Hotchips - Indian Bank & Surya Roshni

INDIAN BANK BSE Code: 532814 Volume: 34568 CMP: Rs 288.25

The Indian Bank is aiming to grow its business at a CAGR of 25 per cent in the coming years. It plans to expand its presence outside south India by opening more branches. The bank’s focus is on increasing its CASA deposits as the final cost of deposits will determine the final rate a bank would charge on its credit portfolio. The Indian Bank intends to concentrate on lending to the agricultural sector and to medium and small enterprises (MSME). It has also decided to increase its exposure towards lending in sectors like retail, education, infrastructure and housing. The bank has booked growth at a CAGR of 24 per cent in the last 4 years while its total business has risen by 25 per cent to Rs 167,980 crore at the end of September 2010. The Indian Bank is determined to maintain this momentum. The stock can be looked at for gains with a short to medium term perspective.

SURYA ROSHNI BSE Code: 500336 Volume: 29383 CMP: Rs  110.90

Surya Roshni (Surya) reported a topline growth of 12.4 per cent YoY to Rs 597 crore for Q1 FY11 as against Rs 532 crore for Q1 FY10. There was a 52 basis points improvement in operating profit margins to 5.5 per cent as against 5.0 per cent on a YoY basis. Overall, the net profit increased by 45.3 per cent on a YoY basis to Rs 7 crore in Q1 FY11 as against Rs 5 crore for Q1 FY10. Also, Surya has expanded its capacity across products in recent years. At current levels, the stock is trading at attractive valuations. Going ahead, we expect a sharp surge in sales as utilization levels in the recently expanded capacities improve. The management too is confident of achieving the same. The promoters converted warrants worth Rs 60.8 crore at Rs 111 per share. This amount will be used to meet working capital and other requirements. The stock can be looked at for gains with a medium term perspective.