STOCK WATCH

With more than dozen of popular brands, JK Paper (17.00) 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. Notably, company has one of the strongest distribution networks which include 11 warehouse, 140 distributors & 2500 Dealers covering the remotest corners of India. Moreover, it is exporting to more than 40 countries including Sri Lanka, Bangladesh, Middle East, Africa, Australia, Singapore, Malaysia etc. For H1FY09 it has reported 40% growth in sales to Rs 546 cr but PAT remained flat at Rs 19 cr due to provisioning of unrealised foreign exchange loss of Rs 8.40 cr. At the same time company didn’t recognize Mark to Market unrealised gains on currency and interest rate swaps amounting to Rs 13.50 cr. Accordingly for FY09 it may clock a turnover of Rs 1100 cr and net profit of Rs 35 cr leading to an EPS of Rs 4.50 on current equity of Rs 78.20 cr. Although its debt equity ratio and interest cost is alarmingly high, investors can accumulate at sharp declines as it can appreciate 50% within a year.

Orient Papers & Industries (23.00) is a diversified company engaged in manufacturing of cement, paper and electrical appliances. It derives 60% of total revenue and 90% profit from cement segment which has an installed capacity of 3.40 million tonne. With its popular brands 'BIRLA A1’ and ORIETAL GOLD’ and having main market as Maharashtra and AP, company’s cement division is reportedly doing well. Infact to increase its market share, company is in the midst of augmenting its capacity to 5 million TPA by April 2009. It is also setting up a 50 MW captive power plant to bring down its power cost. At the same time on the back of strong demand for tissue paper, it is expanding its tissue paper manufacturing capacity from current 10,000 TPA to 30,000 TPA by April 2009. Having a market share of over 17% in the organized sector, its ORIENT PSPO brand of fans are quite popular. To cash on this brand, company has ventured into lighting products also and is now setting up a up a modern manufacturing facility for Compact Fluorescent Lamps at its Faridabad. Financially, in the last two years company has repaid most of its loan and has significantly brought down its total debt to Rs 165 cr from Rs 435 cr in 2006. As a result, it has a very healthy debt equity ratio of 0.16x times. For FY09, it may clock a turnover of Rs 1350 cr and PAT of Rs 150 cr i.e. EPS of Rs 8 on equity of Rs 19.30. Scrip can easily appreciate 50% within a year.

Emco Ltd (42.00) is the third largest manufacturer of transformers in India and a leading player in electronic energy meters and turnkey electrical projects It offers widest transformers range from 5 kVA, 11kV right up to 315 MVA, 400 kV for power generation, transmission & distribution. It is one of the leading players in manufacturing special application transformers like furnace transformers (for Steel Industry), large rectifier transformers (for Chemical Industry) and traction and locomotive transformers (for Railways). With acquisition of Urja Engineers Limited, company can now construct EHV Power Transmission Lines upto 765 kV on a total turnkey basis and boasts of having a tower manufacturing facility up to 45000 MT/Annum. To maintain its growth momentum, company has decided to set up a transformer manufacturing plant in South Africa to meet the growing demand in the African region and neighboring countries. Presently company has an impressive order book position of Rs 1300 cr. For the latest Sept qtr sales grew by 25% to Rs 231 cr and net profit improved by 10% to Rs 11.30 cr. Accordingly it is expected to clock a turnover of Rs 1150 cr and PAT of Rs 58 cr for FY09. This translates into EPS of Rs 10 on current equity. At a modest discounting by 8x times share price can double within a year.

Patels Airtemp (30.00) is engaged in the manufacture and sale of extensive range of heat exchangers such as shell & tube type, finned tube type and air cooled heat exchangers, pressure vessels, air-conditioning and refrigeration equipments and turnkey HVAC projects in India & marketing of equipments even outside India. It has technical collaboration with M/S. TEK FINS Inc. USA for design and manufacture of air cooled heat exchangers. It supplies to core industrial sectors like power, refineries, fertilizers, cements, petrochemicals, pharmaceuticals, textiles and chemical Industries. For future growth company is concentrating more on high value added engineering products and has even got its product the coveted ASME `U' Stamp authorization. Few months back it bagged an order of Rs 16 cr from Essar oil and presently boasts of having an order book of nearly Rs 50 cr. For H1FY09, company has done exceedingly well as its sales jumped up 40% to Rs 35 cr whereas profit shot up 50% to Rs 3.40 cr. Accordingly for entire year it may report sales of Rs 65 cr and PAt of Rs 5 cr leading to an EPS of Rs 10 on equity of Rs 5 cr. At a modest discounting by 5x times scrip can easily appreciate 50% within a year.