1. Avon Organics Ltd(Rs33/): This Hyderabad based company is in the manufacturing and marketing of Diketene with installed capacity of 2000 tpa. It also has Bio-tech division manufacturing Ephedrine HCL. Equity is approx Rs 12.69 crs. Last year, company had incurred heavy losses due to various factors. Due to cheaper imports from China, selling price of Diketene had come down and on the other hand, price of raw-material had gone up. However, promoters have been inefficient and not investor-friendly (allegations of siphoning off funds). Recently, promoters of ARCH PHARMALABS have acquired controlling stake in the company by buying-out exisitng promoters. Earlier, Arch was know as Merven drugs. ARCH is a highly profitable company in which ICICI Venture holding approx 14% equityand ILFS holding around 5% equity(stake acquired at Rs 150/ perhaps). It is reliably learnt that ARCH maybe listed on BSE/NSE next year at around Rs 450-500/. Promoters are following Matrix Lab model (acquiring companies with different portfolio). Some pharma analyst are confident that under new management, Avon will make a sharp turnaround in its performance and should post profits in near future. Further, Avon has received USFDA approval for its Biotech division and will be able export Ephedrine to regulated markets where profit margins are much higher. Moreover, with small capex, Avon can go for forward integration which will enable it to produce value-added biotech products. Some knowledgeable investors are extremely bullish on Avon Organics with price target of rs 90-110/ in less than 15 months. There is a possibility that once Avon performance improves, it may be merged with ARCH. A riskfree turnaround scrip for multibagger returns. Buying in big quantity recommended

2. Garware Polyester Ltd(Rs 73/): This mumbai based company has recently signed OTS agreement with IDBI under which IDBI is being alloted shares at rs 59/. For 06-07, company had achived CASH EPS of 15.24 on equity of 21.78 crs. During the year, company had paid interest charges amounting to 46.30 crs. Now, company has been performing extremely well. In Q2, it has achieved NP of 2.60 crs as against 19 lacs in corresponding quarter of previous year. In H1, its CASH PROFIT is 21.90 crs after providing 27 crs for interest charges. Company is likely to finalise sale of its Mumbai property for Rs 280 in next few weeks. In fact, now company may get much higher price as recently, Bandra Kurla Complex has witnessed more than 100% rise in land prices. Company will use part of proceeds to settle OTS with IDBI. Thereafter, company is likely to save Rs 35 crs in interest cost alone which means in 08-09, company can achieve CASH profit of more than 70 crs and PAT of at least 40 crs. Scrip is being accumuated by knowledgeable investors. Value of property sale alone will work out to Rs 130/ per share. A leading BSE broker has reportedly cornered big chunk of its shares with price target of Rs 150-175/ in less than 9-12 months.

3. Kamanwala Housing (Rs 208/):Share price of this Mumbai-based real-estate company may cross Rs 275-300 mark in next few weeks. For 06-07, company had achieved EPS of 23.80. In 07-08, its performance is bumper. For Q2, its NP has zoomed by 440% to 6.84 crs H1 EPS is 18.75. On small equity of 5.29 crs, company is sitting on highly valued properties. Company is constructing 75000 sq ft commercial complex in BKC where prevailing commercial property prices are around Rs 40,000 per s.f. However, after more than 100% rise in land prices in latest auction, marketmen are predicitng that commercial space prices in BKC can go upto Rs 50,000-60,000 per s f. Kamanwala will be hige beneficiary of such surge in property prices. Further, company is also implementing several other projects in Andheri area(very very close to international airport), Santacruz, Opera House. It has also partnered with Prajay for a big project in Hyderabad. Company should report EPS of Rs 45 in 07-08 which can flare to Rs 60-65 in 08-09. It is one of the cheapest stocks in real estate sector. Share price had touched Rs 320/ last year. Investment at CMP can yield more than 100% appreciation in less than 1 year. Buy aggressively.

4. Eco Board Ind Ltd(Rs 17/): This Pune based company is engaged in the production of pre-fabricated Boards made out of husk, used for office furniture/partitions and residential furniture as well. Recently, company has completed CDR with FIs. Equity is 17.08 crs. For Q2, company has achieved NP of 1.61 crs as against Loss of 1.25 crs in corresponding quarter of previous year. Company has achieved sharp turnaround due to lower raw material cost. Now, company plans to go for Furniture manufacturing and is scouting for some MNC for this purpose. Moreover, company is trying to get Carbon Credit as well. Some positive developments/announcement from the company are expected in coming months. This low-priced pick can provide more than 100% in less than 15 months. Buy large quantity and have patience.

5. JRG Securities(Rs 88/): This appears to be the cheapest scrip in brokerage/financial services sector. This South-based brokerage firm has equity of 12.79 crs (which will go up after equity allotment to BARING). In H1 , it has reported Np of 3.31 crs. However, in near future, company will no longer be known as an Indian brokerage outfit. Rather, it will be an MNC's associate. Recently BARING SECURITIES(Thru Duckworth) has acquired controlling stake in JRG by picking up 1.0382 cr shares and also 1.33 cr warrants. Now, Baring holds majority stake in the JRG. Baring is investing nearly USD 35 million . Now it is felt that JRG will go for aggressive branch expansionwith All-India presence. At present , brokerage scrips are commanding mind-boggling valuations.
Edelweiss scrip(Rs 5 FV) is likely to be listed at rs 1500/ Geojit is enjoying PE ratio of 45-48. PE multiple of India Infoline is around 85 and that of EMKAY is 38-40. Recently listed Religare is quoting at multiple of nearly 180. In such a scenario, JRG is going dirt-cheap. Once, Baring is in full command management of the JRG, scrip will definitely be rerated as company can go for NBFC, Asset Manageent activities also. Ever since BNP took stake in Geojit, valuations of Geojit have gone up by nearly 300%. Investors should not be surprised if JRG quotes above Rs 250/ in just 18 months. An excellent with almost sureshot multibagger retuns



HEMANT K. GUPTA
Centre for Development of Financial Treasure
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