STOCK WATCH

Vivimed Labs (40.00) 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. Last year 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. Recently, company 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 boast of having five manufacturing facilities spread across Karnataka, Andhra Pradesh & Uttaranchal. Considering its Q1FY09 nos and acquisition of UK company, company is estimated to report a consolidated sales of more than Rs 225 cr and net profit of Rs 17 cr. This leads to an EPS of Rs 18 on current equity of Rs 9.40 cr. It has raised nearly 60 cr thru FCCB route which may not get converted into equity considering the CMP. Accumulate between Rs 30 ~ 40 levels to get handsome gain over long term.

Being the Asia’s largest manufacturer of air compressors, Elgi Equipment (30.00) is involved with the design, development and production of exhaustive range of electric and diesel powered, centrifugal, reciprocating, borewell, railway air compressors etc. As air compressors are used in a wide range of applications, company caters to almost all sectors of industry. Besides it also derives 20% revenue from providing total service station solutions through the supply of a range of equipment and tools for two, three & four wheelers. Ironically company deals in or manufactures more than 128 equipments generally required by full-fledged garage. However to concentrate on each business segment company is hiving off its automotive equipment business into a separate wholly owned subsidiary called ATS-Elgi Ltd. Of late to cash on its rich experience company also started offering end to end mechanical engineering solutions and contract manufacturing services of precision engineered part to clients who are looking for cost-effective, subcontracting solution. It is also looking to increase it global presence for which it has formed a subsidiary in China and has also entered into joint venture with M/s. J P Sauer & Sohn, Germany for manufacturing air compressors. For FY09 it is expected to report a topline of Rs 450 cr and bottomline of Rs 35 cr i.e. EPS of Rs 6 on equity of Rs 6.30 cr having face value of Rs 1/- per share. A screaming buy at current levels.

Part of B M Thapar group, Greaves Cotton (75.00) is enaged in production of diesel/petrol/LPG engines for power generation, agro equipment & atumotive apart from manufacturing gensets, agro equipment and construction equipment. Besides, it is also engaged in marketing high technology systems for marine, aviation and electronic applications. In 2007, to increase its presence in global market it acquired, Bukh Farymann Diesel GmbH (renamed as Greaves Farymann Diesel GmbH) which is engaged in the manufacture and marketing of single cylinder diesel engines. However it is reporting loss due to weak economic condition in US & Europe. On the other hand Greaves Cotton is also facing lower demand in India for its automotive engine due to slowdown in 3 wheeler segment. But its infrastructure equipments business is doing exceedingly well. To keep the momentum going company has been expanding its product portfolio by introducing new products, tapping new markets and creating new manufacturing facilities. It has set up new units at Aurangabad, Pune and Gummidipoondi. Moreover the recent fall in all the commodity prices will ease some pressure on input cost. Although it may again report a sharp decline in NP for FY09 still it is estimated to clock a turnover of Rs 1350 cr and PAT of Rs 75 cr which leads an EPS of Rs 15 on equity of Rs 48.80 cr. At current EV of Rs 400 cr its worth a buy.

Being a 67% subsidiary of Honda Motor Co. Japan, Honda Siel (150.00) is the undisputed leader in the field of portable generators with its “HONDA” brand commanding more than 70% market share. Infact company boasts of launching India’s first LPG run gensets which is doing extremely well along with its super silent series. For the first time company has achieved the sales volume of over 100,000 Units (112,517 units) in domestic markets for FY08. At the same time to reduce the input cost, company has indigenised few of the critical parts of engine which it use to import earlier. Thus it has successfully reduced the import content to 19% from 22% and is further slated to bring it down to 15% in the current year. Moreover to consolidate the manufacturing operations company is shifting its Rudrapur (Uttaranchal) plant to its factory at Greater Noida in Uttar Pradesh. Although it may disrupt the production in short term but surely will beneficial in long term. Considering its encouraging performance for H1FY09 it may register sales of Rs 275 cr and PAT of Rs 24 cr i.e. EPS of Rs 24 on equity of Rs 10 cr. Financially, it is not only a debt free but a cash rich company holding more than Rs 100 cr as liquid cash. So at current market cap of Rs 150 cr investors are effectively getting this MNC company for Rs 50 cr i.e. at Rs 50 per share. Due to current market sentiment, its share price has fallen 50% which may motivate the foreign promoters to buy back and delist the company from Indian bourses. In case they don’t opt for delisting, then may give handsome bonus in FY10 being its silver jubilee year. A solid buy