BOC India: Capex boom

ANALYSTS' CORNER

Anand Rathi Securities, in its report on BOC India, states that strong capex growth in the domestic steel sector has provided huge revenue potential for the project engineering division, under which the company installs air separation units (ASU) at client sites.

The recent 50:50 JV with Inox Air Products for setting up of 855 tpd of ASU for JSW Steel project, is expected to provide a revenue potential of Rs 200 crore by June 2006, of which Rs 67 crore has already been accounted for in the quarter ended December 2005.

With the steel industry projecting an annual consumption levels of 55-60 MT by 2012 against 38 MT last year, BOC stands to have a major advantage from this demand growth.

With the open offer by German company Linde AG, to pick up stake in the parent company BOC UK Plc, the law of the land (as per Sebi guidelines) is expected to trigger an open offer for minority shareholder in the domestic market as well.

BOC India, a 54 per cent subsidiary of the $ six billion BOC Group Plc of UK, is a domestic leader in industrial gasses segment.

Patni Computers: Productivity glitch

Motilal Oswal Securities has changed its earlier "buy" recommendation on Patni Computers to "neutral".

In its results update, the report states that the company has reported a total revenue of Rs 580 crore, a 3.7 per cent increase q-o-q, which is in line with expectations.

However, net profit at Rs 64.2 crore was lower than expected, down 2.8 per cent q-o-q. While the company has maintained its 2006 sales guidance at $ 558-562 million, it now expects lower PAT versus earlier expectation of $ 85.5-88.5 million.

This is owing to higher-than-expected salary hikes and delays in achieving productivity gains from internal efficiency initiatives. It expects Q2 2006 revenues to increase by 6 per cent to around $ 138 million and PAT to decline by 23.8 per cent to $ 11 million.

KS Oils: Retail push

Brics PCG recommends a "hold" on KS Oils. The report states that as in the past few quarters, the company has once again outperformed expectations.

The company is looking at acquisitions in different parts of the country to increase market depth and breadth. With the enhanced penetration, it will garner an extensive market share. It is opening 15 new retail sales depots throughout the country.

It plans to increase retail sales contribution from 30 per cent of mustard oil sales to 50 per cent in FY07. This would provide a fillip to operating margins, going ahead.

Moreover, it is focusing on reducing operating costs by measures such as installing power source alternatives, better cost management, and lower inventory levels.