Vamshi Rubber

BSE CODE : 530369 @ 35.95

(equity: Rs 4.20 crore, price: Rs 34.45): Engaged in the manufacture of precured tread rubber. The numbers may be minuscule but tarry a while my friend, there is a pattern emerging: EBITDA has grown in every single of the last five quarters from a trough of Rs 39 lakh at one end to Rs 1.22 crore at the other, increase in EBITDA margin in every single quarter from a low of 3.7 per cent to 10 per cent and a consistent increase in interest cover from sub-3 to around 8. Tax rate of 20 per cent appears fair. Basic and diluted EPS in the last quarter: Rs 1.58. Market capitalisation: Rs 15 cr. Potential.

Jay Ushin

BSE CODE : 513252 @ 108.80

(equity: Rs 3.86 crore, price: Rs 90.70): Engaged in the manufacture of lock key sets, door latches and heater panels. Enlisted as a supplier to leading automobile brands.

Low margin, volume-driven business. Turnover has risen every single quarter over the last five quarters - from Rs 34.86 crore in September 2006 quarter to Rs 55.71 crore in September 2007. EBITDA margin relatively steady at around 6 per cent. The company reported an EBITDA of Rs 3.32 crore in the most recent quarter with an interest cover of around 5.

What I like about the company: a sizable depreciation provision of Rs 1.13 crore in the last quarter, which provides the company with adequate ammunition to enhance capacity (and revenues) sustainably without diluting the equity. At a market cap of Rs 35 crore, the market is obviously overlooking the value of the technical collaborator, profitability and customer alliances. Temporary.

Buy Short to Medium Term Delivery for good Return.

Dated: 08 JAN. 2008