Sunday, August 10, 2008

Stock Idea: Micro Technologies, Ramsarup Industries Ltd

Once again Micro Technologies (India) Ltd. (Code: 532494) (Rs.230) has announced excellent results for Q1FY09. Total revenue as well as net profit shot up by 65% to Rs.58 cr. and Rs.17.50 cr. respectively recording an EPS of Rs.16 in this single quarter itself. For FY08, it had recorded an EPS of Rs.48 with net profit of Rs.53 cr. on its total revenue of Rs.171 cr. The company is a global provider of security, safety and life-support solutions with the first of its kind and innovative products for security of home, office, shop, vehicle, laptop, mobile etc. It also has a business agreement with MTNL as well as Airtel to offer Lost Mobile Tracking System to their customers. Few weeks ago, it introduced a GPS based product called ‘Buddy Tracking System’ to know the real time location of users. Given the current share market condition, the company has again reduced the FCCB conversion price by 18% from Rs.304 to Rs.250. Although this indicates that both bondholders and the company are interested in conversion, not redemption, this will lead to further equity dilution by 45 lakh shares. For FY09, it is expected to report a topline of Rs.250 cr. with bottomline of Rs.70 cr. i.e. an EPS of Rs.54 on its fully diluted equity of Rs.13 cr. Even at modest discounting by 8 times, the share price has the potential to hit a new high of above Rs.400 in 12-15 months.

Recently, Ramsarup Industries Ltd. (Code: 532690) (Rs.122) has come out with decent Q1FY09 results while sales grew by 10% to Rs.383 cr., net profit increased by 25% to Rs.15.80 cr. on the back of better operating margins. The company manufactures a variety of steel wires (mainly used by the power industry) and TMT Bars. To cater to the rising demand, the company is expanding its total wire manufacturing capacities from 233,000 tonnes to 600,000 tonnes including the production of Low Relaxation Pre-stressed Concrete (LRPC) wires over the next two years. It has acquired 60 acres of land in West Bengal and the major plant and machinery are being imported from Italy. And to access cheaper and regular raw material supplies, the company took over Balasore Minerals Co., which has iron ore, limestone and dolomite mines located in neighbouring Orissa. But importantly, the company is merging its group company called ‘Ramsarup Loha Udyog’, which is emerging as an integrated steel producer with captive production of sponge iron, pig iron, billets, power etc. As no official figures are available for the group company, on a standalone basis the company is expected to clock a turnover of Rs.1750 cr. with PAT of Rs.65 cr. for FY09. This translates into an EPS of Rs.37 on its current equity of Rs.17.50 cr. Post merger, its equity is expected to get diluted to about Rs. 35 cr.
Source: Internet


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