Diwali Sparklers In A Gloomy Market

A lot has changed from last Diwali to this Diwali. Last year, after the initial setback of  sub-prime crisis, Sensex had gone on its upward curve and went on to touch 19,000, which reflected the festive mood with great zeal. But this time around, the mood is in sharp contrast to last year's. The market has corrected  more than 47 per cent from its peak and investors are cautious and scary. Many of last Diwali's favourite counters are down by more than 90 per cent. The worst part is that they are still not in the shopping list of the investors.

The festive mood is missing in the economy too as people have curtailed their shopping list. In such trying times, one has to apply one's mind diligently before recommending stocks which are likely to give returns to the investors. Remember, in the last few months, FIIs have been on a selling spree, and the worst part is, no one knows when they would stop selling and start buying. Just to give some comparison, when we did last year's Diwali issue, FIIs had pumped in Rs 76,000 crore (from 2006 Diwali to 2007 Diwali), but this time the FIIs have been net sellers to the tune of Rs 48500 crore (from last Diwali to this Diwali). The Indian stock market is heavily dependent on FII investments and their buying can change the mood of the market.

Similarly, their selling can drag the indices down. Right now, liquidity is the biggest problem for the market. Each and every central bank in the world is trying hard to ensure that their local banks and financial institutions can come out of the sub-prime crisis unscathed. The problem is more acute with banks in the US and Europe. A rough estimate suggests that the amount of money being pumped by all central banks into the system is somewhere in the region of $3 trillion and the impact of the same would be visible in the coming days.

So where do we see the Sensex by next year?
We are of the opinion that all the negatives have been already discounted in the prices as far as sub-prime crisis goes. Before next Diwali, India would have seen the General Election and a new government taking over reins at the Centre. There would also be a change in the GDP growth rate due to slowdown in the global economy.

The commodity upside cycle has taken a beating in the last couple of months and we expect the trend to continue. Similarly, when it comes to crude oil, we expect the crude prices to remain soft. Now, with all these assumptions as the backdrop, we are of the opinion that Sensex would certainly be higher than the current level by Diwali next year. We are expecting Sensex in the region of 13,500-14,000 by next Diwali.

From the current level, this would indicate an appreciation of 30-35 per cent. We are hopeful that the correction that we have seen in the stock indices is a good opportunity for investors to reshuffle their portfolios. If one invests in the present market with a two-year time horizon, one can expect to get at least 25 per cent appreciation every year. To help you to construct a good portfolio, we have as an annual feature, recommended in this issue 11 scrips as Muhurat Buys.

These scrips have been selected from various sectors with a close look at their valuations. We have also created the Rs one crore portfolio based on the 11 chosen scrips so that investors at large can benefit from the same. At the same time, we have also reviewed our last year's portfolio so that investors can get a fair idea about our last year's recommendations. DSIJ's editorial team wishes its readers a Very Happy Diwali and a Prosperous New Year.[PAGE BREAK]

When you review the portfolio when the chips are down by more than 50 per cent, it is obvious that portfolio would also be down. Today, the average returns from equity mutual funds scheme for the last one-year stands at negative 45 per cent. This is average and hence many have performed much worse than negative 45 per cent. This clearly suggests that it is a trying time for the investors when it comes to look at the returns from the equity market. The complete scenario underwent change in last one year.

At the time of last Diwali, Sensex was at 18500 levels and today we are little above 10000 levels. However, it is not a true reflection of the market as prices of many scrips are now available at 4000 levels. There is bloodbath on the street with many scrips taking a beating of more than 85 per cent from their 52-week high. In such a tough scenario, our last year portfolio has taken a beating of 39 per cent against Sensex fall of 42 per cent.

The 39 per cent fall is much better than average fall of 45 per cent from equity mutual funds scheme. Our last year portfolio consisted of 11 scrips of which only Ranbaxy shows gain and this is also due to our timely recommendation "Sell" on the same in our issue dated June 23, 2008. We also recommended book partial profits on Techno Electric at Rs 194 against recommended price of Rs 132 in our issue dated May 26, 2008. The worst performer in our list is Adlabs Films that is down by 71 per cent. In fact, the complete Anil Ambani group of companies has faced the brunt of the investors. Just a small note, all the above-recommended scrips saw handsome gains in just two months from recommended levels. Had investors sold at that time they would have made plenty of gains. Do not forget to see this year's portfolio.

