STOCK WATCH

For the latest June’09 Genus power (190.00) reported 20% growth in revenue to Rs 120 cr but bottomline remained flat at Rs 8.00 due to higher interest cost. Company is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. 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. For FY09 it had recorded 6% rise in bottomline to Rs 51 cr on 25% higher sales of Rs 586 cr thereby posting an EPS of Rs 35. Recently, company cancelled the 16 lac convertible warrants and forfeited the advance amount received as the allottee’s didn’t exercised the option of conversion. Now there is no outstanding stock position which can dilute the equity. As power sector being the least affected due to slowdown, company is having an impressive order book position of more than Rs 1000 cr which is almost double its FY09 revenue. Moreover it has participated in tenders of around Rs ~1300 cr, out of which it is already 'L-1' bidder in tenders worth Rs.283 cr. Accordingly for FY10, it is estimated to do sales of Rs 700 cr and net profit of Rs 55 cr i.e. EPS of Rs 37 on current equity of Rs 14.80 cr.

J Kumar (115.00) has once again reported excellent set of nos for the latest June’09 quarter. Total revenue jumped up 70% to Rs 153 cr whereas net profit increased by 60% to Rs 12 cr. Notably, company has been able to scale up its operation without any compromise on margin. Its OPM for the quarter stood at healthy 15%. For FY09 company had recorded 85% growth in topline to Rs 389 cr and 70% jump in bottomline to Rs 33 cr posting an EPS of Rs 16 on equity base of Rs 20.70 cr. Despite challenging times and overall slowdown company has been constantly bagging good orders. Last fiscal it had bagged huge orders to the tune of Rs 560 cr from MMRDA and MSRDC. Couple of months back it was awarded Rs 130 cr order for construction of nallah & Railway Bridge (Jogeshwari) in Mumbai. This week it has won another 155 cr order for construction of flyover and other dam/canal related marine project thereby taking its total order book position to nearly Rs 1300 cr. In order to fund its various project, company recently made a preferential allotment of 40 lac convertible warrants to promoters and others at the rate of Rs 60 per warrant. For FY10 it may clock a turnover of Rs 550 cr and PAT of Rs 38 cr which works to an EPS of Rs 15 on fully diluted equity of Rs 24.72 cr. Buy at declines only.

JB Chemicals (42.00) - flagship company of the Unique Group, manufactures and markets a wide range of pharmaceutical formulations, herbal remedies, bulk drugs, intermediates and radio-diagnostics products for domestic and international market. Headquartered in Mumbai, it has a large global presence with operations in over 50 countries across the globe. Exports contribute ~70% of total revenue with major chunk coming from key market like Russia/Ukraine/CIS countries. Infact it is one of the top three Indian companies in Russia with its flagship brand "Doktor Mom", being the most trusted and undisputed leader in its segment. Though company would continue to concentrate on its existing markets, it has identified South Africa, Australia, Brazil, Venezuela and other Latin American countries as future growth drivers. It has identified high potential for its herbal and ethical formulations in central European countries. In order to tap this potential, the company, during the year, has set up a wholly owned subsidiary in Romania. For the June’09 quarter its sales as well as net profit remained flat at Rs 139 cr and 13 cr respectively clocking an EPS of Rs 1.60 for the quarter. With an expected EPS of Rs 7 for FY10, scrip can be accumulated at declines.

Despite clocking good performance quarter after quarter, Aditya Birla Chemicals (64.00) is being ignored by the market for quite some time now. Even for the latest June’09 quarter its topline grew by 15% to Rs 60 cr and PAT improved by 20% to Rs 16 cr. It is one of the few companies which have been consistently reporting an OPM of ~40% and NPM of ~25%. Earlier known as Bihar Caustic, it is among the leading caustic soda producer in the northern and eastern region of the country having an installed capacity of 265 TPD of caustic soda, 200 TPD of liquid chlorine, 130 TPD of hydrochloric acid, 150,000 Nm3/day of compressed hydrogen and 3 TPD of sodium hypo chlorite. It has also set up a 25 TPD stable bleaching powder plant and 12000 TPA of aluminum chloride unit. To maintain its future growth, company is in the process of further augmenting the capacity of its caustic soda from 265 TPD to 300 TPD at a capital investment of Rs 30 cr. With nearly 70% its production being taken by Hindalco, company has an assured and ready market for its product. During Q2FY09, company faced minor disruption in production due to some problem in the power plant boiler which affected its bottomline. Hence, company is expected to report comparatively higher bottomline in the current quarter i.e. Q2FY10. And for entire FY10 it may post sales of Rs 240 cr and PAT of Rs 60 cr i.e. EPS of Rs 26 on current equity of Rs 23.40 cr. A screaming buy at current levels.