Multi Bagger: Sejal Architectural Glass Ltd

Sejal Architectural Glass Ltd (Rs 24 Buy)

Sejal Architectural Glass Ltd (SAGL) is in the business of processing glass and has processing facilities for insulating, toughened, laminated and decorative glasses. SAGL has an integrated processing unit, having processing lines for all specialty glasses (Insulating, Toughened and Laminated) under one roof.

SAGL has three distinct SBU’s i.e. Processing, Retail and Float glass manufacturing. Till FY07 the revenues were purely generated from the processing division. The retail division commenced its operations from April, 2007. Further the float glass plant which is the main inflexion point is under construction and would be operational in Q1FY10.

With this SAGL becomes a complete value chain providing company from manufacturing of glass to selling of high end lifestyle products for home décor(art & artifacts, lights & luminaries, sanitary - ware & bath fittings and glass products).

Investment Rationale:

Net Profit to grow 11x by FY12
The 550tpd capacity float plant is likely to transform this Rs55 Crore company into a Rs450 crore company by FY12; i.e. a whopping 8x growth. As a result of backward & forward integration, bottom line is expected to grow over 11x by FY12 to Rs49 crore.

Trading at close to Book value
The book value per share of SAGL is currently Rs50. This translates into a P/BV ratio of 0.48, which is significantly lower than P/BV ratio of 3.6 for its peer. Moreover, if we consider the replacement cost, implied value per share turns out to be approx. Rs135.

First fully integrated Indian player in architectural glass
SAGL is currently having a processing unit and is now setting up a new float glass manufacturing facility. This initiative of backward integration would help the company in procuring raw material for its processing unit. This will reduce raw material cost, dependence on imports and other domestic players for glass, thereby improving operating margins from 16% in FY08 to 34% by FY12.

Demand for glass to remain robust
The per capita consumption of glass in India is about 0.55 kg, which is much lower than 11 kg in USA and 2-5 kg in South-East Asian countries. It clearly shows the growth opportunity in the under-penetrated market. The demand for processed glass has also grown by more than 35% annually, in last 2 years.

Financials and Valuation:
We initiate our coverage on SAGL with a BUY rating and twelve months price target of Rs124 based on our DCF model. The stock is currently trading at P/E of 5.63x its FY09 earnings of Rs4.26. Company’s EV/EBITDA and EV/Sales of FY08 is 16.7x and 2.7x respectively.

Sah Petroleums Ltd

Sah Petroleums Ltd

Background:
Sah Petroleums Limited is a manufacturer of industrial lubricants in India and manufacturing wide range of industrial and automotive lubricants, specialties and process oils etc., under the brand name of "IPOL". The company started in 1973 as a private limited company and became listed in 2004. The company has its plants located at Vasai near Mumbai and at Daman. The plants at Vasai and Daman are equipped with High-Tech blending facilities, quality control labs and automatic filling and packing stations. The company also has one of the largest in-house storage farms in the private sector in India for storing oil sourced from all over the world.

Besides, the company has an all India sales and service network with offices / depots / CFAs located in Mumbai, Pune, Vadodara, Indore, Jabalpur, Jaipur, Delhi, Ghaziabad, Faridabad, Kaithal, Chandigarh, Patiala, Kolkata, Jamshedpur, Hyderabad, Bangalore and Chennai.

Financials:
The latest financials of the company are given as under:-



Conclusion:
Sah Petroleums has a current Equity Capital of Rs.16 crores comprising of 3.2 crore Equity Shares of Rs.5 each. The current promoters of the company hold 1.74 crore shares comprising 54.47% of the equity while the Non-Promoter shareholding is 45.53%.

The Board of Sah Petroleums in their Board Meeting on October 17, 2008 has resolved to issue 1.2 Crore Equity Shares of the company to NAF India Holdings Pvt. Ltd. at a price of Rs 26.65 per equity share on preferential basis, which comprises. This is roughly 27.27% of the diluted equity of the company. Since this investment constitutes acquisition of more than 15% Equity of the company, the transaction will necessitate a public announcement in compliance with the takeover regulations of SEBI.

