STOCK WATCH

Its heartening to see that despite some disputes going on between Man Industries (48.00) & GAIL, the former has recently bagged Rs 200 cr from the latter. Few months ago Man Industries took GAIL to the court due to cancellation of one of the already confirmed orders. However, with this and another Rs 550 cr order from Middle East and Africa, company’s total order book position as on today stands at Rs 2500 cr. It is one of India's largest producers and exporter of large diameter Longitudinal submerged arc welded (LSAW) pipes and Helically submerged arc welded (HSAW) pipes. Infact it is the only company in India to manufacture 18 mtr long HSAW pipe. Of late, company has started a new production line for HSAW pipes with a name plate capacity of 200,000 MTPA thereby equalizing the total production capacity to 500,000 MTPA each for LSAW as well as HSAW. To become a global player, company is setting up a HSAW pipe manufacturing plant with an capacity of 300,000 MTPA in USA under a capex of Rs 400~450 cr. Although company was expected to report better margins due to softening of raw material cost but it didn’t and instead reported sharp decline in net profit to Rs 3 cr on sales of Rs 322 cr. Couple of months ago company made a preferential allotment of 25 lac warrants to promoter group to be converted @ Rs 35 per share. Despite poor Q1FY10 nos, company is expected to report sales of more than Rs 2000 cr and profit of Rs ~50 cr leading to an EPS of Rs 9 on expanded equity of Rs 27.85 cr hacing face value as Rs 2 per share. Keep accumulating at declines.

Diamond Power Infrastructure Ltd (180.00) 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. For the June’09 quarter it reported marginally 5% decline in topline as well as bottomline to Rs 170 cr and Rs 14 cr. Couple of month ago it bagged a large power infrastructure project entailing electrification of north Cachar, Demaji and Kamrup districts of Assam to the tune of Rs 140 cr, thereby taking its total order book position to Rs 1150 cr. During June 2009 it also commissioned its horizontal lead extrusion facility of 66 kV, 132kV, & 220kV cables as partII of its cable expansion project at Vadodara. With this company is now among the select club of EHV cable manufacturers in the range of 11kV to 220kV. Company is further in the midst of expanding its low tension cables capacity from 8800 km to 30,000 km and is adding an EHV cable capacity of 2800 km for voltage upto 500kV maing it one of the largest power cable manufacturers in India. It is also investing 60 cr in setting up a facility for manufacture of Transmission tower with 48000 TPA capacity. All its project are expected to complete by Mar’10. Recently, L&T Infrastructure Finance Company Ltd has also agreed to extend a credit of Rs 50 cr to part finance the expansion project. For FY10 it may register sales of Rs 875 cr and PAT of Rs 75 cr i.e. EPS of Rs 36 on current equity.

JMC Projects (155.00) part of Kalpataru group, is among the top seven players for building and factory construction in India & has also been recognized as India’s one of the fastest growing company. It has successfully ventured into fields of turnkey execution involving civil, mechanical, electrical, HVAC, fire fighting, architectural and landscaping works. Lately, it has started focusing on infrastructure and power projects and is aggressively bidding for contracts to construct bridges & flyovers, roads & highways, railways stations, marine work, water supply & irrigation projects and construction of power plant. Despite significant slowdown in construction industry, company boast of having order book position of Rs 2200 cr (i.e. 1.7x times its FY09 turnover) of which nearly 50% consists of industrial construction/buildings segment, 30% of infrastructure related and 12% of power projects. It is also executing major fast track projects in Delhi for the Commonwealth Games 2010. For future it intends to take up railways, airports and water management projects on an EPC basis which will further add to its execution capabilities. For FY09 company clocked 45% growth in topline to Rs 1309 cr and 20% rise in PAT to Rs 37 cr posting an EPS of Rs 19 on equity of Rs 18 cr. Meanwhile for the recent Q1FY10, its revenue declined by marginally to Rs 292 cr but net profit remained flat at Rs 6.50 cr. Recently company has decided to come out with right issue of Rs 40 cr in the ratio of 1:5 @ Rs 110/- per share and is trading ex-right currently. For FY10 company is expected to clock a turnover of Rs 1500 cr and NP of Rs 42 cr i.e. EPS of Rs 19 on diluted equity of Rs 21.75 cr. Good for long term appreciation.

Ironically, most of the transformer manufacturers reported dismissal performance for the June’09 quarter and Voltamp Transformer (850.00) is no exception. It posted 50% fall in sales to Rs 104 cr whereas PAT declined by 35% to Rs 15 cr ofr the quarter. On the back of lower realization its operating margin also shrank to 15% against 20% last fiscal. However it is a leading manufacturer of customized transformers for industrial, building and power applications. It has special expertise in production of dry type vacuum resin impregnated (upto 3 MVA/11 kV class) and cast resin transformers (upto 7.5 MVA/33 kV class) apart from manufacturing regular oil filled power & distribution transformers, induction furnace transformers & unitized substations. Infact, company is the market leader in dry type transformers with around 40% market share. Unlike other transformer makers, VTL's focus is on the non-SEB industrial and engineering segment, which has enabled the company to restrict its debtors day to less than 2 months and thus better working capital management. Currently company is in the midst of putting up a Greenfield plan with an installed capacity of 4000 MVA thereby taking the total transformer manufacturing capacity to 13000 MVA. The plant is expected to go on stream soon. Although the margins may comparatively remain low but due to higher volumes in H2FY10 it is clock a turnover of estimated to end FY10 with topline of Rs 650 cr and bottomline of Rs 100 cr leading to an EPS of Rs 100 on equity of Rs 10.10 cr. But at sharp declines.