STOCK WATCH
As anticipated earlier, SEAMEC (85.00) has once again come out with stunning set of nos for the March’09 quarter. Its topline almost tripled to Rs 100 cr on YOY basis, whereas it recorded a net profit of Rs 62 cr against net loss of Rs 17 cr in the corresponding period last fiscal. Ironically, its Q1 profit alone is substantially higher than the entire FY08 profit of Rs 47 cr. The reason for this bumper performance is due to the fact that all its four vessels were constantly engaged for the whole quarter and that too at a healthy charter rate. Importantly, none of its vessel is expected to go for dry dock in the current fiscal and will be fully deployed thru out the year. However due to slowdown in the oil E&P activities, the vessel hire charges have fallen in the recent past and accordingly company has signed a new contract for SEAMEC-II at a significantly lower rate. But at the same time it has been able to rent out its PRINCESS vessel at quite as healthy rate although only for 2 months. Its not only a debt free MNC but also a cash rich company having potential to generate Rs 60 ~ 70 cr cash thru core business operation. For CY09 it can report revenue of Rs 325 cr and net profit of Rs 125 cr i.e. EPS of Rs 37. Moreover it is expected to get an insurance claim of Rs 25 cr which will straight away add to the bottomline. It will most probably be able to clock a bumper profit for June’09 quarter as well but its H2FY09 may not be as good as H1FY09. Despite this scrip can easily shoot up to Rs 125~130 Rs in short term. Catch it if you can. If the market remains bullish it has the potential to touch Rs 200 in few months.
Gremach Infrastructure’s (25.00) main activity is to provide rental of construction/earthmoving machineries to infrastructure companies including L&T, Punj Lloyd, Shapoorji Pallonji, Gammon India, HCC, Gannon Dunkerley etc. It has a huge asset bank of heavy equipments ranging from compacters, rollers, concrete mixers, dozers, forklifts, loaders to excavators, PTR, dumpers, electronic sensor pavers, kerb laying machine, concrete batching and mixing plant. In addition to renting its owned equipments, it also hires equipments owned by other parties and rent to its own clients. For the first nine months ending Dec’08 it has already registered an EPS of Rs 15 by earning PAT of Rs 23.30 cr on topline of Rs 238 cr. Although company is witnessing lower demand due to slowdown in construction sector, but going forward it is expected to regain normal business. Interestingly, it has got in-principle approval for 100 hectar Metal SEZ at Kolhapur & another at Dhule in Maharashtra. It has also taken 75% controlling stake in 11 Coal mine licenses in Mozambique. To fund its growth plant company has raised almost Rs 200 cr in Feb 2008 thru FCCB route to be converted into equity @ Rs 376 per share. Ironically, share price which hit a high of Rs 504 in Jan’08 is not finding any buyer even at Rs 20. Aggressive investor can buy at current levels.
Bharati Shipyard (75.00), second largest private shipyards in India is engaged in design and construction of bulkers, cargo/container ships, tankers, dredgers, passenger vessels, chemical carriers etc. It has special expertise in construction of offshore support vessel required for oil exploration industry and is the first Indian player to bag an order of an oil rig. However, the shipyard sector is going thru rough phase as no shipping company is placing fresh order for ships. On the contrary, there is the great risk of order cancellation. Secondly the crude oil prices have also fallen substantially forcing the oil companies to reduce their E&P activities. Meanwhile, company has an all time high order book position of more than Rs 5000 cr which is 7x times its FY08 revenue, thereby ensuring a strong revenue visibility. Due to slump in business, it has slowed down its Greenfield expansion and other capex plan. Notably, 50% of its FCCB has already been converted into equity and the balance FCCB of more than Rs 200 cr may come up for redemption in Dec 2010. Recently govt has decided to disburse the pending subsidies to shipbuilding companies although the decision on extension of subsidy scheme beyond 2007 is yet to be taken. For FY09, company is estimated to clock a turnover of Rs 825 cr and PAT of Rs 65 cr without taking govt subsidy into consideration. Promoters are looking to take preferential allotment of warrants at low price. A good bet for long term.
ICSA(115.00) boasts of developing innovative products suitable for power utilities in the field of energy management, energy audit, control application which identifies distribution losses, and help the power utilities reduce their costs & streamline their operations. The list of its popular product includes Intelligent Automatic meter reading, Distribution transformer monitoring system, Theft detection device, Energy audit services, Pole top & Micro remote terminal unit to name a few. Company doesn’t face any significant competition as it enjoys virtual monopoly for few of its product. It also undertakes electrical infrastructure projects in power generation, transmission and distribution sectors both in India and abroad. Notably, it follows an asset light business model under which it designs and develops prototype models of the product and outsources manufacturing. Currently it is estimated of having an unexecuted order book position of more than Rs 800 cr. This includes the recent order of Rs 460 cr bagged by the company from Bihar and Maharashtra State Electricity Boards. Financially, for the first nine months its sales jumped up 80% to Rs 825 cr and NP shot up 50% to Rs 134 cr thereby surpassing the the sales and NP of entire FY08 by decent margin. Infact it is estimated to end FY09 with sales of Rs 1100 cr and PAT of Rs 170 cr leading to an EPS of Rs 36 on current equity of Rs 9.40 with face value as Rs 2/- per share. Buy at sharp declines.
