Stock Idea: VBC Industries Ltd.

VBC Industries Ltd. (524310) CMP Rs. 31/-

This Hyderabad based Company is engaged in the production of Ferro Chrome with installed capacity of 13,000 tonnes. Promoters stake is 72%. Its financial performance is just average:
Q1 09 - 10 08 - 09 (12 M)
cr. cr.
Net Sales 10.57 43.00
PAT 1.24 1.88
Equity 45.18 45.18
Company has already acquired additional land and has planned to expand its production capacity to 80,000 tonnes next year. However, Company holds big investments in various power projects (gas based, Hydel, Thermal).

1) VBC Ind: Holds 30.87 mn. shares of Konaseema Gas Power by investing 30.87 crs.. Konaseema has already started power generation (Phase-I, 400 MW) as it is getting natural gas from K.G. Basin. Konaseema is implementing Phase-II by adding another 800 MW. Konaseema is likely to come out with IPO in 2010 @ Rs. 150/- per share which means, value of VBC Investment in Konaseema can be worth over Rs. 400 crs.
2) Hydel Power: VBC Ind. had promoted Orissa Power Consortium Ltd., holding 20.00 mn. shares. OPCL has already commissioned 20 MW Hydel Power Plant and trials are under way. Hydel capacity of OPCL will be expanded to 100 MW by 2011. Location of OPCL is considered one of the finest for Hydel Power Generation. This investment of VBC Ind. in OPCL will command bumper valuations (considering huge valuations given to NHPC, VBC Ind. valuation of
investments in OPCL could be more than 100 crs.).
3) Thermal Power: VBC Ind. has invested 8.83 crs. in Karthik Rukmini Energy which is setting up 65 MW Power Plant. Thus, VBC Ind. has invested in 3 spaces of Power Generation i.e. Gas, Thermal and Hydel.
Further, VBC Ind. has also made significant investments in another 2 companies. However, details about nature of business of these 2 companies still not available with us. Finally, it is reliably learnt that, some major developments are taking place. Once same are finalized and announcement is made in next 2 months, VBC Ind. scrip will be re-rated. KSK Energy does not have any Power Plant of its own and has acquired Equity stake in some upcoming Power Projects and is quoting above Rs. 200/-. Thus, in peer comparison, VBC Ind. is dirt cheap. Although at present, we are not able to put exact valuations to various investments of VBC Ind..
However, looking at extremely high valuations of Adani Power, R. Power, NHPC, KSK Energy etc. and, gut feeling as well as analytical vision of this writer, investor should not be surprised if valuation of all these investments works out to more than Rs. 1000 crs. after 18 months (because by that time, full 1200 MW of Konaseema will be operational). Moreover, once Company completes 600% expansion of its Ferro Chrome capacity, it will have substantial manufacturing turnover as well. In 2007, its share price had crossed Rs. 50/-. Scrip is being accumulated by knowledgeable circles. As per latest and reliable info available, Orissa Power will be merged with VBC Ferro. Hence, VBC Inds. will be allotted shares of VBC Ferro (in lieu of its holding in Orissa Power). Share Price of VBC Ferro is around Rs. 500/-. If VBC Ind. gets 20 lakh
shares of VBC Ferro, market value of this investment alone will be more than Rs. 100 crs. Our price target Rs. 50 - 55 in less than 6 months and Rs. 120-150 in less than 24 months. You may buy big quantity.

Source: Internet (Valuenotes by profittrack.in)

Stock Idea: J Kumar Infraprojects Ltd.

J Kumar Infraprojects Ltd as the name suggests is a pure infrastructure player. The company originated in 1980 with a modest beginning and in 29 years has become a force to recon with. Today it competes with all the leading infraproject companies. In the last three years the topline and the bottomline of the company have grown at 18.44% and 35.71% respectively. In FY10 and 11 I expect the company to clock a topline and bottomline growth of 28%. Infrastructure has become the backbone of the economy and the Govt. realizing this has initiated time-bound creation of world-class infrastructure that maximizes the role of public-private partnerships (PPPs). Thanks to these initiatives the order book of the company is 1400 crores (3.46 times FY09 revenues). This assumes great importance because the company has an impeccable track record in timely execution of projects. Hence there is great amount of revenue visibility for the company, which should also reflect on the bottomline.
According to the chairman Mr.Jagdish Kumar Gupta "At J.Kumar our core values-ambition, integrity, foresight, discipline, dedication to excellence and teamwork - have guided us over a quarter of a century".
The present backlog of the company remains completely hedged against commodity price fluctuations. This is a great positive for the company going forward. At a CMP of Rs 158.35 (NSE) the company trades at a P/E of just 7.85 and 6.13 times FY10 and FY11 respectively. The stock can be bought at a price level of 158-159 with a 15-month price Target of 345Rs.

