Electrotherm (India)

Electrotherm (India) has posted very encouraging results for the third quarter ended 31st December 2007. YoY, its net sales rose by a robust 82% at Rs.381.91crore. PBT was at Rs.30.04 crore, up by 85% and PAT zoomed up by 72% at Rs.19.73 crore. On an equity of Rs.9.13 crore, its basic EPS for Q3 was at Rs.21.60.The biggest contributor to the topline has been the engineering projects and special steel divisions.

The company has bagged orders worth US $ 14.06 Million (US Dollar Fourteen Million Six Thousand Only) from Istanbul, Turkey. The deadline for dispatch of first part of the order is before the end of March 2008 and the balance by the December 2008.

The company recently launched its corrosion-resistant steel (CRS) bars, expected to increase the life-span of buildings. It has invested nearly Rs.514 crore so far in its fully integrated steel plant at Samkhyali in Kutch that came up in 280 acres after the Centre and the Gujarat Government gave tax incentives in the district ravaged by the 2001 earthquake.

The company’s electric motorcycles sought to revolutionise the Indian automotive market, is currently having a bumpy ride. The company has seen a slide in sales of the Yo-bykes. In April-Dec 2007, the electric vehicle division could generate only Rs.36.86 crore compared to Rs.51.77 crore in the same period the previous year, posting a drop of nearly 29%.

The company is also planning to invest Rs.300 crore in expanding its engineering projects division, steel, power and electric vehicles divisions over the next one year. To fund its expansion, the company intends to offload nearly 12.5% stake worth Rs.82 crore to DEG of Germany. It is also planning to raise funds via QIPs to the tune of Rs.300 crore.
Currently quoted at Rs.364, stay invested.

Source: Sptulsian.com

Investment Idea: SAIL

Steel Authority of India Ltd. (SAIL) is a PSU, fully integrated iron & steel maker, producing both basic and special steels for construction, engineering, power, railway, automotive and defence industries.
SAIL has 5 integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and IISCO while 3 special steel plants are located in Karnataka, Tamil Nadu and West Bengal with 653 dealers in 527 districts spread all over the country.
The company has joint venture power projects with NTPC as 50 : 50 JV for 314 MW captive power plants at Rourkela, Durapur and Bhilai while 50 : 50 JV with Damodar Valley for 302 MW power project and 1,880 tonne per hour steam generation at Bokaro.
To improve its self sufficiency, SAIL has entered into a 50 : 50 coal mining JV with Tata Steel to explore 4 coal blocks in India as also a JV with Manganese Ore India Ltd. for 31,000 TPA of Ferro Manganese and 70,000 TPA of Silico Manganese to be available by 2010 for producing 24 million MT of steel.
During FY 07, the company produced 12.26 million tonne of steel by operating at 114% capacity of which 3 million tonne was value added and special steels.
For FY 07 the total income of the company was at Rs.35,865 crores with EBITDA of Rs.10,966 crores, resulting into a margin of 30.58% with PBT of Rs.9,422 crores and PAT of Rs.6,202 crores, resulting in an EPS of Rs.15.
For 9 months ending 31-12-07 the total income was at Rs.27,662 crores with EBITDA of Rs.8,921 crores resulting into margin of 32.25% with PBT of Rs.7,804 crores and PAT of Rs.5.160 crores, giving an EPS of Rs.12.50 for the period.
For FY 08, EPS of the company is likely to be Rs.18 while for FY 09 the same would be close to Rs.24 in view of better realizations and strong growth expected in the steel consumption.
The company is planning to have production of 24 million tones of steel by 2010, for which capex of Rs.40,000 crores is planned.
The debt equity ratio of the company as at 30-06-07 was at 0.18 : 1. The net worth of the company as at 31-03-08 would be Rs.23,000 crores and hence the debt equity ratio of the company is not likely to exceed 0.60 : 1, which is considered very healthy for such a huge steel company.
SAIL presently has five iron ore mines which provides about 14 million tones of raw-materials to meet almost the total iron ore and about 30% of its flux (limestone and dolomite) requirement of the eastern sector steel plants. About 12 – 13 mt of coking coal is sourced from outside sources. Hence, rising cost of iron ore is not affecting its profitability, though rising cost of coal is a concern.
Of the present equity of Rs.4,130 crores, Government holds 85.82%; Banks, Mutual Funds, FIIs and Insurance Companies hold 11.75% while only 2.43% is being held by public. This is leaving very low floating stock.
The present market capitalization of the company is close to Rs.80,000 crores at current market price of Rs.190 per share. The present debt of the company at Rs.2,500 crores makes company virtually debt free, net off, net current asets.
The steel prices for flat and long products have been increased by about 8% in last fortnight and rose by about 22% since January 08. Still after this rise, the product is in short supply with good offtake. This is bound to improve the working of the company for March 08 quarter.
Share is presently ruling at Rs.190, which discounts its FY 09 EPS by about 8 times. The steel sector is likely to remain attractive at the current levels, as all the stocks have corrected by about 30% to 35% in the last couple of months.
Share at Rs.190 makes it an excellent buy with potential to rise by about 50% in the next 12 months.

by SP Tulsian

Prithvi Information Solution

The company, when it had gone public in October 2005, its entire focus had been on developing software for small and medium scale businesses in US. With the bigwigs in the industry itself gasping for life right, it is little wonder that small and middle rung companies like Prithvi are able to sustain and yet post some improvement in performances. And this is precisely the reason why the stock has fallen down from the levels of Rs.300 to now rule at Rs.150.

The financial performance for the third quarter ended 31st December 2007 has not been very good. On QoQ, its net sales rose by just 10% at Rs.291.73 crore. Its total expenditure rose 29% of which software development expenses, which till Q2 represented 98% of the total outgo, has come down to 79%. This resulted in the EBIDTA showing a fall of 44% at Rs.35.66 crore. PBT registered a rise of a meager 3% while PAT rose by a measly 5% at Rs.28.40 crore. On an equity of Rs.18.08 crore, it managed to post a good-looking EPS of Rs.15.71.

The main objective of the IPO was to build an offshore delivery centre with 1,500-seat capacity in Hyderabad at a cost of Rs.150 crore, of which, till 31st December 2007, it has spent Rs.62 crore. It’s been over two and half years and it is yet to fully implement the project? Does not speak too well about the management abilities of the company.

And maybe realising that it needs to move on beyond being a mere IT service provider, the company is now trying to gain some foothold in telecom. The company bagged an order of Rs.309 crore from BSNL, for supply of transmission equipment that helps increase network bandwidth. Prithvi has tied up with a Chinese telecom major, Huwei Technologies to source the equipment and is customizing it for BSNL.
Considering annualized EPS of Rs.60, remain invested.

Source: sptulsian.com

Intraday Calls for 18th March

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