Areva T&D India
Areva T&D India (ATDI) looks a perfect pick that has the potential to lighten up the sulking investors this Diwali. There are various reasons for our belief. According to the 11th Five-Year Plan, the government's thrust is on strengthening the National Grid where the preference is to opt for high voltage direct current (HVDC) technology and 765 KV transmission systems and substations, which help in reducing transmission losses.

ATDI, which is one of key players in investments in the 765 KV range pick up in the next 2-3 years. ATDI also gives good revenue visibility to investors with its strong order backlog of Rs 3931.8 crore, almost 2x its CY07 sales of Rs 2006 crore. In fact the higher voltage products command higher margins and with ATDI increasing its focus on the same, its margins will improve even further. In the last three years, its operating margins have increased by 983 basis points. ATDI also has good clientele mix and 60 per cent of its sales come from central and state utilities, while 26 per cent is from private sector and 14 per cent are exports. [PAGE BREAK]

To strengthen its presence further, ATDI is entailing a huge capex of Rs 700 crore with green field projects at Vadodara, Chennai and Hosur. Vadodara and Chennai would stage power transformer manufacturing facility up to 765 KV and eventually up to 1200 KV, while Hosur facility will manufacture circuit breakers up to 765 KV and eventually up to 1200 KV. These three facilities are expected to go on stream by December 2008, thus improving revenues and profitability further. Once the entire expansion completes by 2010, ATDI's transformer capacity would double to 30000 MVA.

Areva, France is a world leader in  nuclear power construction and equipments and with India signing nuclear deal it rings new business avenues for ATDI. But will ADTI foray into this and how much business will come to it isn't known at the present moment. In H1CY08 ATDI has performed fantastically where its topline grew 34 per cent to Rs 1124.6 crore (Rs 840.5 crore), while bottomline grew at 41 per cent to touch Rs 118.8 crore (Rs 84.4 crore) during the same period. For CY2008, ATDI could post revenues and profits of around Rs 2250 crore and Rs 240-250 crore.

Thus an estimated EPS of Rs 10.35 (stock spilt of 10:2 with record date of October 29, 2008 announced) it results in PE of 16x. Besides, though EV/EBITDA is at 11x, it should be noted that being a leading player it has always commanded a higher premium. Thus investors are advised to invest in ATDI in a staggered manner [PAGE BREAK]

with one year price target of Rs 237 (adjusted for split).

CRISIL
CRISIL, a part of Standard & Poor's company, is India's leading Ratings, Research, Risk and Policy Advisory Company. Investors can brighten up this Diwali by adding this zero-debt company to their portfolio which seems good for the long-term investment as it will remain unscratched from rising interest rates. CRISIL is operating in the environment where it faces limited competition with high business margins. For the last 3 years, the company, on an average, posted the operating and net profit margin of 36 and 25 per cent respectively. The company Is expected to benefit from the recent financial crisis in the west. This crisis will not only stimulate the need for the ratings of the financial instruments but also augment the growth of the research and risk and policy advisory services both domestically and globally. In last 3 years, the topline and bottomline have grown remarkably at 67.66 per cent and 70.67 per cent CAGR respectively.

For CY07, Ratings contributed 32 per cent, Research 42 per cent and Advisory 26 per cent of the total revenue for CRISIL.This was mainly due to the RBI's guidelines to use external ratings for computation of capital under Basel-II norms that increased the demand for the financial ratings, structured financial ratings and bank loan ratings.

SEBI has made IPOs grading by rating agencies mandatory for all. However, in the current turmoil, the company might witness slowdown in IPO ratings and research business. Out of 8 subsidiaries, Irevna, a rated leader in high-end and analytics investment research outsourcing for two years in a row has highest turnover. Irevna has also helped the company gain a foothold into credit and derivatives offshore space. CRISIL also has a mammoth cash surplus of around Rs 140 crore which can be further used in funding the acquisitions in non-rating segments such as BPO and KPO services. On YTD basis, the counter has declined by mere 25.28 per cent, while Sensex has fallen by 47.88. The counter is currently available at a PE 17.15 of its trailing 12 months earnings. [PAGE BREAK]

Thus investors can take exposure in the company in staggering manner for returns of near about 25 per cent in.

Larsen & Toubro (L&T)
L&T is one of the largest and well-diversified players with interests in engineering and construction projects apart from manufacturing and information technology. In the recent H1FY09 results, L&T posted topline of Rs 14584 crore compared to Rs 10005 crore during the same period last year, indicating a growth of 45.76 per cent.

