Jindal Saw: Seamlessly ahead

The firm bagged a Rs 985-cr export order from oil refiners in West Asia

The stock price of Jindal Saw shot up by over 5 per cent to an all-time high after it bagged a Rs 985-crore export order from oil refiners in West Asia for the supply of spiral and seamless pipes.

The company's total order book size now stands at Rs 3,350 crore. The orders, amounting to 60 per cent of the trailing twelve month sales of Rs 5,176 crore, are to be executed by January next year.

The demand for pipes is expected to remain buoyant in the next few years on account of huge investments in the oil and gas sector globally. Pipe companies generate most of their revenues from the export market. Exports constitute nearly 80 per cent of Jindal Saw's sales.

Analysts estimate that there is a huge potential for pipes in the domestic market as well, on account of rising gas consumption, new oil and gas discoveries and increasing need for water transport infrastructure.

Considering this, Jindal Saw is expanding its existing capacity of longitudinal saw (submerged arc welded) pipes by 25 per cent, helical saw pipe capacity by 233 per cent and seamless pipe capacity by 150 per cent. The new capacities will be commissioned by FY09.

At the current price of Rs 1194, the stock of Jindal Saw is trading at 12 times FY09 estimated earnings and is not cheap. However, considering that the company is expanding its capacities and is yet to deploy a part of the $940 million raised from the sale of its US operation to group company JSW Steel, analysts are optimistic. The company's operating margin improved by 300 basis points to 11.9 per cent in the September 2007 quarter.

Its investments in group companies are valued at about Rs 2,200 crore or Rs 195-200 a share at 50 per cent holding company discount.

Factoring its investments, the core business is available at 10 times FY09 estimated earnings, which is relatively attractive as other pipe players are trading at 10-15 times FY09 earnings.

Everonn Systems: Big canvas

Everonn Systems, the Chennai-based integrated knowledge management, education and training company announced the acquisition of the e-learning division of another Chennai-based software company, Aban Informatics on Thursday.

Aban Informatics' e-learning division comprises of classontheweb.com, an online as well as intranet-based system catering to the academic and non-academic requirements of students, teachers, parents and schools.

The website also offers content for students of class VI to XII. The acquisition provides Everonn with access to educational content for kindergarten-12 segment.

Besides, Everonn will gain access to over 30,000 students across India, as Aban Informatics has over 40 schools as its clients. Aban Informatics also produces digitised animated textbooks in the form of compact discs, thus adding a new revenue stream to Everonn's portfolio.

Everonn had closed FY07 with a top line of Rs 43 crore and has an operating profit margin of over 40 per cent. The company is expected to double its revenues every year through FY08 and FY09, with the margins remaining stable.

It is planning to focus on its business of live and interactive delivery of education using VSAT technology and has set up 315 virtual learning centres as on Q2 FY08. It will also introduce about 40 new courses for curriculum-based as well as vocational training of students, in the next two years.

Everonn listed in August 2007 at about four times its issue price. The stock has been on a steep uptrend in recent times, gaining 128 per cent over the past month. At an estimated FY09 earnings of Rs 15 a share and a price-earnings multiple of 73 times against industry leader Educomp's valuation of 57 times estimated FY09 earnings, the stock is expensive.

With contributions from Jitendra Kumar Gupta and Niren Shah