GODAWARI POWER AND ISPAT ( GPIL) - BUY

Companies showing resilience during the tough times of any industry surely deserves  special attention.Such companies will out perform in stock market when the fortunes of that particular industry turned around. Godawari Power and Ispat (GPIL)  is one such company which is operating mainly in Steel and also in Power.We are aware companies from steel sector is out of favor of the market right now due to various issues like shortage of raw material on account of mining related issues,interruption in  power supply and power cuts..etc.Even the demand is also soft now on account of lower construction activities ,we can’t ignore the steel industry as it has  a vital role in nation building.GPIL is the flagship company of Raipur based  HIRA Group .This is one of the very few companies in steel sector operating in the entire value chain which includes sponge iron, billets, Ferro alloys, captive power, wires rods, steel wires, fly ash brick..etc.Another  major factor distinguishing this company from others is the fact that this company is not spending a single rupee for purchasing power from outside .It is fully backed by captive power production facilities and also selling excess power  to others .GPIL also having captive mining facilities from two mines allotted for them which is minimizing the uncertainties related with iron ore supply.Now GPIL is increasing its pelletisation capacity from 600000 TPA to 1800000 TPA by setting up new Iron Ore Pellet plant and also setting up 50 MW solar thermal power project  at Jaisalmer ,Rajasthan.Financial closure for both these projects already completed and power selling agreement signed with NTPC.In the financial side company is posting excellent performance .In the latest June quarter GPIL posted a sales of Rs.602 Cr an increase of 22% compared with same period last year and a net profit of Rs.51 Cr, almost 65 % increase from last year and an  EPS is Rs.15/-. Company also declared a dividend of 25% for FY 2011-12. Promoters having 63% stake in this company .Steel industry is a power intensive one and there is every chance for shortage of power in our country for many years due to slow decision taking process in power industry.In such a situation ,companies backed by full captive power production facilities will get an edge over others.In addition to this, more than 80 % of its iron ore requirements are met by production from captive mines which ensure raw material supply amid tight supply situation due to mining ban and other environmental issues.In nut sell GPIL will be one of the biggest beneficiary of power and iron ore shortage in steel industry.It is one of the best mid cap  pick from this sector and eligible to include in your core portfolio with a long term view @ CMP of Rs.117/-. Stock listed both in BSE and NSE.

INDSIL HYDRO POWER AND MANGANESE LTD.-Booming Business

Fortunes of Ferro alloy makers are always associated with the growth of Metal Industry,especially steel.India’s steel production is expected to touch record level in this year.This will surely help ferro chrome companies too.Indsil Hydro power and Manganese is a well managed mid size company from this sector.Indsil has two ferro chrome units ,one in Kerala and the other in Chattisgarh.Since it is a power intensive industry ,company also operating one mini hydel power plant and another coal fired power plant to reduce power cost .Earlier company took 50% stake in an Indonesian Manganese mining venture but later drops this plans and sold the stake due low quality of Manganese from that mine.Now company has signed an agreement for a 50:50 joint venture for the purpose of setting up a 75,000 tpy ferro chrome smelter in the Sultanate of Oman .This project is at a cost of Rs. 140 crores and is expected to operational by end of 2011.Due to crash in metal sector ,last year company posted muted result (NP of 2.8 crore.) With the revival in steel sector, now company is performing well and already posted a NP of 8.41 crore in the first nine month period of this FY which translates into an EPS of Rs.9/- ,full year EPS is expected @ 14/- .At CMP of Rs.76/- ,it is a decent BUY

VESUVIUS INDIA - A WORLD CLASS COMPANY

Vesuvius India is a part of U K based COOKSON group 

and one of the largest manufacturer of Refractories in India .

In 2008 Cookson aquires foseco hence

two companies (Vesuvius India and Foseco India) are
operating in India under the same parent. But the product line
of these two companies are different and
are not competing each other. Vesuvius India makes high-end
refractory products,flow control systems and services.
These products are used by steel manufacturers using the
continuous casting process for manufacturing steel.
Since most of the steel producers have switched to this
technology company’s products are in good demand and the
increase in steel production due to the revival in core sector will
help the company a lot in future.Cement,glass,foundry  and
petrochemical industries are also using company’s products.
Company’s main plants are located in Kolkatta and visakapatanam.
Strength of parent  and its leadership position in refractory
 products with strong R&;D is expected to help the company
to add more products to its portfolio.Company has posted
 a turnover of Rs.364 crore and a net profit of 37 crore last
year.company’s year ending is in December .Next financial year
Vesuvius is expected to perform even better mainly because
of the improvement in steel production where its products
are used.Vesuvius is an excellent MNC company available
at a P/E of just 13 which is at the lower end for a
company like this.CMP is Rs.251/-