments, company also hires equipments owned by other parties and rent it out to its own clients. Infact, GIEPL has been deriving majority of revenue from renting of equipment which are exclusively owned by third parties. This is possible due to the fact that, company has established a very strong network so as to have a geographical reach as well as a diversified industrial and project segment.

Remarkably, GIEPL is among the handful of large player in the organized sector, which is presently being dominated by small unorganized players. But as the project location are diverse and the equipment requirement at various sites may vary, only bigger companies with strong financial muscle like GIEL can fulfill the requirement. Secondly, company has an edge over its peers as it has huge asset bank of heavy equipments ranging from compacters, rollers, concrete mixers, dozers, forklifts, loaders to excavators, PTR, dumpers, electronic sensor pavers, kerb laying machine, tunneling boomer, concrete batching and mixing plant. Moreover it also has a vast pool of skilled labour that include mechanical engineers, civil engineers, mechanical experts, technicians, and operators etc. who operate and maintain the equipment. Because of all these factors, GIEPL boats of having a very strong clientele base that includes all the major infrastructure players in the country such as L&T, Punj Lloyd, Shapoorji Pallonji, Gammon India, HCC, Gannon Dunkerley etc. Incidentally, company adopts direct marketing approach and has set-up a separate Tender department to procure contracts from public sector undertaking as well as from private clients. As of now, company has a centralized maintenance department & workshop in Kalamboli, Navi Mumbai spread over an area of 450 sq. mtrs each.

As a part of its diversification plan, GIEPL has taken 75% controlling stake in 11 Coal mine licenses in Mozambique having an aggregate 13,520 hectares (appx. 13.52 cr sq. mts) of land in prime region of Moatize, Africa. With the global shortage and crisis of hard coking coal, the future prospect of this business looks terrific. Infact in Oct’08 only company stuck coal in the range of 1~3 mtrs depth making it a full open cast mines. Moreover company expects the coal reserve to the tune of 200 million tonne in these mines which is huge. On the other hand witnessing a sharp jump in E&P activities earlier, company even entered into the business of renting of oil & gas drilling rigs. Accordingly it has signed the MOU for 40 on-shore rigs with China's biggest oil & gas rig manufacturer “BOMBO”. Simultaneously, company has also ventured into setting up of SEZ and has received formal approval for 100 hectares Metal SEZ at Kolhapur & another at Dhule in Maharashtra. Although in short term above diversification looks a drain on company’s cash flow, but in long term it may emerge as a sustainable and profitable business.

Meanwhile due to global liquidity crunch and a significant slowdown in domestic construction activity, GIEPL’s performance also took a hit. Its topline as well bottomline declined sharply in the last few quarters. However, of late the infrastructure development & construction activity has started picking up and the industry is expected to be back on growth track soon. To conclude, with govt’s special emphasis on creating physical infrastructure and massive investment being planned in coming years, company’s core business of renting equipment will do well. This concept is growing rapidly and gaining wide acceptance as the penetration level in India is quite low at 2%, compared to UK at 80% and North America at 35%. In order increase its equipment bank & fund other growth plans, GIEPL had raised almost Rs 200 cr in Feb 2008 thru FCCB route to be converted into equity @ Rs 376 per share. Subsequently conversion price has been reset to Rs 282 per share. Surprisingly in June 2009 when the scrip was trading at Rs 30 odd levels, more than 16% of the FCCB holders amounting to US$ 0.82 cr opted for conversion to equity shares @ Rs 282 per share. What made them do so, only they can reply. This is despite the fact that GIEPL has recently taken the approval for FCCB back in March’09. At the same time taking the benefit of crash in the share price, promoters went ahead and made an allotment of whopping 4.90 cr warrants in June’09 to themselves to be converted into equity at merely Rs 31 per share. And infact within the same month they opted to convert 1.8 cr warrants diluting the equity capital to Rs 34.40 cr currently. With this new preferential allotment of 4.90 cr warrants they will smartly let their old allotment of 1 cr warrants lapse which was to be converted @ Rs 123 per share. Despite Rs 55 cr fresh capital infusion, company is looking to raise more money thru other avenues like selling of old machinery, surplus land, ESOP, fresh debts etc to funds its other projects, capital expenditure and working capital requirement. Notably, its outstanding FCCB to the tune of Rs 165 will be due for redemption only in 2013.

Fundamentally, GIEPL reported 15% rise in revenue to Rs 295 cr but 30% fall in PAT to Rs 26 cr for FY09. Even for Q1FY10 it recorded 30% fall in topline to Rs 71 cr and 60% drop in bottomline to Rs 4.50 cr. However it is expected to clock bumper growth in coming years on the back of substantial capital expenditure and starting of commercial operation by its other divisions. Company has also highly leveraged itself with the debt equity ratio of more than 2.5x times. For FY10, it may clock a turnover of Rs ~375 cr and NP of Rs 25 cr leading to an EPS of more than Rs 7 at current equity of Rs 34.40 cr. Although no further FCCB conversion is expected, but the warrant conversion will lead to further 90% equity dilution to Rs 65 cr. So the fully diluted FY10 EPS works out to Rs 4. Considering the company’s growth plan and aggressive attitude, investors are advised to keep a close track on the share price and accumulate it between Rs 30~35 levels for handsome gain in long term.