Source: Internet (Valuenotes by Manu Jain)

Stock Idea: Cranes Software International Ltd.

Cranes Software International Ltd (Rs 42)

(BSE Code- 512093 NSE Code- CRANESSOFT) (P/E- 4, Market Cap- 494 cr.)

Cranes Software (CSI) is a specialised software products company, focussed on providing products and solutions to address the needs of scientists and engineers globally. The company's main focus areas are data visualisation and presentation, statistical and analytical software and engineering. Cranes' core success lies in its unique `Acquire-Enhance-Expand' business model. This model has enabled the company to create a significant intellectual property (IP) driven technology business within the focus area of scientific and engineering software. Acquisitions are an integral part of Cranes' business model and their success the basic reason for the company's strong performance in the past. Its acquisitions include products that have faced problems due to shortage of funds, weak management, and lack of sales and marketing network. These products are usually technologically strong and have brand names. Cranes acquires such products and then uses its R&D capabilities and marketing network to further enhance and sell them.Today, CSI has its presence in 39 countries across the world and has a 350,000 strong global user base. Cranes Software offers a range of proprietary products - SYSTAT, SigmaPlot, SigmaStat, SigmaScan, TableCurve 2D, TableCurve 3D, PeakFit, NISA, XID, XIP, Survey ASYST, iCapella, InventX and world-renowned products from reputed principals such as Engineering Technology Associates, The Mathworks, Texas Instruments and IBM. The company has grown its sales and net profits at compounded rates of 58% and 67% respectively over the period FY02 to FY06. One of Cranes' major strengths is marketing. The company has direct offices in five locations - the US, the UK, Germany, India and Singapore - apart from distributors. The strong distribution network of the company has been one of the key reasons as to why it has been able to ramp up sales of the acquired products over a period of time.Total consolidated revenues for Q1FY10 are up 6% to Rs. 121.8 cr. whereas PAT for Q1 is at Rs 28.1 cr.. EPS for Q1 ended June 2009 is Rs 2.4. Total consolidated revenues for FY09 were up 32.7% to Rs. 528.9 cr.. Overseas revenues increased 41.0% to Rs. 450.9 cr. and constituted 88.6% of total revenues. Operating profit improved by 17.9% to Rs. 240.2 cr.. Operating margins for the year stood at 45.4%. Net profit after tax is up 5.5% to Rs 121.3 cr.. Accordingly, FY09 EPS on a Rs 2 paid up share stood at 10.3 on a equity of 23.55 cr.(Promoter's stake- 36.68%, FII Stake- 41.78%) and the dividend declared is 10%. Proprietary products grew by 31% on a corresponding basis and constituted 87% of total revenues. CSI expects this segment to grow at a healthy pace and constitute majority of total revenues. CSI has, with a longer-term view, invested in proprietary technologies that would deliver returns over a longer period of time. These include wireless technology standards and micro electro-mechanical systems (MEMS).During the year, CSI entered into alliances with several leading Companies and announced new product launches that will serve as a platform for its future growth initiatives. Going forward, it will continue to focus on consolidating operations to sustain long term growth and with increased emphasis on productivity of resources. CSI's premier graphing application, SigmaPlot 11 won the Scientific Computing Magazine's Reader's Choice Award 2008 in the 'Graphing' and 'Statistical Analysis' categories. CSI shifted its Engineering and Technology operations to 35,000 sq ft of own office premises which is expected to result in considerable savings in FY10. The company continues to witness strong traction in its IP-led business model. The continuous launch of newer versions of its proprietary products is a positive factor which is necessary in order to sustain growth in a product-led business model, it is necessary to have a strong R&D set-up in place, as well as a strong marketing network. The company is also in the process of launching its `Solutions' business, which will drive the topline going forward. This initiative will give Cranes an end-to-end solution suite in the niche area of engineering and scientific software products. The stock currently trades at Rs 42, implying a P/E multiple of 4 times FY09 earnings. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 40%-50%over the next 6-8 months.