The acquirers alongwith persons acting in concert have made a Public Announcement for acquiring 88 Lakh shares, comprising 20% of the diluted equity at a price of Rs 48.50 per share. In all probability, the current promoters of the company would not be allowed to participate in the open offer. The current public shareholding is roughly 1.46 crore shares. Assuming all non promoter shareholders opt for the open offer and tender their shares, the acceptance ratio would be 60%, which means any shareholder tendering 100 shares in the open offer, will have 60 shares accepted by the acquirer at a price of Rs.48.50 per share. In reality, the acceptance ratio can be higher.

The stock of Sah Petroleums offer an attractive arbitrage with significant upside from the current levels, in these uncertain times.The caution here is that the time schedule for the open offer (December 4, 2008 as date of opening of offer) may get delayed, as has been seen in numerous other cases of open offer, due to delays in approvals & compliances.

How to spot Multibagger Stocks?

"IF you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them." -- Peter Lynch.

Easier said than done? You can make it 'easier done than said'!

Here's how:

1. Keep your eyes and ears open.
A simple way to identify potential multi-baggers is to look around for emerging sectors and new trends and invest in the leading companies participating in these trends.

For instance, some of the mega sectors (organized retail, media, telecommunications, real estate etc.) helped to create wealth for many investors who participated in those sectors in the early phase of discovery. Let’s take the example of two mega sectors - telecommunications and organized retail. If you had invested in Bharti Enterprises during their IPO in 2002 or in Pantaloon Retail when you saw their first 'Big Bazaar' store, you would have grown your investment by 18 times in Bharti and by 65 times in Pantaloon!

2. Go out, explore and see 'what's in'
Peter Lynch used to spend some weekend time for going to malls and shopping with his daughters. According to him, this was a great place to spot new stock stories and do some real market / business research. He’s found amazing stock ideas by simple observations like the favourite toy store with kids, the restaurant people frequent the most, fashion trends with teens etc. Once he would get these answers, he would research the underlying companies and find out if they were attractive investment opportunities.

Also Read:
Rakesh Jhunjhunwala - Investment Principles Insights
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Top secrets of Warren Buffett's Success

This might seem like a far too easy but difficult to implement strategy but trust me, it can work. See what products are in demand, what things get picked up from shelves in super markets the fastest and so on. It might give you good insights on stock picking.

You can beat fund managers!
Did you know that almost 85 per cent of professional fund managers fail to beat the benchmark index at most times. Normally, fund managers have many restrictions in the kind of companies they can invest in terms of market capitalization, liquidity etc. Mostly, companies that are a part of emerging sectors are small caps or mid caps and hence, outside the radar of most fund houses.
You can do better than them by using your common sense and basic research skills. Also, investing early in the company's cycle offers you the most attractive entry price for the stock by default.

Since India is catching up with the developed world, it is one of the best markets to discover new (stock) success stories. Maybe, the next bull run will be lead by companies in healthcare, niche infrastructure, hospitality, specialty retail, entertainment, security solutions, tourism etc.

So, the next time you step outside your home, don't forget to see which is the most popular car on the road. And by the way, what brand of toothpaste do you use? This is important, since the next multibagger might be right in your home!

CHECKOUT:
Information on Value & Multibagger Stocks
Collection of reports & Recommendations - Multibagger Stocks

POWERGRID CORPORATION OF INDIA (PGCIL)

POWERGRID CORPORATION OF INDIA (PGCIL)
BSE CODE: 532898
NSE SYMBOL: POWERGRID
Current : 105,
Target : 250 in 1 year

POWERGRID was incorporated in October, 1989 with the mission of “Establishment and Operation of Regional and National Power Grids to facilitate transfer of electric power within and across the regions with Reliability, Security and Economy, on sound commercial principles”.Transmission assets and manpower from the constituent central sector undertakings namely NTPC, NHPC, NEEPCO, NLC, etc were progressively transferred to POWERGRID. POWERGRID is engaged in Construction and Operation & Maintenance of inter-State transmission system and operation of Regional Power Grids and has been notified as the Central Transmission Utility of the country.