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Its heartening to see that despite some disputes going on between Man Industries (48.00) & GAIL, the former has recently bagged Rs 200 cr from the latter. Few months ago Man Industries took GAIL to the court due to cancellation of one of the already confirmed orders. However, with this and another Rs 550 cr order from Middle East and Africa, company’s total order book position as on today stands at Rs 2500 cr. It is one of India's largest producers and exporter of large diameter Longitudinal submerged arc welded (LSAW) pipes and Helically submerged arc welded (HSAW) pipes. Infact it is the only company in India to manufacture 18 mtr long HSAW pipe. Of late, company has started a new production line for HSAW pipes with a name plate capacity of 200,000 MTPA thereby equalizing the total production capacity to 500,000 MTPA each for LSAW as well as HSAW. To become a global player, company is setting up a HSAW pipe manufacturing plant with an capacity of 300,000 MTPA in USA under a capex of Rs 400~450 cr. Although company was expected to report better margins due to softening of raw material cost but it didn’t and instead reported sharp decline in net profit to Rs 3 cr on sales of Rs 322 cr. Couple of months ago company made a preferential allotment of 25 lac warrants to promoter group to be converted @ Rs 35 per share. Despite poor Q1FY10 nos, company is expected to report sales of more than Rs 2000 cr and profit of Rs ~50 cr leading to an EPS of Rs 9 on expanded equity of Rs 27.85 cr hacing face value as Rs 2 per share. Keep accumulating at declines.

Diamond Power Infrastructure Ltd (180.00) is a leading manufacturer of transmission & distribution conductors, power & control cables & speciality cables. After the acquisition of Western Transformers in March’07 and Apex Electricals in July’07, company has also ventured into transformer production with installed capacity of 7500 MVA for power transformer and 5000 MVA for distribution transformer. For the June’09 quarter it reported marginally 5% decline in topline as well as bottomline to Rs 170 cr and Rs 14 cr. Couple of month ago it bagged a large power infrastructure project entailing electrification of north Cachar, Demaji and Kamrup districts of Assam to the tune of Rs 140 cr, thereby taking its total order book position to Rs 1150 cr. During June 2009 it also commissioned its horizontal lead extrusion facility of 66 kV, 132kV, & 220kV cables as partII of its cable expansion project at Vadodara. With this company is now among the select club of EHV cable manufacturers in the range of 11kV to 220kV. Company is further in the midst of expanding its low tension cables capacity from 8800 km to 30,000 km and is adding an EHV cable capacity of 2800 km for voltage upto 500kV maing it one of the largest power cable manufacturers in India. It is also investing 60 cr in setting up a facility for manufacture of Transmission tower with 48000 TPA capacity. All its project are expected to complete by Mar’10. Recently, L&T Infrastructure Finance Company Ltd has also agreed to extend a credit of Rs 50 cr to part finance the expansion project. For FY10 it may register sales of Rs 875 cr and PAT of Rs 75 cr i.e. EPS of Rs 36 on current equity.

JMC Projects (155.00) part of Kalpataru group, is among the top seven players for building and factory construction in India & has also been recognized as India’s one of the fastest growing company. It has successfully ventured into fields of turnkey execution involving civil, mechanical, electrical, HVAC, fire fighting, architectural and landscaping works. Lately, it has started focusing on infrastructure and power projects and is aggressively bidding for contracts to construct bridges & flyovers, roads & highways, railways stations, marine work, water supply & irrigation projects and construction of power plant. Despite significant slowdown in construction industry, company boast of having order book position of Rs 2200 cr (i.e. 1.7x times its FY09 turnover) of which nearly 50% consists of industrial construction/buildings segment, 30% of infrastructure related and 12% of power projects. It is also executing major fast track projects in Delhi for the Commonwealth Games 2010. For future it intends to take up railways, airports and water management projects on an EPC basis which will further add to its execution capabilities. For FY09 company clocked 45% growth in topline to Rs 1309 cr and 20% rise in PAT to Rs 37 cr posting an EPS of Rs 19 on equity of Rs 18 cr. Meanwhile for the recent Q1FY10, its revenue declined by marginally to Rs 292 cr but net profit remained flat at Rs 6.50 cr. Recently company has decided to come out with right issue of Rs 40 cr in the ratio of 1:5 @ Rs 110/- per share and is trading ex-right currently. For FY10 company is expected to clock a turnover of Rs 1500 cr and NP of Rs 42 cr i.e. EPS of Rs 19 on diluted equity of Rs 21.75 cr. Good for long term appreciation.

Ironically, most of the transformer manufacturers reported dismissal performance for the June’09 quarter and Voltamp Transformer (850.00) is no exception. It posted 50% fall in sales to Rs 104 cr whereas PAT declined by 35% to Rs 15 cr ofr the quarter. On the back of lower realization its operating margin also shrank to 15% against 20% last fiscal. However it is a leading manufacturer of customized transformers for industrial, building and power applications. It has special expertise in production of dry type vacuum resin impregnated (upto 3 MVA/11 kV class) and cast resin transformers (upto 7.5 MVA/33 kV class) apart from manufacturing regular oil filled power & distribution transformers, induction furnace transformers & unitized substations. Infact, company is the market leader in dry type transformers with around 40% market share. Unlike other transformer makers, VTL's focus is on the non-SEB industrial and engineering segment, which has enabled the company to restrict its debtors day to less than 2 months and thus better working capital management. Currently company is in the midst of putting up a Greenfield plan with an installed capacity of 4000 MVA thereby taking the total transformer manufacturing capacity to 13000 MVA. The plant is expected to go on stream soon. Although the margins may comparatively remain low but due to higher volumes in H2FY10 it is clock a turnover of estimated to end FY10 with topline of Rs 650 cr and bottomline of Rs 100 cr leading to an EPS of Rs 100 on equity of Rs 10.10 cr. But at sharp declines.

