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Wednesday, April 15, 2009

Some more hot picks for you people

1)Scripscan:Triveni Engineering & Industries Ltd
Traded in:Nse-bse

Story:De-risked business model with presence in Engineering & Sugar.Third largest fully integrated player in Sugar business 61000 TCD, 160KLPD Distillery & 68MW Co-Generation facilities,Engineering business with an order book of Rs80bn caters to the power and water sectors and forms 40% of revenues & 60% of profits.Market leader in steam turbines (30% of revenues), gears & gear boxes.Strong presence in water & waste water treatment equipments.Holds sugar inventory worth 50% of its annual revenues.Sustainable EBIDTA of 19% trading at 6.5xFY’10E earnings.Promoter holding 67% and (FV 1)With a Market Capitalisation of Rs14bn,A good bet to be bought in dips.

2)Scripscan:TIL Ltd
Traded in:Nse-bse

Story:India centric business model with multiple revenue streams.Construction & Mining segment forms 70% of revenues.Power Systems segment comprising gensets forms 15% of revenues.Material Handling segment comprising cranes, forklifts and stackers
forms 15% of revenues and is the most profitable segment.TIL should in our view benefit from the Indo-US civil nuclear deal andthe approval of the APDRP during the XI plan.TIL with robust return ratios trades at 3x earnings and markets arevaluing the stock like a closed entity based on slowdown in mining,ports, retail and ITES segments.TIL (Kolkata based) with revenues of Rs10bn is valued at Rs1 odd bn and werecommend a BUY with a 12-18M price target of Rs180.

3)Scripscan:Greaves Cotton Ltd
Traded in:Nse-bse

Story:Contra play on India centric business of Engines, Infrastructure Equipment and Agricultural Equipments.Concerns over done and Greaves can surprise on the upside due to leanfixed cost structure and incremental volumes.Easing of liquidity concerns and input costs along with strong balancesheet could likely be upside triggers.De-risking strategy is working well and exports look promising.Assuming a highly stressed case scenario of a 20% de-growth in revenues and 35% de-growth in profits, the stock trades at less than 5x.Dividend yield even in such a stress case scenario works to 6% and company is virtually debt free with cash per share of Rs15.BUY with a 12-18M price target of Rs140 (FII holding is ZERO)

4)Scripscan:Suven Life Sciences Ltd
Traded in:Nse-bse

Story:Partnership business model with Innovator Drug Companies.Partnering development of under patent molecules.Partnering drug discovery and development of New Chemical Entities with global drug majors.Partnering with multinationals for contract manufacturing.Leveraging relationships with 25 global life science companies.Offering a clear value proposition to multinationals in cutting costs,timeto market and outsourcing research capabilities.Successful transformation in supplying products from grams to tons.Stock trading at 9x one year forward earnings with R&D focus.Zero FII Holding in the stock at present (FV 1)BUY with an 12M to 18M price target of Rs25.

5)Scripscan:Fulford India Ltd
Traded in:bse

Story:Schering Plough last fiscal hiked its holding in Fulford from 40% to 54%at a price of Rs565 which cost it only Rs40crs.Fulford is a leading India centric player in the dermatology segment of the pharmaceutical space with a strong brand franchise.De-risking the product portfolio away from dermatology is now working well after initial teething troubles.Although CY’08 is an year of consolidation for the company with a flat EPS of Rs55 we expect Fulford to post growth next fiscal.The stock trading at 6xCY’08E and 5xCY’09E is the most compelling MNC pharmaceutical company in terms of valuation.BUY with a 12-18M price target of Rs650. (FII holding is Zero)

6)Scripscan:Kaveri Seed Company Ltd
Traded in:bse-nse

Story:South based producer of Hybrid Seeds transforming into a Pan India player – Rs1bn company eyeing the Rs70bn Indian Seeds Market.Leveraging the crop productivity improvement theme in agriculture.High visibility of a 40% earnings growth over the next three years.Revenues projected to grow at 25% over the next three years.Well diversified product portfolio spanning key crops like Corn, Cotton and Sunflower for both the cropping seasons – Kharif and Rabi Germplasm and R&D spread across 350 acres of own land within the listed entity in the state of Andhra Pradesh.Post expansion - State of the Art - Six seed processing plants.Brand Franchisee with Growers & Farmers with strong relationships.Stock trading at 6xFY’10E and grow with this emerging star and reap the benefits of 100% returns in 12-18M

7)Scripscan:Excel Crop Care Ltd
Traded in:bse-nse

Story:JV between the Mumbai based Shroff Group and Nufarm - Australia.Fully integrated player in crop protection products.High visibility of a 25% earnings growth over the next three years.Valued at 4x earnings when the value of its Mumbai property itself is equal to its market capitalisation.No FII holding despite strong free cash flows and healthy ROI.Successful transformation of its business model through pro-active management and new product introductions across geographies.Leveraging the need to improve crop productivity arising due to shrinking land area by promoting weedicides, soil enrichers and nutrients.BUY with a 12-18 month price target of Rs140 (Dividend yield of 5%).

8)Scripscan:Ugar Sugar Works Ltd
Traded in:bse

Story:De-risked business model with power, sugar & ethanol.USW derives 60% revenues from sugar and 40% from co-generation and distillery operations.15,000 TCD in sugar, 75klpd distillery and 75mw co-generation.Highest recovery in the sugar sector this season at 11.4% at Ugar,Jewargi and Bagalkot.Highest co-generation realisation at Rs7per unit in the sugar sector.Co-generation is the most profitable activity for the company and withsugar turning profitable this year, USW has the most compelling
valuation in the sugar space at 2xFY’10E.USW has FV of Rs1 and the FII Holding in the stock is ZERO.Buy USW with a one-year price target of Rs30.

9)Scripscan:Dhampur Sugar Mills Ltd
Traded in:bse-nse

Story:Integrated sugar company with 39,500 TCD at Dhampur, Asmoli,Mansurpur and Rajpura.70% revenues from sugar and 30% from distillery and co-generation.Operates a 270klpd distillery and 145mw co-generation facility.Swapping high cost debt with cheaper loans from SDF along with improved sugar realisations is leading to a turnaround for DSM.DSM would be a Rs10bn company next year generating an EBIDTA of
Rs2bn and with a market capitalisation of Rs1.7bn, DSM at 3xFY’10E is an attractive bet.DSM would crush 2.8 million tons of sugar this season and improved cash generation would ensure sustainable turnaround.BUY with a one-year price target of Rs60.

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