Kalpataru Power Transmission
Reco price: Rs 1668
Current market price: Rs 1470
Broking firm: Religare Securities

The company recently acquired an equity stake in Shree Shubham Logistic which specialises in warehousing activities in Rajasthan and plans to invest Rs 50 crore in the scale up the operations in a phased manner.

The order book at the end of the current quarter stood at Rs 2,300 crore, an increase of 27 per cent YoY. Transmission takes a major chunk of the order book at 65 per cent (Rs 14.8bn) with distribution taking 27 per cent (Rs 6.4bn) and infrastructure 8 per cent (Rs 1.75bn).

The broking firm believes that there are three positives for the stock are spending on the national power grid to more than double the grid capacity to 37,000 MW in the next five years, increased spending on generation and concurrent investments in transmission and the rural electrification and distribution reforms. Given an annual growth rate of 25 per cent for the current and the next fiscal the Religare has put an accumulate signal for the stock.

JBF Industries
Reco price: Rs 225
Current market price: Rs 150
Broking firm: Kotak Securities

JBF is setting up a new line of 216000 TPA manufacturing unit for making textile grade chips. Post expansion JBF will have production capacity of 3 lakh MT in FY08 and enhance it further to 4 lakh FY09.

The company’s RAK unit in UAE which was commissioned recently is expected to produce nearly a 1 lakh MT of pet grade chips in FY08 which is expected to move up to 1.5 lakh MT by FY09.

On the back of these expansions, Kotak believes that JBF will report net sales of Rs 2,470 crore with operating profit margins at 11 per cent and net profit at Rs 139 crore.

This translates to an EPS of Rs 18.4. On a consolidated basis the current market price discounts FY08 and FY09 estimated earnings by 8.5 and 5.5 times. At Rs 225, there is a 48 per cent upside from the current levels.

Hindustan Construction Company (HCC)
Reco price: NA
Current market price: Rs 132
Broking firm: First Global

The securities firm has put an underperform on HCC due to delayed projects, mounting losses on Bandra-Worli project, rising staff costs, increased depreciation and higher interest burden which it believes will be a stain on the bottomline. Valuations appear too expensive in context of low RoCE and already contracting thin margins.

However, HCC’s revenue visibility appears good for the next 3-4 years, although its execution has slowed down. The concerns that the securities firm has are slim margins and negative cash flows. The company will now be forced to cough up more tax on account of the withdrawal of Sec 80IA.

IVRCL Infrastructure
Reco price: Rs 485
Current price: 394
Broking firm: Emkay

Emkay has given a buy signal on IVRCL Infrastructures & Projects (IVRCL) as the results were better than the brokerage's estimates. The company reported a revenue of Rs 680 crore (up 58.8 per cent yoy). The EBITDA grew 67.9 per cent yoy to Rs 60 crore and the net profit grew 74.6 per cent yoy to Rs 38 crore.

The company also added over Rs 2,100 crore to its order backlog which currently stands at Rs 9,500 crore. The company had raised over Rs 550 crore through the QIP route during FY07 which would help it meet funding requirement for various BOT projects and meet working capital requirement.

IVRCL has also recently launched the IPO of its real estate subsidiary IVR-PUDL and has raised over Rs 780 crore from the same. The broking firm believes that the company's growth trajectory will continue in future and the pace of order accretion provides added visibility.

The firm has arrived at a valuation of Rs 485 per share for the company based on a SOTP valuation wherein the core construction business is valued at Rs 278 (15x FY09E), BOT projects at Rs 55, holdings in subsidiaries at Rs 143 for IVR-PUDL and Rs 9 for Hindustan Dorr-Oliver.

Lanco Infratech
Reco price: 332
Current market price: Rs 259
Broking firm: ICICI Sec

The broking firm believes that Lanco has expanded significantly across all its business segments and the trend is likely to continue. In power, Lanco is increasing its capacity from 518MW to 3,848MW by FY12E.

The company’s construction order book has expanded from Rs 5,000 crore nine months back to Rs 7,500 crore at present, with orders worth Rs 7,000 crore on the anvil. Lanco’s real estate venture, Lanco Hills, has generated good response with 50 per cent of the project’s residential space already booked.

Given that the management is proactive and has two decades of expertise in execution, project management and cost management will continue on the fast track growth believes the securities firm.

The sum of parts valuation pegs Lanco’s value per share at Rs 332. Earnings are expected to grow annually at 85 per cent over the next three years, implying significant upside from the current P/E multiples.

Indo Tech Transformer
Reco price: Rs 540
Current price: Rs 468
Broking firm: SSKI

On the back of 84 per cent revenue growth, net earnings in the quarter jumped by 114.6 per cent to Rs 6.9 crore as against Rs 3.2 crore in the corresponding quarter last year. The operating profit too increased by 165 per cent to Rs 9.9 crore due to reduced raw material prices and better utilisations.

The drop in the price of copper, which accounts for about 30 per cent of the total raw material cost, resulted in lower raw material cost. Consequently, the operating profit margin expanded by 770 basis points year on year to 25 per cent.

The order book at the end of the quarter stood at Rs 134 crore which translates to 1,550MVA. With increased product range and surging demand for dry type transformers, SSKI believes that there is visibility in the earnings of Indo Tech backed by a strong order book and capacity additions.