Oil Country Tubular - Rs 70.00

Incorporated in 1985, Oil Country Tubular Limited (OCTL) is among the world’s leading manufacturers & processor of oil country tubular goods specially required by oil drilling and exploration industry. Its expertise lies in production of wide product range of product such as drill pipe, heavy weight drill pipe, drill collars, production tubing, casing, tool joints, couplings, pup joints, nipples, subs, and cross overs. It also deals in oil field accessories such as rotary subs, lift plugs and lift subs, stabilizer sleeves, welded blade stabilizers & integral stabilizers and cast steel lifting bails. But broadly, company has segmented its product range into Drill pipes, production tubing & Casing pipes.

· Drill pipe, a seamless pipe is the principal tool, other than the rig, required for drilling of an oil or gas. OCTL is among the handful companies in India, manufacturing coated as well as uncoated drill pipes up to five and half inches.

· Casing pipes are the steel pipes, placed in an oil or gas well as drilling progresses to prevent the wall of the hole from caving in during drilling, to prevent seepage of fluids and to provide a means of extracting oil & gas. OCTL has the capabilities to produce casing pipes up to 20 inches outer diameter.

· Production tubing is also a tubular pipe but held inside the casing pipe to provide a continuous bore from the production zone to the wellhead in case the oil has stopped flowing naturally.

Presently, drill pipes constitute ~50% of total sales followed by 35% from casing pipes and 10% from production tubings. The rest 5% of revenue comes from services as OCTL also offers following facilities to its clientele:

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  Reconditioning of Drill Pipe


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  Re-threading of Drill Pipe


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  Internal Plastic Coating of Drill Pipe and Tubing


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  Make and Break of Tool Joints


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  Tool Joint Hardbanding


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  Tubing and Casing


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  Field Inspection of Tubulars.

At OCTL, the complete manufacturing & processing activity is concentrated in a single unique integrated plant located at Narketpally, Nalgonda and with corporate headquarters in Hyderabad, India. It boast of having an installed capacity of 10,000 TPA for drill pipes, 50,000 TPA for casing pipes and 15,000 TPA for production tubings. However against this total installed capacity of 75,000 tonne, OTCL produced only 25,000 tonne for FY09 leading to one third capacity utilization. Categorically, 75% utilization for drill pipes, 30% for casing pipes and 15% utilization for production tubings. The facilities at the plant include upsetting, heat treatment, non-destructive testing, metallurgical laboratory, gaging and calibration laboratory, tool joint and coupling threading, casing and tubing threading, friction welding of drill pipe, hydrostatic testing and internal plastic coating of tubulars. Importantly, OCTL is licensed by American Petroleum Institute (API) as processor/threader of casing & tubing, processor of drill pipe and manufacturer of rotary drill stem elements according to API specification. In addition to the manufacture of API Products, company is also a licensee for the manufacture of high performance premium connections which are basically threaded connections with a gas tight seal and the ability to handle high torque, tension and pressure. Being ISO/TS 29001 certified, company’s products are well accepted in the international market and it has been regularly exporting to Russia, Middle East, Far East and European countries. Infact it derives 50% of its revenue from exports. Domestically ONGC and OIL are its two biggest customers apart from other central and state govt companies. For future growth, company has planned to doubled its drill pipe manufacturing capacity to 20,000 TPA but it seems the planned has been dropped. Now OTCL is contemplating to triple its casing pipe capacity to 1,50,000 TPA in the current fiscal itself.

Being a manufacturer of oil country tubular products, OCTL’s fortune is mainly dependent on oil & exploration activities. With crude oil price shooting up at almost US$ 150, the oil exploration activities were at its peak in 2007. But post the economic meltdown & global recession in 2008, crude price as well as exploration activity has come down significantly. Thus the order book which stood at Rs 250 cr in March 2007 now stands at Rs 150 cr in March 2009. However the situation has improved to some extent in the recent past and the long term prospects of the industry looks promising. More importantly, OCTL made a smart turnaround in FY08 as its operating margin improved drastically and it also wiped out all its earlier losses. What more, in FY09 it has even made itself debt free and is now generating strong cash flows. For FY09 it recorded 25% rise in sales to Rs 420 cr but PAT zoomed up 125% to Rs 65 cr due to lower interest cost. This translates into EPS of Rs 15 on equity of Rs 44.29 cr. After a gap of more than 20 years, OTCL has returned back to dividend paying list by declaring 15% dividend for FY09. Despite challenging times, company has reported good nos for June’09 quarter as its revenue grew by 17% to Rs 72 cr and profit increased by 25% to Rs 14 cr due to lower tax provisioning. Considering all the factors, OTCL is estimated to clock a turnover of Rs 375 cr and net profit of Rs 60 i.e. EPS of Rs 14 for FY10. Further it has the potential to post an EPS of Rs 18 for FY11. Long investors are advised to buy at current levels and add on declines for a price target of Rs 110 in 12~15 months.

