Some Scripts & Their Views

Bharati Shipyard Ltd. Rs. 64/-: Company is one of the leading shipyards in India and has been performing consistently well. For 07-08, company had reported topline of 700 crs. and PAT of 107 crs. On Equity of 27.56 crs., EPS was Rs. 39/-. Stock is trading at 2.13 x FY08 EPS. Last year, its share price had crossed Rs. 800/-. Subsequently, share price crashed due to selling by FIIs and fears that company will face slowdown. However, company continues to do well. For 9 months ended Dec. '08, its topline is 722 crs. which is more than turnover of entire 07-08 and PAT is 95 crs. For 08-09 it should report EPS of Rs. 44/- which means stock is available at 1.45 x FY09E EPS. Recently, company has confirmed that its Order Book is full upto 2012, there are no order cancellations and only some delay in payments. Finally, company is entitled for subsidy upto Rs. 1100 crs. upto 2012 against delivery of the ships. Metal prices have come down which is major R/M in ship making. Going extremely cheap. Investment in this scrip should give excellent appreciation.

ABG Shipyard Ltd. Rs. 90/-: For 07-08 company had achieved topline of 967 crs. and PAT of 160 crs. On Equity of 50 crs. EPS was Rs. 32/- and scrip is trading at 2.80 x FY08 EPS. Last year share price had crossed Rs. 700 but subsequently crashed due to various fears including slowdown and may be, govt. subsidy will be discontinued. However, for 9 Months ended Dec. '08, company has already achieved turnover of 1041 crs. and PAT of 119 crs., despite all time high metal prices. Recently, company has clarified that there are no order cancellations and order book is full upto 2013. Morever, company is entitled for govt. subsidy of Rs. 1700 crs. upto 2013 against delivery of ships. Lower metal prices will help company to maintain profit margin. EPS for 08-09 should be 34/- which means stock is available at 2.65 x FY09E EPS. Once Q4 results are out, share price can flare up. In stable markets, this scrip can give more than 50% appreciation.

UNICHEM (Rs 154,FV:Rs.5) : Focuses on domestic market and is ignored by analysts as, it does not have ANDA Funda and does not spend heavily on R&D. However, co. has a good track record with consistent rise in its topline and bottomline. Its profits for 9 months are higher than profits of entire previous year. Stock is available at 4.62 x FY09E EPS. Also a bonus candidate. Price target of Rs. 230-240 appears possible.

NAGARJUNA CONSTRUCTION (Rs 51,FV:Rs.2) : Very few infra companies in India have delivered such big growth (without any political blessings). In 5 years, not only its topline has tripled but profits have also more than tripled. Despite sharp rise in steel/cement prices, company has achieved decent profits for 9 months. Its Order Book is around 13,000 crs. However, scrip has been beated down as some of its projects are JV with Maytas. Even if Maytas JV Projects remain in limbo, Nagarjuna Construction is a big company which is capable of maintaining its growth momentum. It had paid 65% dividend. Extremely efficient and fairly reliable promoters. Scrip is trading at 6.87 x FY09E EPS. Definitely, underpriced and worth buying.

HIND DORR OLIVER (Rs 39,FV:Rs.2) : This IVRCL Group Co. is on a roll, having recently bagged Rs. 440 cr. order from Uranium Corporation of India. Now, its Order Book is more than Rs. 1000 crs. and co. is hopeful of bagging some new contracts in near future. Such an old co. has many special expertise and we are confident for better future. Stock is trading at 4.60 x FY09E EPS and 3.70 x FY10E EPS. An excellent buy.

DEEPAK FERTLIZERS (Rs 52) : Has fairly diversified portfolio of fertilizers and chemicals. Recently, co. opened its retail Mall in Pune which already houses 50 tenants. At present, its fertilizer plant is operating below capacity. Once it starts getting natural gas, fertilizer division can post significantly improved results. Company is also the only producer of IPA in India. Stock looks cheap at 3.32 x FY09E EPS, capable of delivering 50% appreciation.

VBC FERRO ALLOYS (Rs 190) : This scrip is recommended for its investment portfolio. Company is in the business of Ferro Chrome manufacturing. However, it holds 13.43 cr. shares in Konaseema Power. Konaseema has just started power generation of 100 MW. Once it gets natural gas from RIL, output will go up to 400 MW by April end. In Phase II, capacity is being increased to 1200 MW for which Konaseema may place shares at Rs. 60/-. Current market cap of VBC Ferro is just 80 crs. as against investment cost of Rs. 134 crs. In peer comparison, KSK Energy is quoting at Rs. 180/- although it is just an investor in some Power Projects. Logically, Konaseema should command higher valuations. However, even if VBC Ferro Investment in Konaseema is valued at Rs. 60/- per share, it works out to Rs. 2000/- per share as against current market price of Rs. 190/-. A Must Buy.