The PAT during the same period grew 33 per cent to Rs 963 crore (725 crore). But these numbers were below the street expectations as the Electrical and Electronics segment showed a stunted revenue growth with margin erosions of around 440 basis points. Despite the slowdown in the economy, the company is expected to achieve its revenue growth target of 30 per cent in FY09 supported by huge order book (Rs 63,000 crore).

The order inflows growth of 45 per cent seems to provide the base for driving revenue in FY09 and FY10. The major growth in the order inflows was led by E&C segments and the power and process sector. The company business initiative towards the power generation and the ship building business seems to boost the performance of the company. In the midst of clearance of the nuclear deal, L&T is expected to get substantial business to supply nuclear equipment to some of the experts in the industry like GE, Areva and Alstom who have conducted visits to the facilities of the company and approved its technological capabilities. On the other hand, the company's strategic plan to get in to complex and specialized vessels like LNG Carriers will give new dimension to the company.[PAGE BREAK]

To achieve the utmost performance the company has initiated few steps to restructure the business model wherein it has created a few subsidiaries for different business vertical under separate board which could unlock shareholder value when get listed. At the same time few divesture proposals are on the verge of completion like RMC business, Dairy Machinery business, Glass Container business, JV with John Deere and Niro.

On the valuation front, at FY09 estimates L&T is trading at just over 9.60x, which is quite low, compared to valuations it had commanded previously. Even on market cap to sales basis as well L&T is available at a mere 1.53x, which is too low for a company the size of L&T. The scrip has been corrected by more than 50 per cent from its peak due to the global turmoil and credit crunch with higher inflationary condition. But we feel L&T should command higher premium due to its superior execution capabilities and initiative for new ventures.

Maruti Suzuki
Maruti Suzuki is one such counter that has not fallen much in the present mayhem. The scrip from the beginning of the current financial year has seen fall by 18 per cent against the Sensex fall of 31 per cent. One of the reasons why the scrip outperformed the broader indices is due to the better earnings visibility from the company as well as its future plans.

Maruti needs no introduction when it comes to its product range and hence we would only talk about certain key initiatives of the company that make us bullish on the counter for the next 24 months. The company continues to grow in the first six months of the current financial year despite overall slowdown in the economy. Its total sales grew by 5.82 per cent. However, what is heartening is that the A3 segment, the new thrust area for the company in terms of new launch, has grown smartly by 38 per cent. The company's market share due to the same increased to 22 per cent in the A3 segment. The company's main bread and butter segment, A2, grew by 4.46 per cent continuing its leadership position with market share of 58 per cent. We are of the opinion that the A3 segment for the full year should grow at least 30 per cent while the A2 segment would continue to grow at near [PAGE BREAK]

about five per cent from its existing products. At present the company is relying on its "A Star" car that would be launched in the next 30 days that would spur itsgrowth numbers.

The company has set a target of 10 lakh cars for domestic market and two lakh cars exports by 2010-11. During the past year the total car sales of the company stood at 7.64 lakh. In other words, the company is looking at a growth of 57 per cent in next three years. This should reflect in its financials. Right now the share price of the company is discounting its trailing four quarters EPS by 11 times. We are of the opinion that looking at the growth in its A3 segment and future launch the company should offer price appreciation of 25 per cent per annum with two years time horizon. Looking at the sentiment of the market one can buy in smaller lot in the range of Rs 630-670.

State Bank of India (SBI)
SBI remains the Big Daddy of the Indian banking system. When the Bankex (Banking Index of BSE) has been hammered by 49 per cent, till date SBI managed to stop its fall to 37 per cent. The Bank has largely remained unscathed by the global financial turmoil. Out of the global balance sheet of $ 250 billion the Bank has estimated exposure of only one billion in derivative instruments for which it has already provided ten million dollar for any possible losses. When we look at the key ratios of the performance of the Bank, it is showing continuous increment.

The Return of Asset of 1.01 per cent inFY08 against 0.84 per cent in FY07 is one of the best in the industry and the return on equity has improved from15.97 per cent in FY02 to 17.82 per cent in FY08. CASA ratio of 42 per cent at the end of Q1FY09 is one of the highest in the Indian banking sector and gives comfort of margin sustainability as these deposits carry low rate of interest. The Bank's NIM of 3.03 per cent (Q1FY09) will get major boost with the recent reduction in the CRR by 2.5 per cent. The Bank will have extra liquidity to be deployed in higher yielding assets.