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Interesting Jindal Polyfilms (300.00), has recently approved a second buy back for an aggregate amount not exceeding Rs 73 cr at a maximum price of Rs 400/- per share from the open market. In the first buy back which it closed in April 2009, company bought back an aggregate of 32,34,492 equity share at an average market price of Rs 270.17 per share absorbing a total amount of Rs 87.38 cr. So it seems that company may actually buy back further shares which will restrict the major correction in the scrip. Incidentally company didn’t take the benefit of recent amendment in AS11 and provided huge forex loss to the tune of Rs 61 cr in P&L a/c for FY09. Despite that it recorded a PAT of Rs 124 cr on sales of Rs 1417 i.e. EPS of Rs 47 on standalone basis. Company is a leading player in flexible packaging, basically makes polyester films (BOPET), polypropylene films (BOPP), metallised films and coated films with in house ability to produce polyester chips (93800 TPA) for captive consumption. It is the only company in India to offer PVDC coated BOPP and Pet films having a capacity of 4500 TPA to manufacture PVDC, Acrylic and LTS coated films. Remarkably, company has been constantly expanding over the years and has further lined up aggressive expansions till 2011. For the latest June’09 quarter, company has posted good set of nos as it provided Rs 25 cr as forex gain leading to a net profit of Rs 85 cr on sales of Rs 381 cr. Even excluding the forex gain company has recorded an EPS of Rs 24 on current equity of Rs 24.90 cr which is quite encouraging. Purely on the operational front company can register sales of Rs 1500 cr and profit of Rs 160 cr i.e. EPS of Rs 64 for FY10. Keep accumulating at sharp declines.

Bharati Shipyard (150.00), 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 first Indian player to bag an order of an oil rig. However, the shipyard sector is going thru a bad phase as very few shipping companies are placing major fresh order for ships due to world economy slowdown. However company is having sufficient order position (of more than Rs 3000 cr) for next two years and by then the situation is expected to improve. Secondly the crude oil prices have also recovered smartly which will lead to continuation of increased E&P activities. But because of the ongoing slump in business, company has slowed down its Greenfield expansion and other capex plan. For FY09, its topline increased by 45% to Rs 934 cr but bottomline grew by 20% to Rs 125 cr due to significant increase in employee and interest cost posting an EPS of Rs 45. In May 2009 company acquired 15% stake in Great offshore and since then it has been constantly in news as it is competing against ABG shipyard to acquire Great offshore. As of now it holds nearly 20% stake in Great offshore against 8% held by ABG shipyard. Ironically ABG has made a counter open offer @ Rs 520 per share to acquire 1.26 cr shares of Great Offshore against companys open offer of Rs 405 per share. So even if company sells the 72 lac shares to ABG it will make a cool gain of Rs 155 cr on its investment.

Indag Rubber (50.00) has reported satisfactory result for the June’09 quarter. Sales as well as NP improved by 20% to Rs 23 cr & 2.30 cr respectively. Thus it posted an EPS of Rs 4.50 for the quarter. For the entire FY09 its sales marginally grew to Rs 76 cr but net profit declined by 10% to Rs 7.60 cr posting an EPS of Rs 15 on equity of Rs 5.25 cr. It declared 20% dividend for FY09. Company is one of the reputed players in tyre retreading business and has been benefitted to the drastic fall in prices of raw material like poly butadiene rubber, natural rubber, carbon black and rubber chemicals. Due to high prices of tyres, retreading of tyres has become all the more necessary as tyres retreaded with quality material give about the same mileage as new tyres and that to at a much lower cost per mile. On the other hand the concept of retreading is bound to grow in coming years being environmentally friendly. However the performance of the company will be vulnerable to commodity prices and hence scrip wont command very high premium. Buy only at sharp declines

By capitalizing all the forex gain/loss as per AS-11 amendments, JK paper (29.00) has reported decent set of nos for the June’09 quarter. Sales remained flat at Rs 261 cr and net profit stood at Rs 20 cr posting an EPS of Rs 2.50 for the quarter. Surprisingly it reported an impressive OPM of 23% due lower raw material cost. It will be interesting to see if company can maintain this margin going forward. For FY09 it had clocked a turnover of Rs 1077 cr and PAT of Rs 38 cr leading to an EPS of almost Rs 5 on equity of Rs 78 cr. With more than dozen of popular brands, company is India’s largest producer of branded papers and commands 40% market share in branded cut size papers. It is engaged in production of writing & printing paper and has recently ventured into high-end coated packaging boards. It operates two integrated plants in India with an total installed capacity of 180,000 TPA. Of late it has setup Rs 300 cr state-of-the art multi layer packaging board plant with an installed capacity of 60,000 TPA, thereby taking the total installed capacity to 240,000 TPA. But the most interesting aspect of the company is the high dividend payout ratio. Company has announced a dividend of 17.50% (against 15% last year) which translates into payout ratio of more than 35%. At CMP the dividend yield works out to more than 6%. However the record date has gone and scrip is trading ex-dividend now. So buy during corrections.

