Stock Idea: Oil Country Tubelar

Oil Country Tubelar (Code : 500313) (Rs. 49.00)
Hyderabad based OCTL is one of the leading companies producing a range of products for Oil Drilling and Exploration Industry. Its product range covers drill pipe, heavy weight drill pipe, drill collars, production tubing, casing, tool joints, couplings etc. OCTL has been assessed and certified by APIQR. Scrip is being recommended due to buoyant demand from user industry and OCTL, a debt-free company, is reporting excellent nos.

Company had improved its performance significantly in 2007-08 with sales of 340 crs. as against Rs. 262 crs. in 06-07. Exports during the year were Rs. 254 crs. as against Rs. 104 crs.in 06-07, a rise of 145%. Company had sold 4043 tonnes of Casing Pipes, 1262 tonnes of Production Tubing and 10787 tonnes of Drill Pipes. During the year company fully paid Principal amounts of term loan and funded interest to IFCI and ICICI. An amount of Rs. 13 cr. was paid to IDBI towards full and final settlement of FITL outstanding. Thus, company became debt-free. Current Performance :- Company has been performing extremely well. For 9 months, its sales stand at 267 crs. as against 235 crs. in corresponding figures of previous year. However, PBT increased by 100% to 73.45 crs. Despite much higher tax provision, PAT has gone up by 50%. EPS for 9 months is 11.95 For 08-09, OCTL is likely to achieve sales of Rs. 415 crs. and PAT of Rs. 74 crs. It will translate into EPS of Rs. 16.70. Scrip (debt-free company) is available at just 2.87 x FY09E EPS. Company is also likely to declare maiden dividend of 25%. For 09-10, company is likely to achieve EPS of 19.40. Company is planning to expand its production capacities. However, details of same are not yet available.

Valuations: Scrip is available at (1) 0.50 x FY09E sales., (2) 2.87 x FY09E EPS. (3) 2.47 x FY10E EPS. Promoters have been increasing their stake through open market purchase. Considering that OCTL is supplying its products to Oil Drilling Industry, it has bright prospects and deserves
better valuations. If, scrip gets modest P.E. Ratio of 5, based upon FY09 EPS, its share price should be Rs. 83/-. Share price has been lying low due to low profile of the promoters. However, once 08-09 results are announced on 24th April, OCTL should catch attention of the investors and P.E. expansion should take place. Investors can buy this scrip as share price can appreciate minimum 50% in short term, if sensex remains stable.

Source: Internet (Smart Investment)

Multibagger: Marg Ltd.

Marg Ltd. (BSE Code : 530543) (Rs. 59.00)
Rational for recommendation :- 1) Foray into Airport Vertical. 2) Financial Closure for SEZ completed. 3) Karaikal Port commissioned. Background : Promoted by G.R.K. Reddy in 1994, Marg is emerging as one of the fastest growing integrated infrastructure company in India. Under the real estate vertical MARG has already developed over 1 million sq. ft. of commercial space for clients like TCS, Satyam Computers , Scope International among othe In 2007, share price of Marg had gone above Rs. 600/-. Subsequently, share price crashed due to meltdown in Real Estate Sector. However, it may be noted that company has acquired big land bank at very low costs which will provide immense appreciation in coming years, once Real Estate Sector starts reviving. However, now, scrip is being recommended due to implementation of some notable infrastructure projects: 1) Karaikal Port : In 2006, Pondicherry Govt. had awarded Marg the concession to develop the port at Karaikal on BOT basis. This port has been commissioned on 15th April, 2009. Construction of the port is on a vast expanse of 600 acres with a unique state of the art cargo handling and backup facilities. Port already has excellent road and rail connectivity. Optimally suited to cater to the high potential industrial belts of Tamil Nadu and Puducherry, the port is connected with NH45A and NH67. 2) Marg Swarnabhoomi : With specific focus on light engineering and multi-services industries, MARG Swarnabhoomi is poised to become a leading business hub in South Asia. The fully equipped business environment with state-of-the-art infrastructure, will be a perfect destination for corporates looking to set up their units with zero entry barriers. Valuation/Recommendation : Some big players of Real Estate Sector in India have paid unrealistically high prices to acquire new land bank which led to
severe crash. Share price has been lying low as analyst are sceptical about company's capacity to raise funds for implementing all these projects. However, timely commissioning of the port speaks of company's capability. Current market cap of MARG is just 150 crs. which is extremely low even from Karaikal Port point of view alone. We believe that MARG will emerge as a respectable name in Indian infrastructure space. Our price target: 1) Rs. 85/- in 4-8 weeks., 2) Rs. 125/ - in 3-6 months. If scrip is held for 2-3 years, it should provide multibagger appreciation. Perhaps, the cheapest scrips in infrastructure space.

Source: Internet (SmartInvestment)