ELECON ENG (Rs 30,FV:Rs.2) : is amongst the oldest and biggest MHE (material handling equipments) companies in India. Its user industries are power projects, fertilizer plants, etc. where slowdown is not there and hence, Elecon should continue to grow reasonably. As against Order Book of 1100 crs. in Dec. '07, its Order Book in Dec. '08 was Rs. 1800 crs. Company has made forex loss of 11 crs. in 9 months and still achieved 40.45 cr. profits. Reduction in metal prices may enlarge its profit margins in coming Quarters. Promoters are investor friendly and had declared bonus issue in the ratio of 2 shares for every 1 share. Promoters are also buying shares from open market regularly. Stock is available at 4.50 x FY09E EPS and 3.57x FY10E EPS. Elecon deserves much higher valuations. Don't be surprised if share price doubles in 2009.

UNITED PHOSPHORUS (Rs 97,FV:Rs.2) : UPL is the largest agro chemicals company in India. Company went for aggressive scale-up by acquiring several cos. It has also become sixth largest agro chemical company in the world. Stock is trading at 9.32 x FY09E EPS. Investment at current levels can deliver 40% appreciation.

CESC (Rs 196) : In Power Sector, CESC looks highly underpriced. Company also holds investment in group's retail venture spencer. Scrip is trading at 6.00 x FY09E EPS. Only negative is that, promoters in the market do not enjoy high reputation. Still, if market picks up, CESC can go up 30-40%.

THERMAX (Rs 163,FV:Rs.2) : is a leading name in India in Energy and Environment solution projects. Thermax is a very very strong brand. Despite higher metal prices, company has delivered good performance in 9 months. Its Order Book is around Rs. 4000 crs. However, scrip is definitely underpriced at 6.93 x FY09E EPS. With some slowdown, scrip like Thermax does not deserve to be downgraded so viciously. Promoters of the co. deserve premium in the peer group. In the bull run, P.E. Ratio of 30 was also considered fair.

TEXMACO (Rs 40,FV:Rs.1) : This Birla Group Co. is the oldest and leading producer of Railway Wagons. Company also has large surplus Real Estate and holds big investments in listed companies of the group. Texmaco should be the main beneficiary from planned expansion by railways, proposed freight corridors. Worth buying at 5.83 x FY09E EPS.

Surprisingly, banking scrips have been hammered badly although this writer is of the opinion that scrips like BOI , DENA BANK , INDIAN BANK , IOB , VIJAYA BANK , CANARA BANK , OBC are extremely underpriced.

Above scrips have potential to outperform the sensex in next 6 months.

Instead of taking long term view, investors should keep on booking profits at 15% - 20% gains irrespective of whether investment is in blue chip, large cap or mid cap.




WOCKHARDT LTD Rs. 85/-: Finally, skeletons are coming out of the cupboard and this writer is not surprised. Although many analysts used to give buy report on the company but, they ignored integrity of the promoters completely. Another group company Wockhardt Life Science had got Rs. 170 crs. from Baxter of U.S.A. but entire amount was siphoned off and investors did not get any dividend also. Promoters went for aggressive expansion in hospital business. So much money normally comes by milking listed entities.

CNI RESEARCH Rs. 8/-, Re. 1/- F.V.: On Rs. 10/- F.V., share price works out to Rs. 80/- for a company which has made loss of 75 lakhs in Q3. Moreover, its sales are minus 72 lakhs. Wonder how sales/income from operations can be negative! May be, promoters are not making any business in the company. Make money by rigging up the share price. Grossly overpriced. Not to get carried a way by false media release. Sell.

WELSPUN INDIA Rs. 21/-: Equity is 73 crs. For Q3, PBT is just 96 lakhs on 360 cr. turnover. Despite being largest player in Towel segment, company has never rewarded the share holders. As per our sources, promoters may be colluding with operator to take the share price to Rs. 60/-. Fundamentally, scrip is overpriced. Avoid.

SKY INDUSTRIES Rs. 80/: Equity 3.98 crs. Q3 profit just 17 lakhs. Scrip is grossly overpriced and should be quoting below par. However, operators have been successful in keeping the share price at artificially high levels. Don't buy.

FILATEX FASHIONS Rs. 70/-, Rs. 5/- F.V: Equity 5.90 crs. Q3 profit just 40 lakhs. Investors are advised to sell this overpriced scrip immediately and not to wait for higher levels because, once operator exits, scrip can be lower circuit and retail investors may find it difficult to sell.

CALS LTD Rs. 0.50, Re. 1/- F.V: Company is supposed to implement a big refinery project. However, as per our sources, company is finding it difficult to raise money for funding the project. An operator is creating volumes. Prima Facie, scrip looks cheap but avoid as, Equity is huge.

IOL CHEMICALS Rs. 94/: Since market is going up, this scrip can also go up. However, investors are advised not to buy the same as better options are available. Some operators are offering 20% kickback who can arrange delivery based buyers for this scrip. This itself shows that scrip is overpriced.

TRINEHTRA INFRA Rs. 2/- F.V., Rs. 35/-: In this scrip also, operators are offering 15% kickback to middlemen of delivery based buying. Scrip is one of the most overpriced. Sell