Stock Ideas

Accurate Transformers Ltd. (Code: 530513) (Rs.86.50) is engaged in manufacturing of power and distribution transformers ranging from 1 MVA to 160 MVA - in up to 220 KV class. It also carries out rural electrification project, which involve electrification in remote areas including the laying of lines, poles and substations. Unfortunately, despite having installed capacity of more than 8000 MVA, the company is working at very low capacity utilization of less than 50% due to mounting debtors and shortage of funds. However, on the back of the ongoing boom in the power sector and the robust demand for transformers, the situation has improved considerably. Due to better operating efficiency and higher realization, the company is expected to improve its profit margin going forward. It may even grow at CAGR of 50% over the next three years as far as its bottomline is concerned. On a conservative basis, it can clock a turnover of more than Rs.200 cr. with PAT of Rs.8 cr. for FY08. This works out to an EPS of Rs.27 on its current equity of Rs.2.96 cr. As perunconfirmed reports, SEBI has stalled its preferential issue of 31 lakh warrants at Rs.56 and it may have to go in for fresh fund raising programme as per SEBI guidelines. The scrip has reduced to nearly one third from its high of Rs.240. A screaming buy.
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Spanco Telesystems & Solutions Ltd. (Code: 508976) (Rs.165) offers core competency telecom systems integration, which includes implementation of multi-location, multi-services converged networks for carrying diverse multimedia traffic (voice, data & video) based on latest technologies like ATM, MPLS, Frame Relay, TCP/IP etc. On the other hand, it has bagged a 10-year contract to set up, operate and maintain Interactive Voice Response System (IVRS) and Regional Call Centres (RCC) for the Indian Railways in a joint venture with the Spice Group. Moreover, it has ventured into the RFID space by acquiring 51% stake in Skandsoft Technologies - a pioneering software solutions company, which is dedicated to revolutionize the upcoming world of automated business processes through technologies like Radio Frequency Identification (RFID) & Automatic Identification and Data Capture systems (AIDC). It has even formed a joint venture ‘Spanco-GKS’ with Golden Key Solutions of Oman to replicate its Indian business in the Gulf region as well. For FY08, it may clock a turnover of Rs.625 cr. with profit of around Rs.48 cr. on a standalone basis i.e. an EPS of Rs.23 on its current equity of Rs.20.65 cr. A solid bet.

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ANG Auto Ltd. (Code: 530721) (Rs.94.45) is among the few companies in the world to be completely integrated – from the manufacture of components to sub-assemblies and assemblies and finally to vehicles. Today, it is the largest trailer manufacturing company in India with a capacity of 3600 trailers per year and will soon be No. 1 in Asia as it is augmenting the capacity to 6000 trailers. Notably, the company has entered into a 5-year contract with Ashok Leyland for trailers, which is valued at Rs.1500-1800 cr. Secondly, its patented automatic stack adjuster and the single piece dummy axle is witnessing strong demand from all over the world. Going ahead, it intends to manufacture suspension systems and is also setting up a forging unit at Bhiwadi, Rajasthan, at capex of Rs.37 cr. To consolidate its operations, the company has merged ANG Auto Tech, its 75% subsidiary with itself. On a standalone basis, it is expected to clock a turnover of Rs.120 cr. and profit of Rs.16 cr. for FY08 i.e. an EPS of Rs.13.50 on its current equity of Rs.11.90 cr. Since the conversion price is high at Rs.325, its FCCB of Rs.50 cr. may not get converted into equity. Moreover, finding its valuation very cheap, the management has obtained the approval to buy back equity shares up to 24.30% of the total paid-up equity capital at a maximum price of Rs.215 per share. A golden opportunity to buy at such low price levels.
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Part of the B. M. Thapar Group, Greaves Cotton Ltd. (Code: 501455) (Rs.192.50) is engaged in the production of diesel/petrol/LPG engines for power generation, agro equipment and automotives apart from manufacturing gensets, agro equipment and construction equipment Besides, it is also engaged in marketing high technology systems for marine, aviation and electronic applications. Last year, to enhance its presence in the global market, it acquired Bukh Farymann Diesel GmbH (renamed as Greaves Farymann Diesel GmbH), which is engaged in the manufacture and marketing of single cylinder diesel engines and parts for Rs.25 cr. For FY08, it may clock a turnover of Rs.1400 cr. with PAT of Rs.115 cr. i.e. an EPS of Rs.24 on its current equity of Rs.48.80 cr. More importantly, few weeks back Piaggio Group's Indian subsidiary signed an 8 year agreement with the company for purchase of mono-cylinder diesel engines for application on the three-wheeled vehicles manufactured by it. This implies that the company will continue to be a single source supplier of such mono-cylinder diesel engines to Piaggio. A solid bet for long-term.

