Small & Beautiful

Genus power (90.00) declared average result for the Dec’08 quarter. Sales improved by 15% to Rs 120 cr and PAT grew marginally by 7% to Rs 10.65 cr. Company is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. Importantly 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. Although company’s participation in tenders have come down drastically and it may bag fewer orders in future still as of now it has an order book of Rs 795 cr. Besides it has bid for tenders of more than Rs 1500 cr, out of which it is L1 bidder in tenders worth Rs 300 cr. So it can clock a turnover of Rs 475 cr and profit of Rs 35 cr for FY09 on conservative basis. This translates into EPS of Rs 24 on current equity of Rs 14.80 cr. Keep accumulating at declines

For the latest Dec’08 Roto Pumps (30.00) came out with satisfactory result as sales increased by 35% to Rs 14 cr although net profit declined marginally to Rs 0.70 cr due to higher interest cost. Accordingly sales for the first three quarters improved by 35% to Rs 39 cr and NP increased by 10% to Rs 2.25 cr. Company is a reputed manufacturer of progressive cavity pumps and twin screw pumps which have very wide application in agriculture, domestic and industrial sector. Besides India, it has warehouse cum marketing office in Australia and U.K. and also good network of distributors spread across the globe. Remarkably, company derives nearly 55% revenue from exports. However during Sept’08, it bagged approx Rs 4 cr order from L&T which is the single largest value order in the history of the company. To maintain its growth momentum, company is implementing an expansion cum modernization program for which it has been recently allotted an industrial land of 20,000 sq mtr by Greater Noida Industrial Development Authority in Sector ECOTECH – XII. For FY09 it may register a topline of Rs 50 cr and bottom-line of Rs 2.75 cr which translates into EPS of Rs 9 on a small equity of 3.09 cr. It is quite probable that company may maintain its 20% dividend for FY09 which leads to a yield of whopping 7%. Besides with 70% promoter holding and book value of Rs 45, scrip is trading fairly cheap at current EV of Rs 15 cr.

Diamond Power Infrastructure Ltd (90.00) registered 10% rise in sales to Rs 140 cr and 20% jump in NP to Rs 16 cr for the Dec’08 qtr. However the nine months figures are much encouraging as sales are up by 60% to Rs 493 cr and profit before tax has shot up by 70% to Rs 56 cr. However company hasn’t made any tax provision and will do at the end of the year. It 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. To cater the rising demand and increase it export revenue, company is setting up power equipment park spread across 110 acre in Vadodara which would have manufacturing facilities for 50,500 Mt of conductors, 48000 Mt transmission tower plant, 25,000 kms of LT cables, 3200 kms of HT cables and 3000 kms cables of EHV cables. The park expected to go on stream by Dec 2009, will also have space for setting up 50 ancillary units for power equipment manufacturers. Company has already achieved the financial closure for this 260 cr capex plan. Partners. Meanwhile for FY09 it may clock a turnover of Rs 675 cr and profit after tax of Rs 60 cr i.e. EPS of Rs 29 on current equity of Rs 21 cr. Incidentally, company has recently repaid the short term loan to the tune of Rs 40 cr to Clearwater Capital.

Despite the ongoing gloom & recession one company which posted stunning result is VST Tillers (135.00). Suddenly its operating margin has shot up in the last two quarters coupled with consistent increase in sales on QOQ basis. Even for the Dec’08 quarter its sales increased by 55% to Rs 70 cr whereas PAT shot up 140% to Rs 8 cr thereby posting an EPS of whopping Rs 14 for the single quarter. Cumulatively, for the first three quarters it doubled its net profit to Rs 18 cr on 50% higher sales of Rs 193 cr. However company is paying the highest income tax rate of nearly 35% which ensures the genuineness of profit. Company is a leader player in power tillers and also caters to the sub 20HP tractor segment with a niche market share in Maharashtra and Gujarat. To beat the competition, company itself imports and market Chinese make power tillers under the brand name “Dragon”. It is also selling Rice transplanters in the rice growing belts of India, which is slowly shifting in favor of these machines to overcome manpower shortage and reduce costs. Although the power tiller industry is growing at around 20% per annum, still much of the growth relies on govt subsidies and agricultural lending by banks. However the increase in central subsidy on power tillers augurs well for the company as govt has given special thrust in the 11th five year plan thru various schemes like Rashtriya Krishi Vikas Yojana, Integrated Tribal Development, National Food Security Scheme, Macro Management Scheme etc. It may end FY09 with sales of Rs 250 cr and profit of Rs 24 cr resulting into EPS of Rs 42 on equity of Rs 5.80 cr. Buy at sharp declines only.