Pentafour Software (28 April 1997)

Pentafour has posted a net profit of Rs. 469 million (up 54%) on a net sales of Rs. 1702 million (up 51%) during 1996 -1997. EPS stands at RS. 43.31 (up 36%). Equity has increased from Rs. 96 million to Rs. 135 million. 'cause of a GDR issue. A dividend of 45% has been recommended. The stock quotes at at Rs. 159.40 (25 Apr.) in the NSE. Pentafour's thrust on multimedia projects where margins are higher but it is still to develop any projects worth a name. An acid test would be when it decides to market CD ROMs using the Pentafour name. We feel that this stock is fully priced, considering the nature of its earnings & lack of product profile.
Orchid Chemicals (28 April 1997)

Orchid, the cephalosporin manufacturer, has posted a net profit of RS. 306 million (up 76%) on a turnover of Rs. 1925 million (up 72%) during 1996 - 1997. EPS stands at Rs. 17.67 (up 76%). A dividend of 40% has been recommended. Orchid is among the top 4 manufacturers of oral cephalosporins & cephalexins in the world with a 13% market share. We are surprised that Orchid has been able to increase its operating margins largely 'cause of decrease in raw material costs. Pharma companies, worldwide, usually are well aware of the smallest changes in input costs. It is also surprising why other Indian pharma companies are not looking at manufacturing cephalosporins in a big way even when a 1% global share would mean a turnover of Rs. 1600 million. The stock at Rs. 133.00 (25 Apr.) in the NSE could see some upward trend in the medium to long term.
Secals (28 April 1997)

The troubled valve castings manufacturer Secals is to make a preferential equity allotment of RS. 231 million to foreign companies. Foreign holdings after allotment is likely to be around 78% while the promoter's holding is likely to decrease to 3%. Secals plans to increase its capacity to 600 tonnes per month. Management expects a turnaround in 2 to 3 years. The stock quotes at Rs. 11.00 (25 Apr.) in the NSE.
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