· PGCIL has plans to invest INR 550 bn in transmission projects for the Eleventh Plan(FY08-12). This will include increasing the inter-regional power transfer capacity to more than 37,000 MW by 2012 from 17,000 MW currently. During the nine months ending December FY08, projects of INR 52.6 bn were commissioned, including INR 19 bn in Q3FY08. The company is expected to commission projects of INR 30 bn in Q4FY08. In FY09, it is expected to spend ~INR 85 bn for investment in various transmission projects. PGCIL is expected to invest ~INR 350 bn during FY10-12E.

· This year, the company has increased its inter-regional power transfer capacity from 13,700 MW to 17,000 MW. It has added about 4,800 ckt kms, 8 new sub-stations, and around 7,200 MVA of transformation capacity.

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· The company is expected to have net profit of INR 20,343 mn in FY09E and INR 26,022 in FY10E, after inclusion of profits from telecom and Consultancy. From the telecom business, PGCIL is expected to have profits of INR 1,297 mn and INR 2,847 mn in FY09 and FY10, respectively, including profits from leasing of fibre optic bandwidth and usage of transmission towers as mobile towers.

· PGCIL currently has an overhead optic fibre network of 20,000 km, spanning 100 cities in the country. The company has order of over INR 3,000 mn from various telecom players for leasing the optic fibre bandwidth. It also holds license for national long distance dialing (NLD) and offering services as internet service provider (ISP); the company has been generating revenues from both these segments over the past two quarters.

· PGCIL is in talks with telecom players for leasing its transmission towers as mobile towers,it is expected to lease close to 23,000 transmission towers to mobile operators in the next three years.

· Power Grid Corporation of India Ltd (PGCIL) said its revenue increased to a whopping 62 per cent to Rs 125 crore during FY08. This is the first time the Company's foray into telecom business garnered such a sizeable amount in revenues. 'The company is serving major telecom players in mobile and National Long Distance Operator (NLDO) segment and is also planning to tap customers in the entertainment and broadcasting industry.

· It is planning to spread its business overseas, reports Business Line. The company is eyeing opportunities in West Asia and the African markets, with consultancy forays in Nigeria and Dubai on the anvil. The company is in talks with Dubai Electricity and Water Supply (DEWA) to operate consultancy business. Power Grid has already received a contract for laying three transmission lines in Myanmar, while the firm has completed a pre-feasibility report on a proposed under-sea transmission between India and Sri Lanka.

· According to the Budget of 2008, PGCIL can take loan from any bank around the world on a low interest rate. As observed, 26% of expenditure of PGCIL is that of paying bank loan interest. PGCIL is in process of obtaining loans for its further expansion at a low interest rate from banks around the world.

· Power Grid Corporation of India Ltd (PGCIL) has bagged a $600 million loan from the World Bank to strengthen its electricity transmission system. Announcing the loan, which is backed by a Government of India guarantee, the Bank said in a statement that the Fourth Power System Development Project (PSDP IV) would aim to reduce transmission losses and cut the cost of energy through further investments in the utility’s systems.

· PGCIL is entering Nifty. According to shareholding pattern, only 8.4% is held by public. So within 3 months, 3% will enter in Nifty basket because of which there will be shortage of liquidity in this stock.

· Power Grid Corporation of India Limited (POWERGRID) has paid an interim dividend of Rs.176.68 Crore, for the financial year 2007-08.

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· Three projects of Power Grid Corporation of India Limited (POWERGRID) have bagged the prestigious National Awards for Meritorious Performance instituted by the Government of India for the year 2006-07. POWERGRID’s 132 kV Transmission System in North-Eastern region received the Gold award while Silver awards were conferred on the 220 kV and 400 kV Transmission System in Western Region and the 400 kV D/C Kahalgaon-Patna-Ballia Transmission Line.

