STOCK WATCH

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.

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.

For the latest Dec’08 quarter 3i Infotech (25.00) reported encouraging set of nos as its total revenue grew by 90% to Rs 616 cr and PAT increased by 40% to Rs 70 cr on a consolidated basis. Accordingly for the nine months ending Dec’08 it has posted a topline of Rs 1694 cr and bottomline of Rs 200 cr which means company has already clocked an EPS of Rs 14 in the first three quarters. As on date, company has a pending order book position of more than Rs 1400 cr to be executed in next one year. Despite this scrip is hitting all time low. To maintain its organic growth, company is in the midst of opening 255 new service centres in tier-II and tier-II cities to help banks and financial institutions in decreasing the processing time for various back office operations. It has also bagged a huge contract from Central govt for setting up over 12,000 kiosks, spread across various states in India, for providing citizen services centers to be used for dispensing G2C and B2C services. It has recently made a strategic tie up with ICICI Lombard, Airtel and Max Newyork Life to open 12,500 retail stores in rural areas to offer bouquet of retail services in general insurance, telecom and life insurance sector respectively. Earlier it formed a 51% joint venture with Chinese company who will localize the financial technology software from 3i Infotech to cater to the requirements of China's diversified financial services sector. With an expected EPS of Rs 16 for entire FY09, this scrip is trading grossly cheap at current market cap of Rs 400 cr. Keep accumulating at declines

Tera Software (20.00) is one of the leading e-governance solution providers, undertaking data entry/scanning works for digitization of information maintained under Right to Information Act. It also undertakes short-term projects like issue of photo ID cards, ration cards and election commission cards. Last year company successfully executed Maharashtra Vikri Kar Seva Project in Maharashtra State (VAT Implementation of Maharastra sales tax department) on BOOR (Build own operate and refresh) model as the scope of work was computerization of sales Tax department in the entire state of Maharashtra. Of late company has been able to procure additionally six new projects of the State Government of Andhra Pradesh, Karnataka, Rajasthan, West Bengal and Himachal Pradesh. It also ventured into imparting computer education in more than 225 schools in Goa and AP by establishing the computer labs with Computers and providing the teaching staff and maintenance of systems. On the back of satisfactory nos for the Dec quarter it recorded 10% fall in net profit to Rs 8 cr on 20% increased sales of Rs 53 cr for nine months ending Dec 2008. Accordingly it is expected to end FY09 with topline of Rs 70 cr and PAT of Rs 9.50 cr i.e. EPS of Rs 8 on equity of Rs 12.50 cr. It may declare 15% dividend for FY09 which gives a yield of 7% at CMP. Moreover company has few acres of surplus land in Hyderabad, which it can either sell or enter into JV with infrastructure company. Scrip can easily double in 12~15 months.