Stocks for the Long Run

Disclaimer: Read & Act on your Own Risk.

(A) Auto Sector (12%)

1. Omax Autos Ltd

About the company: Omax is manufacturing different automotive parts for Two Wheeler and Four Wheeler vechiles. Omax offers a wide range of products that include Sheet Metal, Tubular, Machined Components, Painting & Plating Parts. With complete in-house designing capacities & capabilities right from the product designing to tooling, jigs, fixtures and gauges designing through the latest CAD/CAM software technology from IDEAS, CATIA & Pro-E.

The company has a rich client base (Indian, European and North America).

Financial Highlights: Sales has been relatively flat in last 4 quarters (227.24 Crs in Dec 06 to 213.36 Cr in Dec 07). Net profit has declines from c5 Crs to c2 Crs in Dec 07. In terms of valuation, the P/BV (Price by Book Value) is 0.75 and Price / Sales = 0.12. Estimated P/E is 6.11.

Suggested allocation - 3% of total proposed investment.

2. Amtek India Ltd

About the Company: Amtek Group is a leading international manufacturer of automotive components and assemblies with production facilities located strategically across North America, Europe & Asia. The Group's extensive manufacturing capabilities encompass Sub assemblies, Iron, Gravity & Aluminium Castings, Forgings, Complex Machining & Ring Gears Flywheel Assembly.

Financial Highlights: Sales have shown a consistent increase in the last 4 QTRS (211.29 Crs in Dec 06 to 247.61 Crs in Dec 07). Net Profit has increased from 34.1 Crs in Dec 06 to 36.15 Crs in Dec 07. In terms of valuation, P/BV is 0.94 , Prices / Sales is 0.96 and estimated P/E is 6.1.

Suggested allocation - 3% of total proposed investment.

3. Nelcast

About the company: Established in 1985, Nelcast has since been a significant and diligent participant in the ferrous casting industry, producing superior quality castings for many an industry. Nelcast has shown an astounding growth rate, growing to 140 times its original size to reach its current capacity of 84,000 MT. It plans to double that capacity in about two years.

Financial Highlights: Sales has increased from 95.2 Crs in Dec 06 to 105.4 Crs in Dec 07 and net profit has increased from 5.67 Crs to 8.67 Crs in the corresponding period. In terms of valuation, Price/ BV is 2.7 times, Price / Sales is 0.42 times and estimated trailing P/E is 6.1.

Suggested allocation - 3% of total proposed investment.

4. Talbros Automotive Components Ltd

About the company: This company has more than 50 years of existance.

Financial Highlights and valuation: Sales has increased from 47.8 Cr in Dec 06 to 52.13 Cr in Dec 07 and net profit has declined from 4.11 Crs to 1.65 Crs in the corresponding period. The stock is attractive in terms of its valuation - Price / BV = 0.66, Price / Sales = 0.22 and estimated trailing P/E = 4.82.

Suggested allocation - 3% of total proposed investment.

(B) Papers (13%)

1. West Coast Paper Mills Ltd

About the company: The West Coast Paper Mills Ltd. is the flagship company of SK Bangur Group, based at Kolkata. They are maindly in the manufacture of Papers for printing / premium papers products and paper boards.

Financial Highlights: Sales has been relatively flat in the last 4 QTRS (average 144.85 Crs) and net profit has increased from 17.5 Crs in Dec 06 to 22.11 Crs in Dec 07. In terms of valuation, Price / BV is 0.26, Price/ Sales is 0.63 and estimated P/E is 4.52. It is quoting at 65 - 70 and has recently alloted shared to promoter group @ Rs. 85 / share. The company has been paying dividend @ 15 per share for the last 4 years.

Suggested allocation: 5% of total Proposed investment.

2. Ruchira Papers Ltd

This is a small cap company and produces paper and paper products. It was listed in the exchange in Dec 2006. The new plant is in trial production and should reflect in the topline and bottom line growth in the coming months.

Financial Highlights: Sales has been relatively flat in the last 4 Qtrs(average of 20 Crs) and average net profit is 1.66 Crs per Qtr. In terms of valuation, the Price / BV is 0.48 and Prices / Sales is 0.34.

Suggested allocation: 4% of total proposed investment.

3. JK Paper Ltd

This is involved in the production of Paper and Paper products.

Financial Highlights & Valuation: Sales increased from 187 Crs in Dec 06 to 206.41 Crs in Dec 07. However, net profit has declined from 11.86 Crs to 7.93 Crs in the corresponding period. In terms of valuation, the Price / BV is 0.75, Price / Sales is 0.36 and estimated P/E is 6.36.

Suggested allocation: 4% of total proposed investment.

(C) IT - Small/ Medium (9%)

1. Aftek Ltd

This is basically into IT consulting / Embedded application development / Enterprise Application development / Wireless application & hardware development.