· Power Grip Corporation of India has obtained permission to generate power from coal and gas along with transmission. It can extract gas and generate power from it by own gas block.

Share Holding Pattern (%):
Promoters : 86.4
MFs, FIs & Banks : 1.3
FIIs : 4.0
Others : 8.4

We expect Power Grid to be the best runner in future years and a strong BUY is recommended.

AXIS BANK

Company Profile:
Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The largest and one of the best known Financial Institutions of the country, UTI has promoted Axis Bank. The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. Presently, the Bank has a very wide network of branches and it has one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is one of the most technology driven banks in the country.

Financial Position:
For the first quarter of the FY'09 (ending 30th June, 2008), Axis Bank reported a stellar set of numbers with the net income growing up by 81.9% at Rs 1435.2 crore and the net profit registered a growth of 89% yoy to Rs 330 crore (including depreciation on bank's investment portfolio of Rs 225.2 crore) compared with Q1FY08.

This is excellent growth by any standards and we expect this momentum to continue in the next few years. Its NII (Net Interest Income) grew by 93% yoy in the current quarter to Rs 810, due to credit growth and improvement in NIMs (Net Interest Margins). On a sequential basis there has been a decline in the NIMs mainly on account of rising cost of funds and lower proportion of demand deposits in Q1 as compared to the last quarter. Asset growth has been strong across all the broad segments including retail, corporate and SMEs. Retail assets have grown by 52% yoy to Rs 14,638 crore, which constitutes 59% of the housing loan. The total net advances grew by 48% yoy to Rs 61,160 crore. The demand deposits constitute 40% of total deposits. The fee income during the quarter has grown by 80% to Rs 484 crore, particularly in the capital markets and corporate banking. Trading income has also grown during the quarter amounting to Rs 52.78 crore. Total investments have grown by 34% yoy r ising to Rs 35,718 crore. Axis Bank has witnessed a sharp increase in NPAs (Non performing Assets) as the net NPAs% has grown from 0.36 in Q4FY08 to 0.47 in Q1FY09.

Investment Positives:
Rapid growth in the bank's core business.
In the current quarterly report Axis Bank has shown great strength with increase in NIIs, net advances and fee income.
A dominant player in handling debt issues.
Axis bank has a wide network. It has added another 42 branches and extension counters and 140 ATMs during the quarter making the total to 713 branches and 2,904 ATMs. It has increased its coverage covering 433 centers.
Progressive globalization and achieving international standards.
Axis Bank adopts Misys tech to support growth in derivatives and boost risk management.

Concerns:
NPAs are growing. But its level of NPAs is below 1 %.Also among the new private banks Axis has the least exposure to the retail segment and this cushions against the bad debts.

Risk associated with the financial sector due to increase in the rate of interest. This is a real threat but the results for this quarter are still excellent considering that we saw the worst interest rate scenario in the last few months. Going forward we expect interest rate to soften.

Valuation:
Axis Bank has shown a strong growth in income and profits during a period which has been tough for all financials. The Bank is expected to have an EPS of around Rs 40 per share for FY09. At CMP of Rs 697.60, it trades at a P/E of over 15.75, which is very attractive. The PEG ratio ( PE/growth in NP) comes to a mere 0.18 which shows good scope for appreciation. The stock has corrected appreciably from the high of Rs 1150 earlier this year. We recommend stock as an excellent investment in the beaten down financial space with a target price of Rs 900.

Everest Kanto Cylinders

Buy : Everest Kanto Cylinders

CMP : Rs 259

Target : Rs 750

Time Frame : 3 Years

Everest Kanto Cylinder (EKC) is a leader in the industrial and CNG cylinders manufacturing business in India. It commands an overall market share of 85% in CNG cylinder industry & is well placed to tap the growing market for environment-friendly Compressed Natural Gas (CNG) applications.

