The Company's current market value of investments is Rs 235 Cr, which translates into Rs 80/share. Given the strong demand on the back of near normal monsoons, the company is expected to continue its growth momentum during the next year also.

Zuari Industries Ltd (ZIL)
(CMP: Rs 182)

The Company's current market value of investments is Rs 235 Cr, which translates into Rs 80/share. Given the strong demand on the back of near normal monsoons, the company is expected to continue its growth momentum during the next year also.

ZIL (formerly known as Zuari Agro Chemicals), one of the leading companies of the Rs 8,000 crs K K Birla conglemerate was incorporated in 1967 jointly by United Steel Corporation of USA and the Birla Group. ZIL is mainly into the manufacture of chemical fertilisers viz., Urea, Diammonium phosphate (DAP) and compound fertilisers.

ZIL has also promoted Chambal Fertilisers Chemicals Ltd in 1987 and later acquired majority stake in the Public Sector fertiliser company Paradeep Phosphates Ltd (PPL) through Zuari Moroc Phophates Pvt Ltd, a 51:49 JV between ZIL and Moroc phosphore, SA, Morocco. With the acquisition of PPL, ZIL has become the largest producer of fertiliser in the private sector in India.

In a move to encourage fertiliser production, we believe that Government of India (GOI) is likely to formulate new policy initiatives which would exempt fertiliser manufacturers from sharing their extra gains with the government in respect of production beyond their stated capacities. As compared to the existing scheme, where Government claims 65% of the net gain made by a urea unit from the extra output, we believe that under the new scheme, GOI, in addition to paying the full subsidy, is unlikely to intervene if the urea manufacturer produce beyond 100 % capacity utilisation.

ZIL, along with Chambal Fertilisers and Chemicals Ltd, is one of the largest fertilizer companies in India. ZIL has shown robust performance on the back of better realizations under the New Pricing Policy due to its cost efficiencies. The Company's current market value of investments is Rs 235 Cr, which translates into Rs 80/share. Given the strong demand on the back of near normal monsoons, the company is expected to continue its growth momentum during the next year also.

At the current price of Rs 168, THIS STOCK trades at 12 x its Annualised EPS which is attractive considering the growth prospects and leverage from the acquisitions

Aurionpro Solutions Ltd
(CMP : Rs 168)

AurionPro Solutions is a provider of IT solutions to the banking and financial services industry and specialises in products for treasury and risk management. About 65 per cent of its revenues come from overseas business and largely from US and other Asian countries.

The company is following a strategy of growing through existing clients and inorganically through acquisitions. Its existing clients are HDFC Bank, ICICI Bank, Standard Chartered Bank, Bank of Singapore , Deutsche Bank etc. Recently, the company acquired SPS Corporation and Coban Corporation in the U.S. Coban provides high-end enterprise web technologies and enterprise integration technologies to Fortune 1000 clients focusing on the web portal and enterprise content management space. SPS corporation has a revenue of $92 mn ( Rs 420 crore) for the year ending Mar 06. These two acquisitions result in over 50% business from the USA. These acquisitions will help achieve the size and scale to launch AurioPro's banking suite in the US market next year and enable the company to compete for major contracts globally with fortune 1000 clients.

Dynamics of the IT environment favours the company. Banks globally are increasing their spends in building systems around core banking solutions and the Company expects the trend to accelerate in years to come. This augurs well for the continued growth of the Company's banking IT business. For FY06, it delivered YOY growth of 121% for Net Sales at Rs 23.12 crore with Net profit of Rs 5.56 crore. For H1FY07, it has Net Sales of Rs 42.18 cr and Net profit of Rs 7.05 with EPS of Rs 6.52. At the current price of Rs 168, it trades at 12 x its Annualised EPS of Rs 13.05 for H1FY07, which is attractive considering the growth prospects and leverage from the acquisitions.