Financial highlights: Sales has increased from 86.19 Crs in Dec 06 to 998.11 Crs in Dec 07, net profit for the corresponding period increased from 26 Cr to 27.28 Cr.. In terms of valuation, Price/BV is 0.56, Price/ Sales is 0.96 and estimated P/E is 3.42.

Suggested allocation: 3% of total proposed investment.

2. Helios & Matheson

This company is in the IT and ITes / BPO domain. Has a varied services and reasonably good client base.

Financial Highlights: Sales have increased from 109.3 Cr in Dec 06 to 113.01 Cr in Dec 07 and the Net Profit has been relatively flat and was at an average of 15.31 Crs / QTR. In terms of valuation, the Price by BV is 1.16, Price / Sales is 0.28 and estimated P/E is 2.02.

Suggested allocation: 3% of total proposed investment.

3. NIIT Technologies Ltd

Financial Highlights / Valuations: Sales increased from 88.13 Crs in Dec 06 to 118.37 Crs in Dec 07. However, net profit decreased from 36.77 Crs to 28.54 Crs in the corresponding period. The Stock price is 85% less compared to its 52 week high. In terms of valuation, Price/BV is 1.28 times; Price/ Sales is 1.4 times and estimated P/E is 4.57 times.

Suggested allocation: 3% of total Proposed Investment.

(D) Textiles (14%)

1. Mudra Life Style

Basically involved in production of designer garments for men / ladies and kids.

Financial Highlights / Valuations: Sales increased from 52.61 Cr in Dec 06 to 68.51 Cr in Dec 07 and Net Profit increased from 6.04 Cr to 8.36 Cr during the corresponding period. In terms of valuation, Price/ BV is 0.88 times; Price / Sales is 0.53 times and P/E is 4.4 times. The company has alloted equity warrents to promoters / directors @ 110 / share in Feb 08 (current stock price is 36). Lower valuation with strong fundamentals, makes it a good buy.

Suggested allocation: 5% of total proposed investment.

2. Alps Industries

This company is mainly in manufacturers of Yarns, Home Furnishings, Natural Dyes, and Fashion Accessories which is well appreciated all across the globe. They are also looking into automotive fabrics.

Financial Highlights / Valuation: Sales have increased from 115.6 Cr in Dec 06 to 169.26 Cr in Dec 07 and Net Profit have increased from 7.39 Cr to 9.32 Cr for the corresponding period. In terms of Valuation, Price/ BV is 0.43 times; Price / Sales is 0.22 times and P/E is 3.43 times.

Suggested allocation: 3% of total proposed investment.

3. Shri Lakshmi Cotsyn

This company is basically into the production of cotton and blended products and have diversified to producing army products like bullet proof jackets, uniforms etc.

Financial highlight/ valuation: Sales have increased from 153.72 Cr in Dec 06 to 232.47 Cr in Dec 07 and Net profit have increase from 11.83 Crs to 16.32 Crs for the corresponding period. In terms of valuation, Price/BV is 0.69 times; Price / Sales is 0.14 times and P/E is 2.07 time.

Suggested allocation: 3% of total proposed investment.

4. Eastern Silk Industries Ltd

This company is basically involved in the manufacture / sale of silk yarn, Fabrics and Made-Ups, Home Furnishings, Handloom Fabrics, Embroridied fabrics, etc.

Financial highlights / valuation: Sales have increased from 96.47 Cr in Dec 06 to 168.96 Cr in Dec 07 and Net Profit have increased from 15.46 Cr to 25.52 Cr during the corresponding period. In terms of valuation, Price / BV is 0.76 times; Price/ Sales is 0.47 times and P/E is 3.13 times.

Suggested allocation: 3% of total Proposed investment.

(E) Consumer Durables (4%)

1. Videocon Appliances Ltd

This company is mainly into the production and servicing of consumer durable products like Washing Machines, ACs, Refrigerators and Microwave Ovens.

Financial Highlight: Sales have increased from 280.31 Cr in Dec 06 to 314.05 Cr in Dec 07 and Net Profit has increased from 3.35 Cr to 4.64 Cr in the corresponding period. In terms of valuation, Price/ BV is 0.16 times; Price / Sales is 0.06 times and P/E is 4.08 time.

Suggested allocation: 4% of total proposed investment.

IMPORTANT

1. Profit Booking - Sell shares once the price rises by 50% or 3 years, which ever comes earlier.
2. Risk Management - Sell shares if the price falls by more than 25% of your purchase price. You can buy the shares back, however, at a price more than what you paid for initially.
3. Make sure that you invest the %age suggested above (it comes to 52%). Please keep the rest of the funds invested in Liquid assets like Bank FDs / Debt Mutual Funds / Liquid Mutual Funds. If investing in Balanced Mutual Fund, please ensure that the total investment is not more than 30% of the total amount available to invest.