Compressed Natural Gas (CNG) offers a feasible alternative to petroleum fuels in vehicles. CNG is a source of mobile-energy, which can be easily supplied on a mass scale at affordable prices. Due to its inherent clean properties, the substitution of petrol & diesel by CNG is advantageous in not only enhancing energy security but also in cutting harmful GHG emissions.

Roughly 800,000 vehicles in Pakistan run on compressed natural gas (CNG). Each needs a specialised cylinder where the CNG is stored under high pressure. And, an Indian company — Everest Kanto Cylinders — is controlling 65 per cent of this market.The company makes CNG cylinders in India and Dubai and sells them in Malaysia, Thailand, several Gulf countries and CIS nations, besides Pakistan.

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Everest Kanto's story turned out differently because its founder chairman and managing director P.K. Khurana spotted a good opportunity in South America. Here, Brazil and Argentina were using CNG as a low-cost, environment-friendly fuel for automobiles, and had approximately 10,00,000 CNG vehicles on their roads. Wondering whether CNG would catch on in India as well, Khurana sent study teams to South America and the US. Initial research convinced him that this would be a good business opportunity in India.

Leading cylinder manufacturer Everest Kanto (plans to invest Rs 1.5-1.75 billion on capacity expansion across its plants in US, Dubai and India.The company expects to clock 35% increase in volumes and 50% increase in earnings in the current fiscal. Also company`s wholly owned subsidiary in China has successfully completed the trial production phase and commercial production has been already started.

EKC is ramping up its capacity to enhance its market share and is also planning to exploit other markets such as Iran and China, where a well timed capacity expansion would drive a ~36.8% EPS CAGR over FY08-FY10E.

PRAJ INDUSTRIES

About the company
Praj Industries has been one of the fancied stock in the recent rally not only among the traders as well as among the investors too. The stock was volatile and spurt on news coming one after another.The company is engaged in Ethanol distillery projects as well as in brewery projects.

Shareholding Pattern : " Its Different "
JM Financial Mutual Fund bought about 5.80 lakh shares of Praj Industries, increasing its stake to 5.25%. Tata Capital holds 7.33%, Rakesh Jhunjhunwala has a 7.3% stake and Vinod Khosla holds 6.15%. Morgan Stanley holds 2.77%. Makes one wonder what is so special about the company?

About The financials
The financial performance of the company for the first quarter ended 30th June 2008 has not been as good as expected. Infact its bottomlines took a hit. YoY, its topline showed a 12% growth at Rs.154.76 crore. Though it has managed to contain its operating expenses, OPM slipped from 28.27% to 20.57% and NPM from 20.47% to 15.99%. Ethanol distillery projects contributed over 85% to the topline, whereas the brewery projects made up for the rest. But forex losses during the quarter dented its earnings.

Positive News In the counter
1. The ability of the company to drive down cost as a result of value engineering exercises undertaken as well as the product mix has helped boost contain the margins at these levels. Praj’s current order-book is pegged at about Rs 950 crore of which 48% is from exports and the rest domestic. Being a net exporter, the current depreciation of rupee would go in favour of the company.

2. Increasing acceptance of ethanol-blended petrol and bio-fuels.

3. With fuel bills touching the sky, biofuels is the way into the future and Praj is ready to capitalize on this. It is setting up its first plant in Louisiana, based on sugarcane juice and if this biofuel gets accepted, Praj would have the whole of North America as a market. In EU, it has a JV - BioCnergy Europa B. V., with Aker Solutions. It has also got orders from European sugar majors such as British Sugar, Suedzucker and Danisco. Its JV in Brazil is expected to help tap opportunities there too but this may take a longer while as not much progress has been made on this JV.


Negative News In the counter
1. Suspection of Govt postponing the October deadline for making it mandatory for another 10% ethanol blending.

About the Stock
Though the prospects for the future is good and likely to be promising , one can have some minor stake in the company . Though attractive levels are expected in drastic falls for investors to invest in.