TIL Ltd - Rs 235.00

Established in 1944, TIL Ltd (erstwhile Tractors India Ltd) is one of the oldest and country’s leading providers of a wide range of technology intensive equipment for infrastructure development that represent some of the finest in global technology. It provides a complete gamut of support solutions ranging from equipment recommendation to total maintenance and repair contracts. Apart from manufacturing and marketing hi-tech equipments, TIL’s forte also lies in after sales service including equipment commissioning, inspection, overhauling and rehabilitation, training support, 365 days service and tailor made service contracts. It also offers field repair service and fleet maintenance management even if the equipments are deployed in the remotest location. And most importantly, TIL boasts of having a strong network of parts warehouses across various regions to minimize delivery lead time. Infact, its total stock of spare parts exceeds 2 lac line items which ensures that all the critical items are available off the self to its customers. Headquartered in Kolkata, company has four regional offices (Kolkata, Delhi, Mumbai and Chennai) and a network of 50 branches. Besides it has overseas office is in Phuntsholing (Bhutan) and subsidiaries in Nepal, Myanmar and Singapore. Its manufacturing locations are based in Kolkata (cranes, reach stackers and lorry loaders) and Ghaziabad (generator sets). To have cutting edge technology, TIL has several long term technical and strategic alliances with leading Equipment manufacturers in the world - Caterpillar Inc, Grove Worldwide USA, Manitowoc Crane Group - USA, Paceco Corp-USA [a part of Mitsui Engineering and Shipbuilding-Japan], FAMAK - SA, Poland. For effective management, TIL operates through following three strategic business groups

Material Handling Solutions (20%): This division designs, manufactures, markets and supports a comprehensive range of lifting and material handling equipment. Notably, it has many “first in India” to its credit – the first mobile yard crane, first truck mounted crane, the first rough terrain crane, the first 100 tonne crane to name a few. The broad product portfolio includes all types of Mobile Cranes, Lorry Loaders, Reach Stackers, Electric Level Luffing cranes, Rubber Tyre Gantry cranes, Lattice Boom Crawler cranes etc. The division caters to a wide array of infrastructure sectors such as Port, Aviation, Railways, Construction, Mining, Oil & Petrochemicals, Steel plants, Cement, Power and Defence through its product range. Presently, TIL is the undisputed leader commanding more than 60% market share in India and is infact the only manufacturer of higher capacity mobile cranes (40 tones and above) in India.

Construction and Mining Solutions (60%): This is basically the dealership division, as TIL represents “Caterpillar’ products across North and East India as well as Bhutan, Nepal and Myanmar. It markets, imports and services a comprehensive, range of equipment manufactured by Caterpillar- the world leader in construction and mining equipment. Remarkably, TIL partnered with ‘Caterpillar' in 1944 and since last 6 decades the bonding has only become stronger. The products offerings include Wheel Loaders, Backhoe Loaders, Excavators, Off Highway Trucks, Motor Graders, Track-Type Tractors, Compactors, Paving products, Wheel Dozers and Underground Mining equipment. Being a very reputed brand, the equipments are extensively used by the companies in mining & quarrying industry like coal, iron ore, metal and limestone. Its also popular in construction sector like building, Roads, Ports, Power (thermal and hydro), Airport, Urban and Rural infrastructure.

Power Systems Solutions (20%): For continuous and quality power and for critical standby applications, TIL offers a complete portfolio of diesel and natural gas generator sets powered by Caterpillar engines. The core focus products are diesel generators from 200 kVA to 3500 kVA and gas generators from 1000 kVA to 3500 kVA. It even markets only the engines for industrial, oil & gas, marine as well other applications. It also deals in engine and generator sets used for the Petroleum sector. Thus as a single source for complete power solutions, TIL provides application engineering, feasibility studies, supply chain management, onsite installation services, and uninterrupted product uptime thru on-site support & maintenance.

Apart from above three segments, TIL has of late started to focus on the global concept of providing equipment on Rent. In India, the rental business is gaining importance rapidly as it eliminates capital investments, risk of equipment idling, the need for cumbersome maintenance, as well as inventory management for the end users. To cash on this growing opportunity, company has already set up six rental stores in Sahibabad, Bhubaneswar, Asansol, Lucknow, Udaipur and Chandigarh. These rental stores offer new and relatively new rental equipment and reliable used equipment. To improve coverage and be close to the medium & smaller size companies, rental was also promoted from outlets in Dhanbad, Jamshedpur, Kolkata and Ranchi. Due to special thrust, company rented out more than 150 units for the first time in FY09 and is planning to grow this business at CAGR of 50% for next 5 years.

To maintain its growth momentum, TIL is in the midst of constructing a 5-star state-of-the-art component rebuild centre at Asansol-West Bengal, as per the Caterpillar standards. Simultaneously, it is also putting up a Greenfield plant for manufacturing cranes and other new products. Of the required 200 acres of land, the company has already acquired 100 acres of land at Kharagpur, West Bengal. The total capex is estimated to be Rs ~200 cr and may begin operation in FY11. Meantime, to enhance its product range and increase its customer base TIL has entered into strategic tie up with NACCO-USA for marketing its Hyster range of Big Forklift trucks, Container Handlers & Reach Stackers. Besides its has also entered into technical collaboration with Astec Inc – USA for manufacturing Double Barrel Hot Mix Asphalt plant, used in the road making industry and for crushing and screening plants for mining and construction industry. This new indigenization process under the technology transfer and licensing agreement from Astec will enhance TIL’s cost competitiveness and ensure faster delivery and better value proposition.

During FY09, the infrastructure industry in particular, was impacted because of the freeze on fresh capital infusion into projects of a large size, given the contracted liquidity situation across the globe. Ironically, the Indian construction equipment industry at US$ 2.3 billion, is a fraction of the global market, whose size is over US$ 75 billion. However, it has been growing at a frenetic pace of 30%, in sharp contrast to the world average of 5 per cent. Today, India is one among the top ten markets for construction equipment and is one of the key international markets. The Government of India's focus on infrastructure development is the single biggest driver for the construction, mining and material handling equipment industry. With government planning to invest Rs. 2,002,000 cr in physical infrastructure (railways, roads, ports, airports, irrigation, urban and rural water supply and sanitation) as per Eleventh Five-Year Plan, the future prospect of the company looks robust.