However,  there are certain concerns with the type offset quality of the Bank. Gross NPA has increased from 2.92per cent in FY07 to 3.04 per cent in FY08. NPA for the same time period has increased from 1.56 per cent to 1.78per cent. For Q1FY09 NPA improved marginally to 1.42 per cent due to lower provision cover of 44.8 per cent (51.63 per cent in June 07). Merger of State Bank of Saurashtra with SBI sets the precedent of its consolidation with other state banks. This will help SBI in improving its operational synergies. The Bank’s price to book value of 1.94 is in the lower band compared to other private banks (except ICICI Bank). Moreover, SBI is likely to gain at the cost of ICICI bank. Therefore we ask our readers to invest in the counter in staggered manner.

Nestle India
Nestle India (NIL) in the past so many years has only asked for just two minutes from its consumers and if we take a look at the company's valuations, it is asking for nothing at all  from its investors. Yes, no one can resist a crunchy taste of Munch and Kitkat, the different taste of Maggi tomato sauce and the fast to cook -Two minutes noodles.

Similarly, no one can ignore Nestle to become a part of their portfolio. Now there is more than one reason for recommending NIL. First, the company is expected to maintain its growth in the domestic as well as exports market. While the recent issue regarding Chinese milk products has created good amount of opportunities for NIL, as far as the domestic market is concerned, the company has adopted new mantra of focusing on smaller cities with just Rs 10 products as they contribute up to 40 per cent of overall FMCG market. Secondly, the NIL seems to be best consumerisation story and considering the same, NIL has unveiled its capital expenditure of Rs 600 crore (through internal accruals) for R&D, advertising and capacity addition in 2009, which is double the Rs 300 crore in 2008.

Thirdly, the company gets strong support from the parent company which will  help it to add new products (that has historically driven its growth) apart from helping in applying the cost control. As it is manufacturing from its new Uttaranchal unit its effective tax rate in H1FY08 has declined to28.30 per cent as compared to 33.70 percent in H1FY07. As the company further increases the production from this unit, the effective tax rate is expected to drop further, improving its bottomline.  Lastly, Nestle has rewarded its shareholders with good amount of dividend. On the valuation front also the counter is available cheap. Here CMP ofRs 1525 discounts its CY09E earnings by24x (EPS of Rs63.30).

The market Cap to sales ratio of3.30x is lower than3.90x of Hindustan Unilever and 4.25xof P&G. Even the EV/EBITDA of 15x is in line with the industry standards. Considering all these factors we recommend a buy on the counter with a target price of Rs 1840 in next one year.

Sun Pharmaceutical
The financial carnage that unfolded with the dawn of this calendar year has seen many stocks trading at their year low, but there are few scrips which have outperformed the market and given positive results. Sun [PAGE BREAK]

pharmaceutical is one of such scrips which appreciated by 15 per cent year till date when the market has fallen by40 per cent. This reward in the bourses was for its spectacular financial performance.

In FY08, the company posted consolidated sales of Rs 3356.5 crore against Rs 2135.9 crore giving rise of 57.1 per cent. In the same time period net profit increased by 89.6per cent and EBITDA margins increased from 32.3 per cent to 47.1 per cent. However, some part of this growth may be one time, the management expects sales growth of 18-20 per cent in FY09. This is backed by capex of Rs 150 crore the company envisages for FY09 and strong balance sheet. Capex will be utilised to ramp up the production facility to meet the product demand. Cash balance of USD 600 million on consolidated basis at the end of June08 gives the company enough elbow room for inorganic growth. Sun Pharma management is very aggressive and has done 13 acquisitions till date and constantly looks for good opportunities. Sun's R&D cost towards generics and API development is highest in the Indian Pharma Industry and is around 8-9 per cent of sales.

This shows the company's commitment to investment in future products. Top 10 brands of the company contribute only 21 per cent of the total sales. This saves the company from depending upon a single 'blockbuster product'. Going forward the company plans to enter on complex generic products and technology-based products for growth through product differentiation. In a major development the Israeli court has ruled in favour of Sun Pharma in the Taro acquisition, paving the way for its new generic launch in American market. Taro has 100 approved and 26 awaiting ANDA approvals.   At CMP of Rs 1396, it discounts 12-month trailing earnings by 26.6 times. Though it commands premium to market PE of14, when we add CAGR in EPS of44 per cent in last four years (FY04-FY08), we get PEG ratio of 0.6 which shows there is still scope of potential upside. We advise investors to invest in the counter with appreciation of 15-20 per cent in next one year.

