Alphageo India: Growth potential

ANALYSTS' CORNER

Sharekhan recommends a "buy" on Alphageo India. The report states that the Q1 FY07 results of the company were in line with expectations.

Net revenues for the quarter grew by 319 per cent to Rs 11.19 crore, as this quarter saw operations of its 2D and 3D crews as opposed to only 2D survey crews in Q1 FY06.

However on a sequential basis, the revenue has declined as the operations of the crews were suspended from May 2006 because of the turbulent weather prevalent in the North-East region, the area where the company is executing its contracts.

Operating profit for the quarter grew by a whopping 480 per cent as the operating profit margin expanded by 14.3 per cent points to 51.6 per cent for the quarter.

The interest charge for the quarter grew eight-fold to Rs 1.05 crore as the company had taken Rs 28 crore worth debt to set up its 3D crews.

Similarly, the depreciation increased by 450 per cent to Rs 2.45 crore as the company is charging accelerated depreciation on its newly acquired 3D survey equipment.

Motherson Sumi : Positives factored in

Enam Securities rates Motherson Sumi as "neutral", relative to the sector. The company reported revenues of Rs 340 crore (up 48 per cent y-o-y) driven by domestic sales of Rs 210 crore (up 38 per cent) and exports of Rs 130 crore (up 68 per cent) in Q1 FY07.

While EBIDTA grew by 28 per cent to Rs 52.1 crore, net profit declined marginally by one per cent at Rs 24.2 crore. The stock trades at 17x FY07 and 14x FY08 earnings, respectively.

While the management remains committed and is moving in the right direction strategically to achieve its long term (2010) target of being a $1 billion company, the report believes that the current valuation factors in most of the near-term positives.

Punj Lloyd: Bridging the Gulf

Brics PCG recommends a "buy" on Punj Lloyd. The company has registered an improved performance during Q1 FY07, with consolidated margins stable at approximately 9.8 per cent (excluding Semb Corp acquisition).

The company posted a consolidated net profit of Rs 26.3 crore for the quarter against Rs 54 crore for FY06.

The acquisition of Singapore-based Semb Corp Engineering & Contractors, an engineering procurement and construction management company, will fortify the company's position and enable it to diversify and enter new business areas.

Also, its JV in Saudi Arabia will enable it to undertake infrastructure construction activity in the region. The management expects business in the Gulf region to commence during the latter half of the fiscal year.

With this acquisition, the company is in a position to undertake infrastructure construction projects across the globe.