Financially TIL is doing well although it didn’t recorded spectacular growth as it did in FY08 due to obvious reasons. For FY09 on a consolidated basis it recorded marginal decline in sales to Rs 1037 cr and 7% rise in PAT to Rs 45 cr leading to an EPS of Rs 44 on equity of Rs 10 cr. However for Q1FY10 it reported flat bottomline of Rs 5.80 cr despite 10% fall in topline to Rs 163 cr on a standalone basis. But considering all the factors like revival in construction sector & fall in metal prices, TIL is expected to clock a consolidated turnover of Rs 1200 cr and NP of Rs 48 cr i.e. EPS of 48 on current equity. Recently, the 30 lac convertible warrants (@ Rs 326) which were issued in Dec’07 to promoter group & ENAM to fund the expansion got lapsed due to poor market sentiment. But it doesnt make much difference as company can easily raise debt and complete the project. Its debt equity ratio stands low at 0.50x. At current Enterprise Value of Rs 300 cr, TIL is trading grossly cheap at PE ratio of less than 5x times, EV/EBITDA of less than 3x times & Price/book value of almost 1x times. Investors are strongly recommended to buy at current levels for 50% gain within 12~15 months.

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For the latest June’09 quarter TIL Ltd (250.00) reported flat bottomline of Rs 5.80 cr despite 10% fall in topline to Rs 163 cr on a standalone basis. Company is engaged in three business segment namely construction and mining solutions, material handling solutions & power systems solutions. It has long term technical and strategic alliances with leading equipment manufacturers in the world- Caterpillar Inc, Manitowoc crane Group, USA Famak S.A, Poland and Paceco Corp, USA. Pioneering the manufacture of mobile cranes in India, company deals in hundreds of specialized construction equipment like excavators, loaders, pavers, rollers, concrete mixers, batch plants, forklifts, conveyors, tower cranes, crushing plants, dumpers, demolition equipments etc. To cater the global clients effectively it has set up subsidiaries in Singapore, Myanmar & Nepal etc which are doing well. For FY09 on a consolidated basis company has recorded sales of Rs 1037 cr and PAT of Rs 44 cr leading to an EPS of Rs 44 on equity of Rs10 cr. With government planning to invest Rs. 2,002,000 cr in physical infrastructure (railways, roads, ports, airports, irrigation, urban and rural water supply and sanitation) as per Eleventh Five-Year Plan, the future prospect of the company looks robust. Thus company is even setting up a Greenfield plant in West Bengal under a capex of Rs 175 cr which may get ready by late 2010. Meanwhile the 30 lac convertible warrants (@ Rs 326) which were issued in Dec’07 to fund this expansion got lapsed due to poor market sentiment. But it doesnt make much difference as company can easily raise debt and complete the project. For FY10, on a consolidated basis it is expected to clock a turnover of Rs 1200 cr and PAT of Rs 48 cr i.e. EPS of Rs 48 on current equity. A solid bet

Once again Jupiter Bioscience (48.00) has reported satisfactory performance for the June’09 quarter. Sales improved by 15% to Rs 33 cr but PAT remained flat at Rs 7 cr posting an EPS of Rs 4.50 for the single quarter. Even for FY09, company had clocked 10% rise in sales to Rs 143 cr and 20% increase in profit to Rs 32 cr thereby posting an EPS of Rs 20 on a standalone basis. Although the consolidated nos are not available but it estimated to be marginally better. Company is operating in a very niche segment and is among the few companies in the world to have competency in synthesis of peptides. The technology focus of the company has enabled it to develop more than 400 products in its catalogue and establish a leadership position in the peptide business internationally. It is poised to become a global peptide solutions group having a broad canvas of peptide chemistry products, peptide reagents, coupling reagents, protective agents and supplier of key ingredients used in peptide based pharmaceuticals. However few experts have concerns over the non performance of its subsidiaries despite considerable capital being employed into them. Despite this investors can accumulate the scrip at current levels. The days its subsidiaries start performing scrip will see a vertical rise.

After witnessing the worst time of its history, things are gradually improving for Phillips Carbon Black (100.00). Due to economic meltdown and slump in auto sector, demand for carbon black also nose-dived during late 2008 which forced the company to cut down the production. Moreover the carbon black prices also fell due to dumping & inventory clearance by international players. Incidentally, company’s capacity utilization for FY09 stood at merely 79% (against 93% in FY08). However in the last few months the price as well as demand has improved to some extent. Also anti-dumping investigation against import of carbon black from Thailand, Australia, China, Russia, etc. is in progress and it is expected to be concluded in due course during FY10. In the meantime company reported encouraging performance for the June’09 quarter. After reporting significant operating loss in the preceding two quarters it recorded an operating profit of Rs 32 cr (OPM of 11%) for this quarter. Interestingly it reported only 10% fall in sales and PAT to Rs 291 cr & Rs 20.50 cr respectively against corresponding quarter last year. In order to generate extra revenue from sale of power, company has put up a huge 30 MW power generation plant which commenced commercial operation from April, 2009. For future growth company is looking to expand its installed capacity by whopping 140,000 tonne thru Greenfield as well Brownfield expansion along with adding another 32 MW of captive power generation facility. In short, post all expansion by end of 2010, its carbon black production capacity will stand augmented to 410,000 MTPA and power generation capacity to 80.50 MW. Worth a punt.