MOSER BAER INDIA LIMITED (MBIL)

MOSER BAER INDIA LIMITED (MBIL) is a global technology company with presence in over 82 countries, and services through six marketing offices in India, the US and Europe. Incorporated in 1983, today it is India's largest and the world's 2nd largest Optical Storage Media (OSM) manufacturer and enjoys strong tie-ups with all major global technology brands.

It is also India's largest home entertainment Company. It releases video content in the DVD and VCD formats using proprietary and patented technology that ensures the highest quality standards at affordable prices. It is also the first storage media Company in the world to make commercial shipments of HD (high density) DVDs. Moser Baer has also established itself as a major player in the USB drives and memory cards. Its foray into PC peripherals in the form of ODDs (Optical Disk Drives) will further help it strengthen its position in the industry. Currently the IT vertical industry (PCs and Notebooks) is pegged at Rs 20000 Crores and the PC Peripheral industry is worth Rs 12000 Crores. Moser Baer with its entry into the ODD Market in the form of Combo Drives and DVD Writers plans to capture 20% market share of present Indian market size of five lakh units per month. Recently, the company has transformed itself from a single business into a multi-technology organisation, diversifying into exciting areas of Solar Energy, Home Entertainment and IT Peripherals & Consumer Electronics.

Investment Rationale
FY 2008 AND Q1 FY 2009 PERFORMANCE OVERVIEW: The Consolidated Net Sales of the Company increased from Rs. 1984.04 Cr to Rs 2070.01 Cr during FY 2008, an increase of 4.33% YoY. The Consolidated Core EBITDA stood at Rs. 223.96 Cr in FY 2008 as against Rs. 433.83 Cr during FY 2007, down 48.34% YoY. The Consolidated Net Loss for the year stood at Rs 431.85 Cr against Rs 60.88 Cr in FY 2007, an increase of 609% YoY. The Standalone Net Sales stood at Rs. 1892.59 Cr. during FY 2008 as against Rs. 1981.91 during FY 2007, down 4.5% YoY. The Standalone Core EBITDA stood at Rs. 302.37 Cr. during 2008 as against Rs. 460.25 Cr. during 2007, down 34.3% YoY. The Standalone Net Loss of the Company is Rs. 310.52 Cr. for FY 2008 as against Rs. 32.18 Cr. during 2007.

The Standalone Net Sales of the Company increased to Rs. 478.93 Cr in Q1 FY 2009 as against Rs. 469.30 Cr during Q1 FY 2008, a growth of 2.05% YoY. The Standalone EBITDA for the quarter stood at Rs. 53.46 Cr. as against the Standalone EBITDA for the same quarter last year of 152.08 Cr down by 64.85%. The Standalone Net loss for the same period increased to Rs. 103.98 Cr as against Rs. 71.72 Cr in the last quarter of 2007-08 an increase of 45%. The net loss includes a loss of Rs. 28.27 Cr on account of the adverse movement of foreign exchange.

INNOVATIVE PRODUCTS TO CATER GROWTH: Moser Baer recently acclaimed fame of being the first non-Japanese Company to innovate its own OSM blu-ray disc technology. The demand for these blue laser based formats is expected to exceed over 12 Crore discs by 2009 from less than a crore units at present. The concept works on blue laser, which used to read and write this type of disc. Because of its shorter wavelength (405 nm), substantially more data can be stored than on the DVD or CD formats (which uses 650 nm and 780 nm wavelength respectively). A dual layer Blu-ray Disc can store upto 50 GB; almost six times the capacity of a double dual layer DVD. The company has an advantage of being "first-to-market" and is well positioned to capture a significant share of this emerging opportunity. The intellectually strong position in the development of this next generation product provides a significant competitive edge.

HUGE MARKET SIZE; POISED TO GROW EVEN FURTHER: The size of the blank optical media market in India is over one billion discs per annum. CDR (Compact Disc-Recordable) is the predominant format accounting for about 80% of the OSM market in India. DVDR (Digital Video Disc-Recordable) has grown exponentially over the last year. The overall Indian market for OSM is growing at 15% with DVD growing at a pace faster than the industry (it grew at around 100% YoY in FY 2008 and is expected to continue growing at even higher rates in future).