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PAE Ltd. (Rs.19.25) is in the automotive and non-automotive (industrial) segments of batteries and components/systems The power segment presents its new growth opportunities as PAE has launched power back-up devices and systems and sees excellent growth potential for them. It is a profit making and dividend paying company. In the current year expected EPS is around Rs.5/6. Last dividend was around 10%, which is likely to rise to 12% in the current year. At present, market cap is just Rs.19 cr. The stock has reacted from a high of Rs.54 to the current level of Rs.19 where it looks very attractive for investment.
* Torrent Cables (Rs.180) - Those who booked profits at higher levels can add this stock at the current level of Rs.180 or on dips. Full year expected EPS is Rs.38/40.

Source: Internet

Investment Idea: Orchid Chemicals

The share price of Orchid Chemicals has taken a beating for the past few days. And that is precisely what makes it a good buy. The fall in the stock was directly attributed to Bear Stearns selling off a major chunk of its holding in the company. Selling was further triggered by promoters of the company selling a 7% stake to meet the margin calls. The promoters had earlier ramped up their holding from 17% to 24% and had borrowed the money to increase the stake. But when the margin pressure increased and the promoters did not have enough money to pay these off, they took to the recluse of selling their 7% stake and raising the money.

There is also news about the company having incurred some forex losses and it is also feared that FCCB of US$193 million due in 2012 would not get exercised and hence could remain as a debt in the books of the company.

On the financial front, despite all these turmoil’s, the company has been doing very well. For the third quarter ended 31st December 2007, YoY, the net sales rose by 39% at Rs.332.69 crore. EBIDTA was up 34% at Rs.104.87 crore. PBT almost doubled from Rs.31.28 crore to Rs.61.78 crore. PAT rose by a whopping 91% at Rs.54.12 crore. The company has posted an exceptional item of Rs.6.42 crore, representing exchange gain on outstanding FCCB. On this, the company paid a tax of Rs.2.19 crore which does not make the gain look very big now. On an equity of Rs.65.84 crore, the EPS is at Rs.8.20, which on the current price of Rs.118 gives a of PE of just 4.

The company has lined up 12 new products for launch over the next two years. The company has a very strong R&D, which has seven pre-clinical entities (total 15 molecules) targeting diabetes, infection, inflammation and oncology areas. Currently Orchid spends about 6-7% per cent of its sales on R&D. ORLL has filed 162 patent applications for new drugs and other innovative products. Well, with most of the drug majors spinning off their R&Ds into separate profit making entities, it will not be a surprise to see Orchid also do the same in the near future. At the current market price of Rs.118, Orchid is a good investment.