Ironically, the net profit of Balaji Amines (85.00) remained same at Rs 5 cr despite 25% fall in topline to Rs 59 cr. It recorded a healthy OPM of 17% against 12% in the corresponding quarter last year. For FY09 its sales as well as net profit were up 15% to Rs 252 cr & 15 cr respectively. Company is among the few handful manufacturers across the world producing methylamines, ethylamines and their derivatives, as amine manufacturing technology is a closely guarded process. Ironically company is using indigenously developed technology i.e. without any technical foreign collaboration. It also produces specialty chemicals which are import substitutes like Morpholine,hydroxylamine, N-Methyl Pyrrolidone etc and few natural products (herbal extracts) such as solanesol, calcium sennosoid, coleus forskohlii, camptothesin etc. Infact couple of weeks ago it commissioned Gamma Butyro Lactone (GBL) plant with a capacity of 18 MT / day which is first of its kind in India and is a 100% import substitute. However being in a petrochemical industry with crude based feed stock, company’s performance is affected to some extent by the volatility in crude oil prices. For FY10 it is expected to register sales of Rs 250 cr and PAT of Rs 15~16 cr i.e. EPS of Rs 25 on equity of Rs 6.50 cr. Only long term investors can accumulate at declines.

Vivimed Labs Ltd - Rs 76.00

Incorporated in 1989, Vivimed Labs Ltd (VLL) is a speciality chemical manufacturer with prime focus on the Home and Personal Care (H&PC) segment. Its extensive range of speciality chemicals caters to segments including oral care, sun care, skin care, hair care, natural extracts, preservatives, anti microbial, anti oxidants, anti-aging molecule etc. In short company’s primary strength is in synthetic organic chemistry. Remarkably, VLL is the worlds 2nd largest manufacturer of Triclosan - an antibacterial used for oral care and one of the top three companies for Avis – a chemical which improves UV absorbing ability of Sunscreen. Thru acquisitions of Creative Health Care and merger of associated company VVS Pharmaceuticals & Pharmaceuticals Pvt Ltd, VLL has entered into the speciality pharma business as well. This specialty division has its inherent strengths in drug delivery and drug discovery with focus on providing cures in the oncology space, arthritis, syndrome X, macular degeneration, psoriasis and stress. Moreover, VLL is an active player in CRAM (Contract Research and manufacturing) segment providing vendor partnerships ranging from molecular research to collaborative manufacturing. It holds a unique position in the international H&PC industry with supply-chain relationship with global leaders including - Unilever, L'Oreal, Procter & Gamble, Johnson & Johnson etc. Having exclusive tie ups with global logistics companies, VLL has been offering shipment, warehousing, redistribution and door delivery services to large global majors. It has global network of offices, representatives and distributors across America, Europe, Far East and the Asia Pacific region.

Importantly, in May 2008 VLL acquired 100% stake in M/s James Robinson,UK (JR) which is an international manufacturer and supplier of speciality chemicals used in hair dyes, pharmaceuticals and photographic films/prints to ophthalmic sunglasses. Infact, one out of every three hair dyes in the world has a specialty chemical from JR. With manufacturing plants in UK, Germany and India, JR now a 100% subsidiary of VLL also offers a novel range of photochromic dyes for a wide variety of applications including ophthalmics, plastics, coatings and inks, and fluorescent dyes for both textile and non-textile applications. Thus this acquisition has seamlessly positioned VLL in the larger and high value space of high-end specialty chemicals. In order to avail the benefits of lower cost of production, manufacturing of most of the products of JR is being shifted to India.

As of today, VLL has two speciality chemicals plants – one in Bidar (Karnataka) and second in Hyderabad(AP). Apart from these it has three other pharmaceutical finished dose plants one each at Hyderabad (AP), Kashipur (Uttaranchal) and Haridwar (Uttaranchal) where it manufactures all types of solid oral, liquid orals, topical applications, small volume parenterals, cytotoxic etc. As the demand for end products in H&PC industry (like skin care, hair care, oral care products) is growing substantially, VLL is also witnessing robust demand for its chemicals. It has been constantly expanding its capacity and has chalked out capex plan for coming years as well. It has already bought land in Uttranchal for Greenfield expansion and another 23 acre land in Hyderabad to set up state-of-the-art R&D centre and pilot plant. Meanwhile its CRAM division, is focusing on exploring joint ventures / strategic alliances with manufacturers and IP companies in the specialty chemicals sector to partner in areas ranging from custom synthesis to commercial production. It offers contract manufacturing services from less than 1 metric tonne to more than 100 metric tonne. On the other hand its R&D section, is busy in researching and collaborating for creating new drug delivery systems with special thrust on anti-obesity dieting products, anti arthritic drug, anti-wrinkler, an anti oxidant, an anti cancer drug and an anti acne products. Notably, it has undertaken new formulations in urinary disorder and psoriasis treatment and the results are very encouraging.

Meanwhile, VLL is also open for inorganic growth. To increase its global footprint further and cut down the time to market for global customers, company recently in Dec 2008 finalized to acquire & merge Har-met International Inc, USA which is an importer of pharmaceutical and cosmetic ingredients since last two decades. To fund the JR acquisition and expansion plan, VLL had raised roughly Rs 60 cr thru FCCB of US$ 15 million in June 2007 to be converted @ Rs 185 per equity share. However out of this, company has now bought back US$ 12.50 million of FCCB with only US $ 2.50 million outstanding as on date. For FY09, on a consolidated basis VLL reported a turnover of Rs 280 cr (up 55%) and PAT of Rs 22 cr (up 40%) i.e. EPS of Rs 24 on equity of Rs 9.40 cr. Even for recent June’09 quarter it recorded 50% rise in sales to Rs 80 cr whereas net profit zoomed up 70% to Rs 7 cr. Accordingly for FY10, it is estimated to report a consolidated sales of more than Rs 325 cr and net profit of Rs 25 cr. This leads to an EPS of Rs 27 on current equity of Rs 9.40 cr. Investors are strongly recommended to buy at current levels as share price can double within 15 months.

