31st March, 2009
When the times are tough the good gets the same treatment as the bad and worse. Sensible people fail to distinguish between great opportunities and bad investments.
The sentiment in the stock market is a curious thing. It colors all the stocks with the same hue when the sentiment is negative and on a positive run even penny stocks look like value buys.
The global meltdown, both on the domestic front and globally, has led to a sharp decline in stock prices across the board in the last one year. Many stocks are quoting below their book values. Book value of a stock reflects the intrinsic value of the company and the stock. Many such stocks offer a great investment opportunity. Good companies are capable of delivering consistent performance even under tough conditions. Such value stocks will be the first to bounce back when the stock market sentiment improves.
Here are some of the value picks in the Indian Stock Market in the current scenario:
Bartronics
Bartornics India Limited (BIL) has been growing at a clipping pace thanks to a small base effect and good business strategy. BIL has a compounded annual growth rate (CAGR) of 100 per cent in revenues and 220 per cent in profits during FY2003-08. Even for FY09, revenues are seen growing by 85 per cent year-on-year (y-o-y) to Rs 500 crore (Rs 417 crore in nine months ended December 2008).
The company's inventory and supply chain management products and solutions find application in different industries and hold promising future thanks to increasing applications in retail and manufacturing sectors. The company has recently extended its product offering through its partnership with US-based Intelleflex Corporation for RFID(radio frequency based identification)-based solutions for the Indian market.
Notably, its smart cards business also holds promise and finds wide application in data capturing and identification. The company has a manufacturing capacity of 80 million cards per annum. While in FY08, it sold 31 million cards (Rs 93 crore in revenues), for FY09 and FY10, the company is expected to achieve higher sales on the back of strong order book of Rs 140 crore. Also, the average realization (Rs 30 per card) and volumes, so far, has been low due to high dependence on a telecom.
The company is eyeing orders from the government and banking sectors, which should help in improving pricing power and volumes going ahead. With the introduction of 3G cards itself, the realization will jump by 40-50 per cent. The expected introduction of 'master' banking cards (consolidated card assisting multi-banking transactions) in 2010 should also help improve realizations. Thus, both margins and volumes are seen improving in this business. The company is operating in fast growing segments and has a strong order book of Rs 1,100 crore (four times its FY08 revenue and executable over the next two years), which provides good growth visibility.
BEML
BEML has operations in three segments:
1. Mining and construction and makes equipment like hydraulic excavators, bulldozers, dump trucks,
2. Defense sector where it provides field artillery tractor, tank transportation trailers, weapon loading equipment, armored recovery vehicle
3. Railways BEML caters to metro trains, rail coaches, D-EMUs, wagons.
4. BEML's other three divisions are technology which deals in design and engineering solutions, trading in third party products and exports.
The performance of BEML has been impacted by the global slowdown in the current quarter. Not only topline growth has slowed, margins have also slipped. However, net profits haven't declined because of higher other income.
Recently the company has received some high value orders. BEML bagged a Rs 1,672.50 crore order from Bangalore Metro Rail Corporation for supply of 150 metro coaches in addition to an Rs 1,365 crore metro coach order from Delhi Metro. BEML also stands to gain from new metro projects coming up in Chennai and Mumbai..
BEML has also been active in terms of strengthening its vast portfolio by entering into joint ventures with foreign players. On |
