Value Picks In Such Bear Markets ( Cherry Picking)

VALUE PICKS

INDRAPRASTHA GAS LTD BUY CMP Rs 138

The company distributes CNG and PNG in Delhi. The business model is very safe and company can be expected to deliver steady improvement in performance based on low cost expansion of network. The future growth of the company can in Delhi is expected from expansion of PNG network and conversion of private cars to CNG, which has been gaining momentum in Delhi. Other potential consuming source is LCV’s. In Delhi registration of new LCV’s requires that that LCV operates on CNG. It expects the introduction of high capacity buses and radio taxis will also add to sales of CNG.
It is expanding network in Ghaziabad and Noida. In Noida, NOC has been received and work has started in October 2007. It has also the permission for entering Sonepat and Panipat but the progress appears to be slow.
The company is expected to report an EPS of Rs 13 for the year FY08. It is trading at a PE multiple 10.6. Dividend for the year FY07 was Rs 3 per share. It is debt free company and has been funding the capex out of internal accruals. No dilution is anticipated.
The stock can be bought with a long-term view.

GIC HOUSING FINANCE LIMITED. BUY CMP 58.50

The company is a small player in in its segment compared to other big players like ICICI Bank and HDFC. The company has been growing steadily. The profit has grown from 6.61 crores to Rs 50.07 crores during FY03 to FY07. The company paid a dividend of Rs 3.00 per share for the year FY07. The expected EPS is around Rs 10.75 for FY08. The stock is trading at a PE multiple of 5.5. The book value is Rs 61.13 (estimated for Dec 07). The share is currently available at Rs 58.50, that is below book value and offers dividend yield of more than 5%.
In order to meet the capital adequacy requirements further dilution cannot be ruled out in future though at present it is adequately capitalized.
The share provides value at the current prices. The investors can buy the stock at CMP with a long-term view.
RISK
The price could move adversely to the extent of 10 to 15% in the short run.