Moser Baer: Ray of hope

Philips' optical tech buy will power Moser Baer's R&D

With the acquisition of Philips' optical technology research and development (R&D) subsidiary OM&T, Moser Baer will move up the value chain. Though Moser Baer has developed some intellectual property, this acquisition will bring in major R&D capabilities to the company.

OM&T is one of the few companies to have set the Blu-ray disc standard (this optical media can store over five times more data than a DVD). Along with patents, OM&T, with its 6 million unit plant in Europe, is the only company outside of Japan to manufacture Blu-ray discs.

Moser Baer estimates the Blu-ray market to be $5 billion over the next three years. Besides complementary technology with Moser Baer in the Blu-ray area, OM&T will also bring pure R&D in the photo voltaic business, which is one of Moser Baer's recent diversification.

The Moser Baer management has not disclosed the cost of the acquisition. However, a senior official said it would be routed through its overseas subsidiary, which was set up last July to acquire future technologies in the US and Europe. It will use a mix of equity and debt to pay for this purchase.

Meanwhile in the December 2006 quarter, Moser Baer's operating profit grew 57 per cent y-o-y, while its sales went up 19 per cent.

Operating margin was up 722 basis points y-o-y to 29.9 per cent as product prices improved owing to higher demand, while the price of the key input-poly carbonate-was stable. With its new businesses such as photo voltaic cells and the home entertainment, the company is trying to protect itself from the vagaries on the optical media storage business.

The Moser Baer stock gained 7.4 per cent on Tuesday, and trades at an expensive 30 times and 20 times estimated FY07 and FY08 earnings, respectively.

IVRCL Infrastructure: Core impetus

IVRCL Infrastructure has reported improved December 2006 quarter results, thanks to the well documented boom in infrastructure and construction activity.

As a result, operating profit grew 64.5 per cent y-o-y to Rs 55.6 crore in the December 2006 quarter compared with 42.2 per cent growth in net sales to Rs 522.3 crore. Operating profit margin also expanded 140 basis points y-o-y to 10.6 per cent in the last quarter.

The company derives nearly 46 per cent of its revenues from projects relating to water and environment, with power projects accounting for 18 per cent.

Prominent projects bagged by the company in the last quarter include an irrigation project from the Andhra Pradesh government, valued at Rs 388.16 crore.

These orders helped its order backlog reach Rs 7650 crore, a sequential growth of nearly 9.3 per cent. In the September 2006 quarter, operating profit margin was more or less flat at 8.4 per cent.

During the last quarter, the company had raised Rs 555 crore via QIP, and this offering was at Rs 370 a share. The stock currently trades at Rs 435 levels and it discounts estimated FY08 earnings by nearly 40 times.