Source: Internet (By Sanjay Chhabria)

Stock Idea: Geodesic Ltd.

Geodesic Ltd (Rs 136)
(BSE Code- 503699 NSE Code- GEODESIC)
(P/E- 4.4, Mkt. Cap-1253 cr.)
Geodesic Ltd, formerly Geodesic Information Systems Ltd, has been an innovator in software products focused on information, communication, and entertainment for mobile phones and desktop computers. Among its retail products are instant messenger service, software applications (VoIP or Voice over Internet Protocol) and Mundu Radio (allows users to navigate numerous radio stations and news channels on mobile phones). Its institutional products help enterprises manage customer data, reduce advertising and communication costs and enable communication across the enterprise
Geodesic offers applications under the brand name 'Mundu' for retail segment and is also the owner of Chandamama, the library of 15,000 exclusive stories. Geodesic offers communication and collaboration solutions. It provides innovative front-end applications, the Mundu suites of products. Mundu instant messaging (IM), (voice-over-internet protocol) Mundu speak, Mundu Radio, Montage, etc. Mundu Radio technology is used by Idea Cellular's 'Idea Radio' and Geodesic also has technology allowing live TV on mobile handsets. Mundu IM has been recognised as one of top 10 applications of 2007-08 and is used by more than 7% of iPhone users. Mundu suite of products helps reduce 60-65% of communication costs. In 2005, Geodesic acquired three companies including Bangalore based Picopeta Simputers and Hong Kong based Engage solutions and took a stake in Swedish Clangula IT. In 2007, it acquired web development company E Dot solutions and children's magazine Chandamama. Its latest acquisition was South American Interactive Networks (INT), which has given Geodesic access to secure private IM solutions for enterprises, private label IM solutions for internet services and IM solutions for mobile operators.
There are an estimated 360 million smart phones worldwide and what Geodesic offers is mostly related to Internet services on mobile phones-a market that's growing 30% a year. Call and message rates in India are already very low and there is little room for competition on the price front. The next wave will come from value-added services(VAS) such as VoIP and entertainment content. As a niche content provider, Geodesic can tap this opportunity. Instant messaging is a rapidly expanding mode of real-time communication across the world. The global messaging market, which was $65 billion in 2007, is predicted to touch $117 billion by 2012 according to Portio Research. A more recent report also states that Mobile Instant Messaging, which generated $2.5 billion in 2008, is expected to increase to $12.4 billion by 2013.
Geodesic reported a consolidated topline of Rs 642.94 cr. in FY09, a whopping 103.18% jump over Rs 316.44 cr. in FY08 on consolidated basis. Net profit at Rs 282.84 cr. grew a handsome 90%. On a equity of 18.44 cr.(Promoter's stake-23.25%, FII/MF stake- 58.32%) The EPS on a Rs 2 paid up share stood at Rs 30.67 and the dividend declared is 80% (Rs 1.60 per share). Geodesic has a strong balance sheet with Rs 380 cr. of cash, part of which was used to buy back $8.5 million outstanding FCCBs. In the March quarter, Geodesic finalised a deal with Bright Star Corporation, Miami, to launch Mundu IM on mobile phones and also got orders from Atom Technologies, Mumbai, Venture Infotech and Fullerton India Credits Ltd for implementing a biometric enabled mobile terminal. It inked deals with Business India and Ahli United bank BSC, Bahrain, as also with some leading stock broking firms in India and Mirae Asset Global Investment Hong Kong. Besides, Toonz has recently tied up with the company for using Chandamama stories for full-length animated films. For the Q1 ended June 2009, Geodesic posted net profit of Rs 59.04 cr. on net sales of Rs 163.2 cr. on consolidated basis. The stock is trading 4.4 times its FY09 earnings and appears extremely cheap for a products company with a net profit margin of over 44%, much higher compared to most other listed, products-focussed technology companies. Investors can start accumulating the stock at current levels and add more on declines for decent returns of 50%-60% over the next 6-8 months.

Source: Internet (Valuenotes by Sanjay Chhabria)