STOCK WATCH

IMP Power (125.00) has come out with good set of nos for the June’09 quarter. Sales as well as PBT increased by 70% to Rs 52 cr and Rs 7.2 cr respectively. Due to lower tax provisioning its PAT quadrupled to 6.30 cr for the quarter. Thus for the full year ending June 2009 it recorded 40% growth in sales to Rs 190 cr and 70% increase in NP to Rs 15.70 cr posting an EPS of Rs 19 on equity of Rs 8.10 cr. Company is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has last year doubled its production capacity from 3,600 MVA to 7,000 MVA. Further its in the midst of expanding it to 10,000 MVA in the current fiscal itself. Post this completion, company will be among the very few transformer manufacturers having the capability to make EHV power transformer up to 200 MVA in 330 kV class. Besides, company has also upgraded its Kandivali plant to manufacture complete range of analog meters in addition to high end meters like maximum demand indicator, trivector meter, multifunctional and kWh Meters. Recently company converted the preference share into equity shares @ Rs 161 per share thereby diluting the equity by 20% to Rs 8.14 cr. For FY10 ending June’10 it may report sales of Rs 250 cr and NP of Rs 18.25 cr i.e. EPS of Rs 22 on current equity. For FY11 it has the potential to post an EPs of Rs +30. A good bet for medium to long term.

For the June’09 quarter Vivimed Lab (90.00) has reported decent set of nos as sales was up 45% to Rs 48 cr and profit doubled to Rs 4.70 cr, thereby registering an EPS of Rs 5 on a standalone basis. Even on a consolidated basis its performance was encouraging with an EPS of Rs 7.40 for the quarter. Company is a speciality chemical manufacturer catering to segments including oral care, sun care, skin care, hair care, natural extracts, preservatives, anti microbial, anti oxidants, anti-aging molecule etc. Infact it is world’s 2nd largest manufacturer of Triclosan - an antibacterial used for oral care and one of the top three companies for Avis – a chemical which improves UV absorbing ability of Sunscreen. Earlier it acquired 100% stake in M/s James Robinson,UK which is an international manufacturer and supplier of speciality chemicals used in hair dyes, pharmaceuticals and photographic films/prints to ophthalmic sunglasses thereby making it a multinational company. Of late to increase its global presence, it has decided to acquire Har-met International Inc a small importer of pharmaceutical & cosmetic product, based in USA. Organically as well company has been expanding its capacity and has chalked out Greenfield expansion plan in Uttaranchal and Hyderabad. Presently it boasts of having five manufacturing facilities spread across Karnataka, Andhra Pradesh & Uttaranchal. For FY10 on a consolidated basis it may report a topline of Rs 325 cr and bottomline of Rs 25 cr i.e. EPS of Rs 25 on current equity of Rs 10 cr. Last month in Aug 2009, company completed the buy back of US$ 12.50 million FCCB and issued 5.6 lac equity shares for the balance US$ 2.50 million FCCB @ Rs 185 per share leading to equity dilution to Rs 10 cr. A solid bet.

Having an equity venture with Specialty Process LLC of USA and technical collaboration with Lubrizol Inc (formerly known as BF Goodrich), Astral Polytechnik (120.00) is the leading manufacturer of CPVC (chlorinated poly vinyl chloride) & PVC (lead free) pipes & fittings India. Due to inherent better properties, CPVC is replacing various traditional piping systems like galvanized iron and other metal pipes world over. Company being the pioneer in India and backed by reputed international brands like FlowGuard, Corzan etc is all set to rule the Indian market. Infact all the frontline organized players like DLF, Sobha, JP group, Kalpataru, Unitech, Parsvanath, etc are its regular customers. To cater the rising demand company has last fiscal doubled its pipe manufacturing capacity from 11,800 to 26,000 TPA. Further to enhance its product range company has recently launched underground drainage pipes, foam core pipes, drinking water pipes etc under various brand names. It is also planning to add Blazemaster Fire Sprinkler System, SWR Variants, Manholes and Inspection chambers in the current fiscal. Meanwhile company is also thriving to increase its export revenue and has even formed a JV with a Kenyan company. For FY09, company’s bottomline was hit due to rupee depreciation but for FY10 it may clock a turnover of Rs 275 cr and PAT of Rs 22.50 cr. This translates into EPS of Rs 20 on current equity of Rs 11.24 cr. Scrip can shoot up to Rs 200 within a year

Ratnamani Metals & tubes (110.00) has emerged as a single stop provider for the steel piping solutions for an array of applications required for the large projects in oil & gas and power sector in India as well as internationally. Further it is striving to be a major player for the titanium welded tubes which find applications in power plants, desalination plants and various other critical applications. Thus company is basically engaged in manufacturing welded and seamless stainless steel (SS) pipes & tubes, carbon steel (CS) LSAW, HSAW and ERW pipes. Apart from being a active player in domestic market, it also exports to USA, Canada, Chile, Germany, France, Japan, South Korea, Saudi Arabia, Oman, Qatar, UAE, Egypt, Kuwait, Italy, etc. Last fiscal company added 3,000 TPA of capacity in stainless steel tubes and pipes segment and 50,000 TPA of HSAW capacity through brown field expansion. It is further adding 50,000 TPA of HSAW in the current fiscal to take the total installed capacity to 4,20,000 TPA. Besides, as a part of forward integration, company has already set up a 3 layer polyethylene and epoxy coating line with capacity of 2.7 million sq mtrs. For FY10 company is expected to clock a turnover of Rs 900 cr and PAT of Rs 75 cr i.e. EPS of Rs 17 on equity of Rs 9 cr having face value as Rs 2/- per share. Keep accumulating at sharp declines.