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For the latest June’09 Genus power (190.00) reported 20% growth in revenue to Rs 120 cr but bottomline remained flat at Rs 8.00 due to higher interest cost. Company is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. It has diversified into engineering construction and currently derives more than 50% from EPC power T&D projects where it provides absolute solutions for power transmission & distribution system. As a step forward, company has also launched IT enabled distribution transformer metering system, feeder monitoring and management system, smart street light management system with value added software application for providing end to end solutions for energy management. For FY09 it had recorded 6% rise in bottomline to Rs 51 cr on 25% higher sales of Rs 586 cr thereby posting an EPS of Rs 35. Recently, company cancelled the 16 lac convertible warrants and forfeited the advance amount received as the allottee’s didn’t exercised the option of conversion. Now there is no outstanding stock position which can dilute the equity. As power sector being the least affected due to slowdown, company is having an impressive order book position of more than Rs 1000 cr which is almost double its FY09 revenue. Moreover it has participated in tenders of around Rs ~1300 cr, out of which it is already 'L-1' bidder in tenders worth Rs.283 cr. Accordingly for FY10, it is estimated to do sales of Rs 700 cr and net profit of Rs 55 cr i.e. EPS of Rs 37 on current equity of Rs 14.80 cr.

J Kumar (115.00) has once again reported excellent set of nos for the latest June’09 quarter. Total revenue jumped up 70% to Rs 153 cr whereas net profit increased by 60% to Rs 12 cr. Notably, company has been able to scale up its operation without any compromise on margin. Its OPM for the quarter stood at healthy 15%. For FY09 company had recorded 85% growth in topline to Rs 389 cr and 70% jump in bottomline to Rs 33 cr posting an EPS of Rs 16 on equity base of Rs 20.70 cr. Despite challenging times and overall slowdown company has been constantly bagging good orders. Last fiscal it had bagged huge orders to the tune of Rs 560 cr from MMRDA and MSRDC. Couple of months back it was awarded Rs 130 cr order for construction of nallah & Railway Bridge (Jogeshwari) in Mumbai. This week it has won another 155 cr order for construction of flyover and other dam/canal related marine project thereby taking its total order book position to nearly Rs 1300 cr. In order to fund its various project, company recently made a preferential allotment of 40 lac convertible warrants to promoters and others at the rate of Rs 60 per warrant. For FY10 it may clock a turnover of Rs 550 cr and PAT of Rs 38 cr which works to an EPS of Rs 15 on fully diluted equity of Rs 24.72 cr. Buy at declines only.

JB Chemicals (42.00) - flagship company of the Unique Group, manufactures and markets a wide range of pharmaceutical formulations, herbal remedies, bulk drugs, intermediates and radio-diagnostics products for domestic and international market. Headquartered in Mumbai, it has a large global presence with operations in over 50 countries across the globe. Exports contribute ~70% of total revenue with major chunk coming from key market like Russia/Ukraine/CIS countries. Infact it is one of the top three Indian companies in Russia with its flagship brand "Doktor Mom", being the most trusted and undisputed leader in its segment. Though company would continue to concentrate on its existing markets, it has identified South Africa, Australia, Brazil, Venezuela and other Latin American countries as future growth drivers. It has identified high potential for its herbal and ethical formulations in central European countries. In order to tap this potential, the company, during the year, has set up a wholly owned subsidiary in Romania. For the June’09 quarter its sales as well as net profit remained flat at Rs 139 cr and 13 cr respectively clocking an EPS of Rs 1.60 for the quarter. With an expected EPS of Rs 7 for FY10, scrip can be accumulated at declines.

Despite clocking good performance quarter after quarter, Aditya Birla Chemicals (64.00) is being ignored by the market for quite some time now. Even for the latest June’09 quarter its topline grew by 15% to Rs 60 cr and PAT improved by 20% to Rs 16 cr. It is one of the few companies which have been consistently reporting an OPM of ~40% and NPM of ~25%. Earlier known as Bihar Caustic, it is among the leading caustic soda producer in the northern and eastern region of the country having an installed capacity of 265 TPD of caustic soda, 200 TPD of liquid chlorine, 130 TPD of hydrochloric acid, 150,000 Nm3/day of compressed hydrogen and 3 TPD of sodium hypo chlorite. It has also set up a 25 TPD stable bleaching powder plant and 12000 TPA of aluminum chloride unit. To maintain its future growth, company is in the process of further augmenting the capacity of its caustic soda from 265 TPD to 300 TPD at a capital investment of Rs 30 cr. With nearly 70% its production being taken by Hindalco, company has an assured and ready market for its product. During Q2FY09, company faced minor disruption in production due to some problem in the power plant boiler which affected its bottomline. Hence, company is expected to report comparatively higher bottomline in the current quarter i.e. Q2FY10. And for entire FY10 it may post sales of Rs 240 cr and PAT of Rs 60 cr i.e. EPS of Rs 26 on current equity of Rs 23.40 cr. A screaming buy at current levels.