NOVEMBER 7, 2004
 Cover Story
 Personal Finance
 BT Special
 Back of the Book

The iPod Effect
Now you see it, now you don't. All sub-visible phenomena have this mysterious quality to them. Sub-visible not just because Apple's hot new sensation, the handy little iPod, makes its physical presence felt so discreetly. But also because it's an audio wonder more than anything else. Expect more and more handheld gizmos to turn musical.

What route other than musical would Panasonic take, even for a phone handset, into consumer mindspace?

More Net Specials
Business Today,  October 24, 2004
10 Best Stocks Under Rs 50
On the lookout for low-priced stock picks? Here are some of the best.
The Return Of Cheer
Fresh Fund Fiddling

As alphabet soups go, the Bombay Stock Exchange is quite a champion. It has 5,000-odd companies listed on it for share trading (now what was Shanghai's figure again?). Naturally, not all those shares are worth the paper they're printed on, or in these DEMAT times, perhaps even the chip memory they occupy. There are hundreds and hundreds of worthless stocks that can still be traded (some dead firms too, people claim).

Now, of the 5,000-odd scrips, as many as 3,640 were trading at under Rs 50 on October 8, 2004. The good news, and that's what this is about, is that some of these are actually genuine bargains. They're going cheap at the moment, but they won't stay cheap forever.

Why are they so cheap? Good question. Some lie undiscovered. Some of them are momentarily in the dumps, plain and simple. Some just have low face values. Most of these companies, though, are really small, with the market value of all shares adding up to under Rs 100 crore (also called 'market capitalisation'). So they are not tracked by the big research houses. Nor do they get media attention. Another problem that plagues most of them is lack of liquidity. It all adds up to low investor interest. Yet, some of the best opportunities are found where others fear to look. So here goes our list of 10. If you have both the patience and risk-appetite, you might want to give them a shot.

Kamat Hotels (India)

A name associated by most with South Indian fast food, this stock is actually a play on the prospects of The Orchid Hotel, an 'Ecotel' certified eco-friendly five-star hotel located near the airport in Mumbai. And its outlook is bright, given the increase in both green consciousness and foreign arrivals. "As the price is still cheap, the stock offers good growth potential," says Jamshed Desai, Head of Research at IL&Fs Investsmart India.

Lakshmi Precision Screws

A cyclical gainer. In the rush for automotive fasteners, investors ignored industrial fasteners (hence its low p/e multiple). But the expected industrial recovery in India, together with its increased focus on exports (38 per cent of revenues for the year ending March 2004), could see this firm stage a resurgence.

GIC Housing Finance

In a fiercely competitive housing finance market, GIC Housing Finance has taken its net profit up 68 per cent in 2003-04 by slashing its cost of borrowing. Since the debt restructuring was done recently, its full impact on profitability will be felt for several more quarters. Since the stock's price is still low, its dividend yield works out to around 6 per cent.

Petronet LNG

This emerging company is yet to break on to the investor radar. Buying it is a bet that it will, once it kicks off operations. Promoted by ONGC, GAIL, IOC and BPCL to set up LNG import and re-gasification facilities, "it is a very good emerging infrastructure stock" in the estimation of Rajesh Jain, Director and CEO of Pranav Securities. Promoter interest remains strong; the gas will use GAIL pipelines, and will be used mostly by IOC and BPCL.

Mahindra Ugine Steel Co.

This maker of alloys and special steel products has been in a bad shape lately, with rising steel prices sending it into losses, but is turning around sharply. With the auto components sector in boom, it is doubling its capacity and is likely to bounce upwards. "This capacity doubling is done at a very low cost (of Rs 18-20 crore)," says Jigar Shah, Head of Research at KR Choksey Research.

Centurion Bank

Another turnaround stock, this time on account of a restructuring. In February, it reduced its equity capital base from Rs 152 crore to Rs 15.2 crore (and wrote off the rest). Further, additional capital was infused by Bank of Muscat and Sabre Capital. With this, it was able to report a small profit for the June quarter, and has just issued rights. "With the new management in place, things are expected to improve further from here," says Jain of Pranav Securities.

Deepak Fertilisers & Petrochemicals

This has been a victim of misperception. It is treated just as a fertiliser company, and gets clubbed by analysts as such, though it is getting a fast increasing share of revenues from its chemicals business. Further, it is a consistent dividend-paying company, and can boast a yield of more than 5 per cent.

Ashok Leyland

This truck maker is a big company with a Re 1 face value share (the minimum allowed). With commercial vehicles in increased demand because of India's industrial spurt, it is expected to turn in a performance even stronger than that of 2003-04. "Ashok Leyland is not expensive in relation to its earnings," says Rajeev Thakkar, Head of Research at Parag Parikh Financial Advisory Services. Interest rate and oil price rises, though, could hurt.


This stock's low price is an open and shut case of a share split (which typically splits the price too). A medium-sized firm, Pricol-formerly known as Premier Instruments & Controls-is one of India's most efficient auto component manufacturers, and this sector is headed up. "With its export thrust yielding good results, it has a good upside from the current levels," says Desai of IL&Fs Investsmart India.

Shanthi Gears

Another stock with strong potential. This Coimbatore-based company, reputed for industrial gears (which includes boxes, motors and assemblies), caters to a wide range of industries, from steel and cement to chemicals and textiles. "The management of Shanthi Gears is rightly expanding its capacities to leverage its pre-eminent position and brand image to capture the revival in its user industries," says S. Ranganathan, an auto analyst with LKP Research.




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