Genus Power Infrastructure Ltd - Rs 200.00

Founded in 1994 Genus Power Infrastructure Ltd (GPIL) erstwhile Genus Overseas Electronic Ltd is amongst the leading integrated metering solutions' providers and the pioneer in implementing AMR (Automatic Meter Reader) technology. It manufactures wide range of high-end programmable multi-functional intelligent single phase & three phase electronic meters with in-built advanced security and anti-tamper features such as AMR enabled meters, trivector meters, panel meters, time of the day meters, audit meters, etc. But importantly, over the last few years GPIL has significantly transformed itself from only a meter manufacturer to an entrenched power infrastructure player. It now derives more than 50% revenue from EPC power T&D projects where it provides absolute solutions for power transmission & distribution system. As a step forward, GPIL 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. Catering to giants like Reliance Energy, Tata Power, BSNL, BEL, DRDO, ITI and several state electricity boards, GPIL currently operates in following four verticals.

· Metering Solutions: GPIL manufactures high end programmable, multi functional & intelligent single phase and three phase meters with in-built advanced security and anti tamper feature. It deals in all types of electronic meters such as residential meters, industrial meters, agricultural meter, substation meters, audit meters, grid meters, group meters, special meters (prepaid / rail mounted) etc. It specializes in providing AMR solutions for comprehensive billing using PLCC, RF, GSM and GPRS technologies which ensures drastic reduction in power pilferage, less AT&C losses, effective load management, improvement in quality of power supplied, customer satisfaction and maximization of revenue generation.

· Engineering Construction & Contracts: GPIL has vast technical expertise for commissioning new substations (design, engineer, supply, installation, erection, testing and commissioning sub-stations) or working out capacity augmentation, renovation and modernization of existing substations. Being an EPC contractor it also executes turnkey T&D projects like setting up transmission towers, execution of civil work, laying of cables, installation of transformers etc. Company also undertakes rural electrification projects, energy accounting and auditing at all distribution levels, comprehensive billing solutions for utilities etc. Apart from power sector, company also provides SCADA solutions for water suppliers and industrial automation.

· Power Backup Solutions: GPIL boast of successfully introducing most advanced Sure Sine Wave inverter technology in India. Its revolutionary ASIC technology customizes wave form needed by different appliances hence ensuring 100% of their safety. It makes several inverters in the range of 400 VA to 100 KVA and for high load electronic system, it provides home UPS, online UPS and high frequency & line interactive UPS in the range of 3 KVA to 100 KVA. Although on a small scale, GPIL has also forayed into renewable energy segment with products like solar panel, solar inverters and solar water heater. Getting itself backward integrated and to offer complete power backup solutions, it is contemplating to launch a full range of batteries (lead acid, tubular, SMF) under the “GENUS” brand name.

· Hybrid Microcircuits: GPIL manufactures superior hybrid microcircuits which are used in all electronic components and find vast application across all the industries. The bulky printed circuit boards are becoming outdated and are now aggressively getting replaced with miniature hybrid microcircuits. Company has advanced design software such as VISULA, OrCAD for design of hybrid microcircuits and PCBs.

GPIL perhaps has one of the biggest manufacturing units of energy meters and power electronics in the country with its two plants located at Jaipur (Rajasthan) and Haridwar (Uttranchal). With a production capacity of 2 million pieces, company has till now installed more than 10 million electronic meters globally. Of late, to integrate its EPC business company has set up a new facility at Alwar (Rajasthan) for manufacturing of poles, distribution transformers, etc. with an investment of Rs 50 cr. It also entered into two joint ventures in Brazil to manufacture electronic energy meters & provide state-of-art AMR technology. Meanwhile it continues to export its product to over 20 countries and is now focusing meter export to SAARC, Middle East, African and Latin American countries, where power reforms are taking place in a big way. Thus GPIL has become a global player with manufacturing facilities in India & Brazil, marketing offices in Singapore & USA and a full fledged sourcing office in China.

Presently, GPIL has an order book position of Rs 1100 cr which is almost twice its FY09 turnover. Besides it has participated in tenders of nearly Rs 1200 cr, out of which it is ´L1´ bidder in tenders worth Rs 89 cr only. Sarcastically, these figures are way lower than last year bidding of Rs 8000 cr and L1 bidder of Rs 650 cr. As per unconfirmed reports, due to some execution as well as payment problems, company has cut down the bidding process significantly. This comes on the back of the fact that company recently wrote off Rs 36 cr as various deduction made by its customers on earlier sales of multiple years. As company provided this extraordinary expense only in audited accounts, the NP plummeted to merely Rs 13 cr against Rs 51 cr as unaudited net profit. So according for FY09 it reported audited sales of Rs 556 cr and audited PAT (after extraordinary item) of Rs 13 cr leading to an EPS of Rs 8.50 on equity of Rs 14.80 cr. However for Q1FY10 it reported 20% growth in revenue to Rs 120 cr but bottomline remained flat at Rs 8.00 due to higher interest cost. Thus it is expected to clock a turnover of Rs 700 cr and PAT of Rs 50 cr for FY10 i.e. EPS of Rs 34 on current equity. As scrip doesn’t look very cheap at current EV of Rs 600 cr, investors are advised to buy at sharp declines for a price target of Rs 280 in 12~15 months.

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