STOCK WATCH

Last week Numeric Power (380.00) reported almost flat nos for the March’09 quarters with net sales of Rs 113 cr and net profit of Rs 10 cr thereby posting an EPS of Rs 20 for the single quarter. Effectively for entire FY09 it recorded 5% growth in topline to Rs 409 cr but PAT declined by 15% to Rs 33.50 cr. This translates into EPS of Rs 66 on small equity of Rs 5.05 cr. Incidentally, on a consolidated basis company has clocked a turnover of Rs 443 cr and profit of Rs 38 cr i.e. EPS of Rs 76. Thus company is currently trading at a P/E multiple of 5x times against its current consolidated earnings. Company has eight world class manufacturing facilities spread across Pondichery-TN, Chennai-TN, Parvanoo-HP and Colombo-Srilanka, thereby emerging as the biggest integrated manufacture of UPS in India. It also undertakes turnkey projects and offers end to end solution for SCADA/EMS package, large network of industrial process, power transmission support systems and distribution management. It has an enviable and high profile clientele including Infosys, Siemens, Intel, Philips, Microsoft, Veritas, HDFC, Citibank, ICICI, RBI, NIC, Reliance, ABB, BMW, NCR, Nokia, major stock exchanges etc. As per rough estimates, around 75% of the ATMs in the country are fitted with UPS supplied by the company. Recently, company ventured into solar power generation using Photo Voltaic Modules and initially intends to develop solar hybrid UPS systems. To become more efficient, it is backward integrating into batteries and is scouting for a technology partner to set up a battery manufacturing unit. To conclude, company has the potential to report 20% growth for FY10. Keep accumulating at sharp declines.

For the latest March’09 quarter Tantia Construction (65.00) has reported excellent performance by clocking an operating margin of impressive 15%. Thus is registered 160% jump in net profit to Rs 12.50 cr although its topline remained flat at Rs 169 cr. Eventually for entire FY09, its PAT improved by 12% to Rs 17.25 cr and revenue increased by 25% to Rs 450 cr thereby posting an EPS of Rs 11 on current equity of Rs 15.57 cr. This stupendous performance is backed by good order booking in the last few months. Its current order book position stands healthy at Rs 1500 cr which is more than 3x times its FY09 turnover thereby giving strong future revenue visibility. Company boasts of having presence in roads and highways, railways, tunnels, bridges and flyovers, urban instructure, sewerage and drainage, civil & housing construction etc. Lately, it also ventured into the lucrative marine infrastructure space, power transmission and distribution segment and aviation infrastructure. Infact, it is among the five Indian companies capable of providing ‘foundation-to-finish’ for mega railway bridges spanning 2-km or more. More importantly, company has a very strong presence in the eastern and north-eastern region which gives it an edge, as very few players are interested in bidding in these regions due to difficult terrain. With Mamta Banerjee being the railway minister a special fund has been created for development of north east railway in the recent railway budget. This augurs well for the company as its forte lies in railways infrastructure. A decent bet for long term.

International Combustion (215.00) has reported very flat nos the March’09 quarter and ended FY09 with topline of Rs 99 cr (up 5%) and bottomline of Rs 10 cr (down 15%). Thus it clocked an EPS of Rs 41 on a very tiny equity of Rs 2.40 cr. Company is a leading manufacturer of sophisticated plant and machinery for core industries. To have a cutting edge technology for manufacturing premium quality equipment, ICIL has made several tie-ups with international majors like Danfoss Bauer(Germany), Mogensen(Germany), IMS Engineering(South Africa), Alstom Power(USA), Gummi Kuper (Germany) and Tredomen Eng (UK) for each product group. To meet the increasing demand, company has initiated an expansion programme for augmenting the manufacturing capacity of the gear box/geared motor division. It is also upgrading the manufacturing capacity of the Heavy Engineering Division. Ironically, scrip which crossed Rs 900 in Dec’07 tumbled down to as low as Rs 80 in March’09 and has now recovered to above Rs 200 in a very short span. For FY10 it can report sales of Rs 125 cr and profit of Rs 14 cr leading to an EPS of Rs 58. Even at modest discounting by 5x time scrip can move up to Rs 300 by March’10. A safe buy.

Last week, Ind Swift Lab (40.00) reported satisfactory result for March’09 quarter. Sales grew by 20% to Rs 148 cr but net profit remained flat at Rs 11 cr posting an EPS of little more than Rs 4 for the quarter. Accordingly for the entire FY09 its sales jumped up 30% to Rs 588 cr and profit increased by 10% to Rs 35 cr after considering onetime extraordinary expense of Rs 5 cr. Thus company reported an EPS of Rs 16 on current equity of Rs 25 cr. Notably, company has started exporting to USA after getting USFDA approval in Sept 2007 for its API manufacturing facility at Derabassi Punjab for Clarithromycin. Presently, exports constitute around 40% of sales with company having presence in 45-50 countries across globe. For future growth the company has a robust product pipeline of 25 products which includes few blockbuster drugs as well. It has successfully filed over 72 DMFs with the US, Canadian, UK and European Drug Authorities. Hence company has been aggressively expanding its capacity and has increased the gross block by almost five times to Rs 470 cr from 100 cr in 2005. With a healthy book value of Rs 97, scrip is trading relatively cheap at a P/E ratio of 2.5x times. However high debt equity ratio is cause of concern.