HDFC
HDFC has been fulfilling the dreams of millions of people, to have a roof over their heads, for the past three decades. As of now, over three million customers have heaved a sigh of satisfaction. Recommending a financial institution at a time when there is global financial crisis, epicenter of which lies in the asset bubble, may sound irrational.

However, our confidence in this scrip comes from two reasons - firstly, HDFC's experience in managing asset quality across various economic cycles and secondly, its conservative lending practices. Since its inception in 1977 the company has gone through various economic cycles and has maintained loan approval of 30 per cent [PAGE BREAK]

CAGR since 1984. Its policy maintains low loan to value ratio around 65 per cent to 85 per cent and lends primarily to end users. In this quarter the average loan amount is around Rs 15 lakh. In the recently announced half-yearly results HDFC has maintained its momentum and its approvals increased by 28 per cent in H1FY09 compared to H1FY08. NPL (Non-performing loans) of 1.04 per cent improved marginally from 1.16 per cent in last year during the same period and is the lowest in the last decade.

This shows the company's sound asset quality. In this tight liquidity condition globally, when FIIs are selling theirs takes in Indian companies, HDFChas reversed the trend and has actually seen increase in FII stake marginally from 59.09 to 60.41 per cent in the last quarter. Other comfort in the company comes from its investment in various subsidiaries. It holds around 23.3 per cent to100 per cent in14 subsidiaries including HDFC Bank, HDFC AMC and HDFC Standard Life Insurance. HDFC's current book value is 456 in stand-alone basis but when we included its listed investments the book value comes to Rs 772. This gives price to book value of Rs 2.3 times, which looks quite attractive. Therefore, we advise our investors to put this as part of their portfolio and invest in a staggered manner.

Asian Paints
The Sensex has breached the 10,000 mark and sentiments couldn’t have been worse. However, Asian Paints is all set to brighten our Diwali providing multi-coloured rangoli hues. Sensex on YTD basis has fallen by 52 per cent, but Asian Paints (APL) is down just 15 per cent. In fact on YoY basis APL is actually up 3.22 per cent, even when the Sensex has fallen 47 per cent.

This shows the counter's strength despite markets in sharp correction mode. It makes real sense for investors to grab such counter as it not only limits downslide but protects your capital. When the market bounces back it could, no doubt, deliver guaranteed returns. APL is an undisputed leader in the Indian paint industry with an overall market share of 32 per cent. It commands 43 per cent of the organized market share and 54 per cent market share of the total decorative segment. Decorative segment forms 75 per cent of Indian paint industry and 90 per cent of APL's revenues come from it.

This leadership gives it the pricing power and other companies tend to adjust their pricing according to APL's price movements. 65 per cent of paint demand is replacement-led and the balance demand is new construction. Despite housing slowdown APL's decorative paint sales are healthy and kicking. That apart, [PAGE BREAK]

revision of salaries of government employees will increase demand for housing renovations leading to higher demand for paints as well. APL stands to benefit from here as well. In fact, APL is expanding its capacity by 1.50 lakh kilolitre, (eventually to increase to 4 lakh kilolitres), which is expected to come on stream by 2010. The cost of this initial phase is Rs 400 crore and is funded through internal accruals. This will help APL to garner further market share. For FY09, APL could post revenues and profits of around Rs 5198 crore and Rs 512 crore. At these estimates APL generates an EPS of Rs 53.38, thereby resulting into PE of just 18x. Thus investors can buy APL at CMP of Rs 960 with one-year price target of Rs 1281.

Emami
Emami is one of the fastest growing ayurveda-focused FMCG company in India, with a three-year CAGR of 24.60 per cent in topline and bottomline CAGR of 45.80 per cent. Emami markets multi-faceted personal care products ranging from skin care, hair care as well as health care products and with brands like Navratna Tel, Boroplus antiseptic cream, Boroplus prickly-heat powder, Sona Chandi Chyawanprash, Mentho Plus balm, Fast Relief and Fair & Handsome to its product kitty, many are aware of the brand Emami. Now, there are many reasons for recommending Emami, but what makes this company stand out from others is its strong presence in niche segments where very few multi-national companies are competing. Here we feel that the strategy of the company, not to enter the premium products segment and rather design tailor-made products for domestic and international markets, has really helped it.  Similarly, in most of its products like Navratna Tel and Fast Relief it is a market leader and despite the low entry barriers not many competitors are there.