EMBEDDED VALUE IN SUBSIDIARIES: Moser Baer Photovoltaic Limited, a WOS of Moser Baer India, is in the business of photovoltaic (PV) cells and modules. MBPV is expected to emerge as a technology-driven PV equipment manufacturer in the world by implementing a capacity of 500 MW by FY 2010; through a mix of multiple technologies including crystalline silicon, concentration and thin films. The manufacturing facilities are housed in a SEZ dedicated for renewable energy at Greater Noida. MBPV is in the process of setting up India's largest grid connected solar farm in Rajasthan with an investment of around Rs 100 Crore. Driven by recent significant technological advancements, it is estimated that the solar market will have a 43% CAGR over FY 2008 - 2012 and is poised to achieve grid parity in the short to medium term.

Current demand projections translate to a value of US$ 50-70 billion by 2010. Another subsidiary, PV Technologies India Limited (PVTIL) has successfully completed deposition trials for Gen 8.5 a-Si (Amorphous Silicon) thin film modules at its new 40 MW facility in Greater Noida in FY 2008 and thus achieved a global landmark. The company is setting up a thin film PV plant near Chennai with a proposed 500MW annualised capacity. The Chennai and the Greater Noida plants will be manufacturing Gen 8.5 thin film panels measuring 5.72 square metres. The utility of using thin films includes savings of material, monolithic device design, use of inexpensive substrates, and manufacturing processes that need low temperature and are possible over large areas. Photo Voltaic Technologies India recently signed a MoU with a global equipment supplier to secure supply of critical equipment for an additional 565 MW phased expansion of its Thin Film photovoltaic modules manufacturing capacity, which together with the current project capacity of 40 MW will take the total manufacturing capacity to over 600 MW by 2010.

INTEGRATING OPERATIONS THROUGH ACQUISITIONS: Moser Baer's acquisition of an 81% stake in OM&T B.V., a highly specialized technology Company based in The Netherlands, has started bearing fruits in terms of exploiting cutting edge technologies in both the optical and solar photovoltaic (PV) segments. This acquisition is a major milestone for Moser Baer as it will facilitate strategic implementation and ensure the presence in both the optical and solar photovoltaic (PV) segments. This acquisition will complement the existing research being done at R&D facility based in India and help the company to further consolidate its leadership position. According to the agreement, all innovations by OM&T will be transferred to Moser Baer. The Joint venture will also focus on development of photovoltaic technologies to support Company's existing PV business.

GOVERNMENT ASSISTANCE: Indian government would provide financial assistance amounting to Rs.12 (30 cents) per kWh in case of solar photovoltaic and Rs.10 per kWh in case of solar thermal power fed to the electricity grid. The scheme will be run by the Indian Renewable Energy Development Agency (IREDA), and solar farm developers will be able to access the subsidy by selling their energy to state-run utilities under the new tariff. The incentives are scheduled to run for 10 years and will be paid in addition to any subsidies offered by state governments. Some of the Indian states have also announced independent programmes to support large size solar PV installations. However, the ministry has imposed a limit for the incentives of 50 megawatts in total, a cap of 10 megawatts (MW) within any one state and a maximum of five megawatts per developer.

Conclusion
The company is incurring losses since last three quarters on high operating expenses due to foray in new business areas. However, we believe that solar division will add significantly to the top-line of the company. Recently, the company sold 6.5% of its Photovoltaic Divison in a private equity deal to a group of foreign and domestic investors for Rs 411 crore, valuing the division at Rs 6,350 crore. This is significantly higher than the total market capitalization of the company i.e. Rs 1620 crore. The stock currently trades at Rs. 96.25. We expect that the stock could be a multi-bagger. We recommend a BUY on the stock with a time horizon of 24 months and a price target of Rs. 173, offering a return potential of 80% from the current levels.

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