Jan 21 -02

After hitting a recent high of Rs 75, Gujarat Intrux (48.00) has corrected sharply to less than 50 levels giving a good opportunity to buy for long term. It’s a small company based in Gujarat and is mainly engaged in the production of stainless steel, alloy steel and non-alloy steel castings. Apart from catering to domestic market it has been exporting its product to Israel, U.K., Spain, Germany, U.S.A., and Australia. Due to robust demand for its product, company is planning to enhance its production capacity by 3600 MTPA. Whereas it’s existing production capacity is merely 1800 MTPA. Financially, it’s a debt free company and has been making highest tax provisioning of around 35% of PBT. For H1FY08, it registered 20% growth in topline to Rs 14 cr but NP was almost flat at Rs 1.40 cr. Hence it may clock a turnover of Rs 28 cr and profit of Rs 2.75 for FY08 i.e. EPS of Rs 8 on small equity of Rs 3.40 cr. However the huge fluctuation in the price of raw materials i.e. Scrap and Ferro alloys is a cause of concern. Still considering company’s expansion plan and management’s capability it can be added at declines.

Shilp Gravures (70.00) is undisputed leader in electro-mechanical engraving, with a substantial market share of around 40% for flexible packaging industry in India. In simple terms it manufactures electronically gravure/engraved cylinders which are eventually used for rotogravure printing. It has a 300-strong client list which includes India's most reputed names like HLL, Britannia, Amul, Nestle, Cadburys, Tata Tea, Pepsi Foods, Haldiram, P&G, Reliance, ITC, Colgate, Mcdowells etc thereby having a pan India presence. On the back of retail boom and strong demand from FMCG sector, company is doing exceedingly well. It has reported very encouraging nos for first two quarters because of higher realization and increased volume. Sales jumped up 45% to Rs 18 cr whereas PAT more than doubled to Rs 3.50 cr thereby registering a very healthy OPM of 44%. Interestingly its H1FY08 profits have already surpassed the entire FY07 net profit of Rs 2.90 cr. Hence accordingly it may end FY08 with sales of Rs 38 cr and NP of Rs 7.50 cr which leads to an EPS of Rs 12 on equity of Rs 6.15 cr. Keep accumulating at declines.

Span Diagnostic (90.00) is a pioneer and trend-setter of high quality products used by pathology & clinical laboratories in the diagnostics industry and also one of the largest manufacturers of diagnostic reagents. Hence it supplies variety of instruments and consumables besides reagents and kits required by modern clinical laboratory. To strengthen its market share in overall diagnostic market, it has recently formed a new subsidiary especially for R&D of instruments. It has exclusive tie-ups with reputed companies worldwide for marketing, distributing and servicing diagnostic products in India. Moreover company also undertakes contract manufacturing of a wide range of quality reagents and kits in bulk for private labels. For six months ending Sept’07 it has reported excellent nos with sales up 55% to Rs 32 cr and PAT up 130% to Rs 2.50 cr. Importantly it has been able to improve its operating margin to 14% against 11% last fiscal. So it may end FY08 with total revenue of Rs 70 cr and PAT of Rs 4.25 cr. This translates into EPS of Rs 13 on small equity of Rs 3 cr. Again buy at sharp declines only.

Sukhjit Starch (155.00) is mainly engaged in manufacturing edible and non edible maize starch, dextrine, liquid glucose and dextrose monohydrate. It also produces sorbitol, maize oil, maize gluten, maize husk, high maltose syrup, oxidized/pregelatinized starch etc. Notably, it is the only multi-locational group in India as of now with a combined installed capacity of 1,50,000 tons corn grind per annum. It is expected to report encouraging nos for Dec qtr as it started commercial production at its new Himachal Pradesh plant in July 2007. This new plant has enhanced the capacity by nearly 25% and is dedicated for high margin starch and derivative products especially for pharmaceutical industry taking shape in Baddi, HP. Company has an impressive clientele including corporates like Britannia, Dabur, Colgate, HLL, Heinz, Ballarpur, Berger paints, JCT, Mahavir Spinning, Wockhard etc. On a conservative basis, it is expected to end FY08 with sales of 175 cr and NP of 18.50 which translates into EPS of 25 Rs on equity of 7.40 cr. A safe bet in current market sentiment.