Raj Ratan Global Wire: Cap gains

ANALYSTS' CORNER

Emkay Research, initiating coverage on Raj Ratan Global Wire, recommends a "buy". The report states that the company in December '05 has expanded its tyre bead wire capacity from 25,000 to 30,000 MT, and in FY07 it is expected to further increase it to 36,000 MT to capture growing demand from domestic manufacturers and international giants, both for their Indian and overseas operations.

Going ahead, the report expects topline CAGR of 30.6 per cent during FY06-08, operating profits CAGR at 37.4 per cent and net earnings CAGR at 58.6 per cent. The stock trades at P/E of 3.7x FY08E and EV/EBITDA of 3.3x.

The company is one of the leading manufacturers of high carbon steel wires in the country. It manufactures tyre bead wire and pre-stressed concrete wire.

The company's domestic revenue is expected to grow at CAGR of 25 per cent during FY06-08. Its tyre production is expected to grow at 10 per cent CAGR over the next 3-4 years in the country.

Amforge Industries: Sweet alliance

SSKI Securities, in its visit note on Amforge Industries, states that the company plans to enter into a strategic alliance with automobile major Mahindra & Mahindra (M&M).

As part of the deal, its Chakan unit will be spun-off as a running concern to Mahindra Automotive Steels Pvt Ltd (MASPL), a 100 per cent subsidiary of Mahindra Systems & Automotive Technology (MSAT) - M&M's auto component arm.

This restructuring will lead to significant value creation for shareholders. Going forward, MASPL is likely to become MSAT's hub for its entire forging related business.

The report estimates Indian auto-component exports to touch $20 billion by 2015, of which forging exports are likely to be $4 billion ($1.4 billion currently). A company with the size and vision of M&M is well positioned to capitalise on this opportunity, according to the report.

Fortune Informatics: Niche play

Brics PCG recommends a "buy" on Fortune Informatics. The report states that the company has a robust customer base in the telecom segment, which includes names such as BSNL, MTNL, Hutch, Tata Telecom, BPL Mobile, Bhutan Telecom and Ghana Telecom.

The company is aggressively marketing its products such as eVAT, eTaxfile and ReportSuite, which will drive its future growth. The report feels that a financial turnaround is imminent.

The company is expected to post profit this year after two consecutive years of losses. Net profit is expected to improve significantly in FY07. Its ReportSuite is already well accepted by many reputed telecom players.

The changes in government taxation policies will generate a huge potential market for eVAT and eTaxfile. Fortune Informatics is a Hyderabad-based software product company catering to the document and content management requirements of enterprises.

It has a range of products in imaging, workflow, and enterprise-wide document and output management.