There are lot other factors which make the company a good buy at the current level. Apart from the expected strong revenue growth as its existing brands hold immense potential for rapid growth, even the new products are expected to drive the growth further, we feel. Most of Emami's power brands represent niche categories, with very high growth prospects and the management expects them to grow at better than category speed. Considering the track record, we expect that Emami will continue to introduce value-added products and brand extensions. These would guarantee rapid growth of the present brands as well as a better brand mix. Regarding the new products, Emami has been successful in inventing new categories in men's grooming and toiletries. In the past, most of these newly launched products were a real success. In addition to new products, its ability to launch unique products is expected to drive the growth. In recent past, Emami has been able to roll [PAGE BREAK]

out unique products successfully.

The senior management team has been keen to discover niche categories which are of little interest to MNCs or where regional players see few growth prospects. For example, MNCs do not operate in antiseptic creams. Indian companies like G. D. Pharma (Boroline) and Paras Pharma (Borosoft) are not keen on entering antiseptic cream. By analyzing this gap in product offering, Emami had launched Boroplus cream, which grew rapidly due to its many benefits. Another advantage the company enjoys is its strong brand equity that helps to save on advertisements funds. The two flagship brands like Navratna and Boroplus have grown faster than the category growth, as they enjoy strong brand equity and recall. The brand loyalty could generate optimumrevenue for new products and this might allow for significant reduction in ad-spend resulting in higher bottomline margins. But there is one additional factor which we need to mention very categorically.

Although we are talking about lower advertisement spend, Emami is spending higher than its competitors.  Fewer marketing measures by competitors allow Emami to dominate. Major competitors like Paras Pharma and Zandu Pharma, though have strong brands, they still miss out on leveraging their brand equity mostly due to not so strong enough balance sheet to incur ad-spend in support of brands. In addition to the above factors we are of the opinion that Emami's acquisition of controlling stake in Zandu is a really strategic move as this will give the company an access to the products like Zandu Balm (45 per cent market share) and Zandu Chyawanprash (10 per cent).With Emami having the similar products like Tiger Balm and Sona Chandi Chyawanprash the acquisition seems to be a strategic one. The company also has a 100 per cent subsidiary with 17 million sq ft of developable land. Even if we consider the recent turmoil in the real estate segment, per share value of the same comes to 15-20 per share. On the valuation front the CMP of Rs 253 discounts its FY09E results by13.60x (EPS of Rs 18.50). We recommend the investors to buy the scrip at current level with a target price of Rs 310 in next one year.

Honeywell Automation India
Honeywell Automation, part of Honeywell International, with $36 billion turnover, has come out with good numbers in the first nine months of the current calendar year, despite the economy not doing well. In the first nine months, its sales grew by 8 per cent to Rs 685 crore with net profit of Rs 57.65 crore, a growth of 20 per cent. Looking at the first nine months, we have a feeling that it would report biggest-ever net profit in the year 2008. We are expecting net profit in the region of Rs 75 crore for the full year, as against last year's Rs 65 crore.

The company has very small equity capital of Rs 8.84 crore (FV Rs 10) with limited floating stock as promoters are holding 81 percent of the stake. The estimated net profit figure give EPS of Rs 85. The current market price of Rs 890 gives P/E of 10.47 times. We feel this company should command P/E in the region of 13-14 times and that leaves scope for near about 25 per cent appreciation from the current level. Honeywell Automation has divided its operations in five business segments. The first one is Honeywell Process Solution. This division offers automation and control solutions to various industries like refineries, oil and gas, pulp and paper, and so on. The second one is Honeywell Building Solutions, through which it offers solutions like heating ventilating air-conditioned (HVAC) control system, fire detection system, security systems like access control, CCTV and perimeter control. The third division is Global Engineering Services through which it offers cost engineering, software development and programming and hardware design.

The fourth is Environmental and Combustion System Division and the fifth is Sensing and Control System Division. The company has not given the division-wise revenues or profits from each segment, but we feel that each segment has good potential to grow in the coming months as some of the sectors cater to core segment of the economy. With some slowdown in the economy, there is a possibility that the company may see its growth taking some beating. However, what makes this counter attractive from a one-year point of view for investment is that it is available at very attractive valuations. Right now, the scrip is quoting close to its 52-week low. This valuation may prompt the parent company to make an open offer in the coming months to make it 100 per cent subsidiaries. Also, remember that this company has almost zero debt and is a consistent dividend paying company with the last year dividend payout of Rs 10 per share. We are looking at share price target of Rs 1,100 by next Diwali, resulting in an appreciation of 24 per cent from the current level. On the down side, we are not expecting the scrip to go below Rs 800. One can buy the scrip in a staggering manner due to subdued sentiments in the market.