Some penny stock gems/probable multibaggers/emerging bets/hidden gems

1) scripscan:Aplab Ltd
code:517096
cmp:60

Story: Aplab specialises in test and measurement equipment, power conversion equipment, UPS systems, self-service terminals for the banking sector and fuel dispensers for the petroleum sector. Of its wide range of products the last two are likely to enjoy a huge demand given the growth in retail banking and petroleum retailing. India has several thousands petrol pumps and the number is expected to go up substantially given that the government has issued licences to set up another thousands of fuel stations. The rush of banks to set up ATMs is likely to be beneficial too. Apart from a good domestic demand, the company exports its output to Western Europe, Canada and the US. All these factors suggest that Aplab will very soon move out of the micro-cap space transforming itself into a larger league stock.

2)scripscan:Faze Three Ltd
code:530079
cmp:10

Story: Faze Three manufactures bath mats, shower curtains, blankets and throws, curtains, accent and area rugs, kitchen textiles and doormats. Its business is positioned across three distinct segments of home furnishings, retailing and automotive textiles; products are exported mainly to the US. Its client list is very impressive -- the likes of Wal-Mart, Sears, Target, Marks & Spencer, J C Penny and others. The sector offers excellent growth opportunities and if Faze Three can handle its expansion well, mainly through acquisitions, investors will see the stock do well.

3)scripscan:Lakshmi Electrical Control Systems Ltd
code:504258
cmp:168

Story: Lakshmi Electrical Control Systems deals in electrical control systems and contractors, thermal overload relays and other products. It has a technical collaboration with Sprecher & Schuh AG Aarau, Switzerland, to make and assemble electrical contractors, which gives it a distinct edge in precision manufacturing.Valuation wise its quoting at singe digit pe.Prospects looks good added up advantage would be its investments in lakshmi group stocks.Equity is low with fat reserves in book.A liberal bonus can be on the anvil too.Good stock to buy at dips.

4) scripscan:Novopan Industries Ltd
code:500310
cmp:24

Story: Novopan Industries is another micro-cap company which has recorded powerful growth and has a promising future. Novopan makes particle boards and other decorative panels. Demand for particle boards is gradually rising given its cost effectiveness vis-à-vis wood. A booming property market spells a bright future for companies like Novopan.

5)scripscan:Savera Industries Ltd(hotels)
code:512634
cmp:37

Story: The hotel industry has been raking in the moolah for quite some time now. Most well-known hotels in major cities are fully booked throughout the year thanks to booming domestic and foreign travellers. Among the smaller, more established hotels, is Chennai-based, Savera Hotels, a four-star property with 260 rooms. Its operational performance in the recent past has been very impressive. Demand for hotel rooms is likely to continue in the near future given the rising business and tourist traffic in the country. Though Savera is a micro-cap company, its 260-room property offers it a huge opportunity to capitalise on the growth that is likely to come the way of hotels especially in fast-growing business centres like Chennai.A good buy at dips.

Scripscan:Vishal Information Technologies Ltd
cmp:55
Traded in:Nse-bse

Story: The Rs 41-crore VITL is a subsidiary of Tutis Technologies. VITL provides IT-enabled services (ITeS) in the areas of data digitisation, e-publishing and digital library. These services fall under the non-voice category of the ITeS segment. VITL has a subsidiary called Basiz Fund Accounting Services, in which it holds 86.9% stake. Basiz provides sub-fund accounting and administration services to hedge funds, private equity firms, mutual funds and insurance companies in various countries including the US, UK, Hong Kong and Singapore.VITL derives more than 98% of its revenue from overseas clients. The UK is the company''s biggest market, contributing three-fourths to its total revenue. Among its three verticals, data archiving accounts for 60% of its topline, while e-publishing contributes 30%. The rest comes from Basiz. Though Basiz contributes to just over 10% of VTIL''s business, it provides a much better operating margin of 45%, compared to 25-30% for other verticals. Revenues from services, including archiving and e-publishing, are project-based and hence, lumpy in nature. To reduce its exposure to this lumpiness, VTIL is focusing its attention on print-on-demand (POD) and digital library services. These services are recurring in nature and hence, provide higher revenue visibility.VTIL''s topline and bottomline have shown a compound annual growth rate (CAGR) of 31% over a period of four years ended March ''08. Along with a sustained growth rate in sales and profit, the company has also maintained healthy margins. Its operating margin improved from 32% in FY04 to 36% in FY08. Its net margin has more or less remained flat at 30% during this period. However, compared to FY07, its net margin shrank by 220 basis points due to the imposition of minimum alternative tax (MAT) on IT companies.The company is working on a pilot project with Royal National Institute for the Blind (RNIB), UK, to provide digital library services. Further, it has tied up with leading book publishers in the UK and US for POD services. These two new lines of businesses, along with existing ones, are expected to maintain the company''s growth momentum. Investors with a two-year horizon can consider this scrip at dips.