Source: Sptulsian.com

Markets Today

Blue chips edged higher in volatile trading session today. After an initial surge, the market had pared gains in afternoon trade. The S&P CNX Nifty, had in fact, slipped into the red. A strong rebound was witnessed in late trade.
As per provisional closing, the 30-share BSE Sensex rose 351.89 points or 2.35% at 15,346.72. The index gained 356.48 points at the sessions high of 15,351.31, hit at the fag end of the trading session.
The broader CNX S&P Nifty rose 49.4 points or 1.08% at 4623.35.
Mid-cap and small-cap stocks slumped, which was clearly reflected in the poor market breadth. Banking and IT stocks were in demand. Metal and power stocks declined. 22 out of 30 stocks from the Sensex pack ended in green.
The market sentiment remained edgy on reports Monsoon Capital LLC, a $1.20 billion hedge fund firm run by Gautam Prakash, has been hit hard by a slump in Indian stocks this year. The news may trigger more redemptions from hedge funds with higher exposure to India, reports suggest.
Among the Asian markets, Japans Nikkei slipped traded in red and Chinas Shanghai Composite declined further. Earlier in the day, Asian indices were mostly in the green. European markets were closed on account of Easter holiday.
As per data released on Thursday, 20 March 2008, inflation surged to over 11-month high of 5.92% for the week ended 8 March 2008 as essential items like fruits and vegetables and pulses as well as some manufactured items turned expensive.
The BSE Mid-cap index fell 2.41% at 5,820.13. The BSE small-cap index was down 3.47% at 6,971.42.
The market breadth, which was negative in early trade, turned poor as the session progressed. On BSE, 559 stocks advanced, 2130 declined and 34 stocks were unchanged.
The BSE clocked a turnover of Rs 4663 crore as against Rs 5,796.91 crore on Wednesday, 19 March 2008.
Indias largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 1.93% to Rs 2200.80.
Indias largest private sector bank by assets ICICI Bank rose 4.98% to Rs 804.55.
Indias largest engineering and construction firm by revenue gained 3.46% to Rs 2937.20.
Among the other Sensex gainers were, Housing Development Finance Corporation (up 7.96% at Rs 2389), Wipro (up 7% at Rs 402.95), HDFC Bank (up 6.14% at Rs 1349), Hindustan Unilever (up 4.84% at Rs 236.20), and State Bank of India (up 2.91% at Rs 1649.50).
Among the Sensex losers were, Tata Steel (down 6.95% at Rs 593), Reliance Energy (down 3.46% at Rs 1164.80), DLF (down 3.53% at Rs 601), Maruti Suzuki (down 1.91% at Rs 807), Jaiprakash Associates (down 1.08% at Rs 201.80) and Ranbaxy Laboratories (down 0.93% at Rs 446).
India's second biggest real estate developer by market capitalisation Unitech declined 4.90% to Rs 254.20, off sessions high of Rs 279.70. Lehman Brothers and Deutsche Bank are reportedly set to make a combined investment of $500 million in Unitech's special purpose vehicle formed to execute two commercial projects in Mumbai.
Refrigerant gases maker Gujarat Fluorochemicals jumped 3.35% to Rs 185 after its board approved the proposal to buyback equity at a ceiling price of Rs 300 per share.
Drug maker Sun Pharmaceutical Industries gained 1.31% to Rs 1277 after it received an approval from US Food and Drug Administration for the abbreviated new drug application to market a generic of Parke Davis's Cerebyx, fosphenytoin sodium injection.
Textiles firm S.Kumars Nationwide slumped 28.45% to 81.75 after 7.10 lakh shares changed hands on BSE at Rs 110 and 5.02 lakh shares changed hands on NSE at Rs 88.50 each.
Sujana Towers, manufacturer of galvanized steel towers, slumped 10.38% at Rs 85.05 after the firm said Morgan Stanley & Co International Mauritius acquired a further 3.85% stake in the company to raise its total holding to 7.04%.
FMCG products maker Dabur Pharma rose 3.38% to Rs 50.50 after 3.75 million shares or 2.4% of the company's equity capital changed hands on the NSE in a block deal at Rs 50.75 each.
Drug maker Aurobindo Pharma rose 0.60% to Rs 2505, off session's high of Rs 259.90. The comapny said it has concluded a deal to acquire Italy's Intellectual Property & Marketing Authorizations.
Edible oils maker KS Oils fell 1.73% to Rs 62.60 even as some reports suggested that the firm sees revenue rising to Rs 3200 crore and expects net profit of Rs 200 crore in full year (FY) 2009 due to a rise in demand, following import duty cuts in mustard oil. Indian government on Thursday, 20 March 2008 announced a cut in import duty on some edible oils to improve supplies and rein in inflation that touched a 10-month high.
Most Asian markets were trading higher today, 24 March 2008. Key indices in Taiwan, Singapore, and South Korea were up 0.58% to 3.99%. However, Chinas Shanghai Composite index was down 4.49% and Japans Nikkei was down 0.02%. Stock market in Hong Kong was closed for public holiday.
Wall Street shares soared on Thursday, 20 March 2008 as declining commodity prices helped offset worries about the economic slowdown. Financial stocks rallied on analyst expectations that more mortgage purchases by Fannie Mae and Freddie Mac may help stabilize the home loan market.
The Dow Jones industrial average jumped 261.66 points, or 2.16%, to 12,361.32. The Standard & Poor's 500 index added 31.09 points, or 2.39%, to 1,329.51, and the Nasdaq Composite index advanced 48.15 points, or 2.18%, to 2,258.11.
Back home, the Sensex rose 161.37 points or 1.09% at 14,994.83 on Wednesday, 19 March 2008. The broader based S&P CNX Nifty was up 40.95 points or 0.9% at 4,573.95 on that day.
The market remained closed on Thursday (20 March 2008) on account of Id-E-Milad and on Friday (21 March 2008) on account of Good Friday.
As per provisional data, foreign institutional investors (FIIs) purchased shares worth Rs 30.54 crore on Wednesday, 19 March 2008. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 142.19 crore on that day.
FIIs were net buyers of Rs 1,901.33 crore in the futures & options segment on Wednesday, 19 March 2008. They were net buyers of index futures to the tune of Rs 1,838.77 crore and sold index options worth Rs 175.11 crore. They were net buyers of stock futures to the tune of Rs 239.51 crore and sold stock options worth Rs 1.85 crore.
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Intraday Calls for 24th March

Markets may open flat to positive and remains rangebound about +/- 1%. A flat to positive closing expected.

Today's Intraday Picks:

GMR Infra
SAIL
UNITECH
Federal Bank
Gujarat NRE Coke

For levels and Targets download the file by Click Here

Others: Lok Housing, Bank of Rajasthan, HCC, Noida Toll.

Good Luck