Scripscan:Ratnamani Metals & Tubes Ltd
cmp:74
Code:520111

Story: Ratnamani''s business can be categorised mainly into two segments - stainless steel tubes for industrial applications and carbon steel pipes. Stainless steel tubes are used by a number of industries like refineries, fertiliser, pharmaceutical and power plants (both thermal and nuclear), among others. These are very critical applications and hence, require high quality levels. Ratnamani is a market leader in this segment, with a market share of close to 40%. The second line of business constitutes electric resistance welded (ERW) and submerged arc welded (SAW) pipes, which are used for oil & gas transportation. Most of the company''s carbon steel capacities are currently fully utilised. The company''s strategy is to maintain a balance between the two lines of businesses, with each contributing around 50% towards its topline.The company plans to expand its capacity in modular phases. It plans to increase its horizontal SAW (HSAW) capacity by one lakh tonnes to two lakh tonnes by the end of the current financial year. Out of this, 150,000 tonnes of capacity will be commissioned by September this year, while the rest will come up by the end of FY09.CRUDE OIL prices has been a cause of concern in the past five years, and this has increased exploration and production (E&P) activities around the world. These activities have generated huge requirements for carbon steel pipes and stainless steel tubes. Many domestic pipe makers are set to benefit from this trend. Ratnamani Metals & Tubes is one such player which manufactures pipes and an array of stainless steel tubes, used in industrial applications. The company''s strong financials, growth plans and diversification strategy make it a good investment bet at the current price level.

Scripscan:Simplex Infrastructures Ltd
cmp:385
Traded in:Nse-bse

Story: The company''s revenue growth of 65% in FY08, against revenue CAGR of 33% over FY03-07, means the efforts put in by the company to boost its manpower strength, asset base, systems & processes, and funding capabilities are bearing fruit. Simplex is on a high-growth path and investments made during the past few years will benefit the company in future. Having one of the most diversified order books in the construction sector (in terms of segmental and geographical mix), Simplex is hedged against any slowdown in order awards due to impending elections in India. It expects margins to improve, driven by a shift in its order book towards higher margin segments and more profitable overseas operations. At CMP, for revised fully diluted EPS estimate of Rs 38, Simplex trades at a P/E of 10.1x FY10E,. Though the outlook for the construction sector is challenging in the short term, Simplex is better placed with limited funding concerns - it has a well-diversified business model, strong growth prospects, and limited real estate & asset ownership exposure.

Scripscan:Hindustan zinc ltd
cmp:582
Traded in:Nse-bse

Story: HZL is expected to post EPS of Rs 30 on revenues of Rs 2200 crore, and has reduced its zinc price forecast for FY10, in line with the sharp correction in LME zinc prices recently. This has largely been driven by zinc surplus of 78 kt in January-April ''08. However, even at the reduced prices, HZL is likely to post strong EBITDA margins of 61% in FY09 and 60% in FY10. Given the pure-play nature of HZL''s business, zinc price has been embedded in the market value of the stock: at 5x EV/EBITDA, the market seems to be factoring in a sub-$1,500 zinc price on the LME. Even if zinc price remains stagnant at $1,800, HZL''s fair value should be Rs 656 per share.