Winning Strokes: Think different:

Why should one buy W S Industries Ltd?

i) W S Industries Ltd is a play on significant investments planned in the power sector by government of India in the next 5 years time frame. Hence at the CMP, any investor is immune from making losses if he/she keeps it for at least 2 years.

(ii) WSIL had around 14 acres of surplus land, which it transferred to its subsidiary, WS Electric, which in turn is developing that property into a 16 lakh sq. ft. IT park through a joint venture. Phase-I of 3 lakh sq. ft. is expected to be completed in this fiscal (FY09) from which WSIL may start earning a lease/rental income of around Rs.3 Cr per year. This is a great story by any means. But before the work completes the stock will rise in anticipation of better revenues.

(ii)You have also seen that WSIL has an installed capacity to manufacture 16000 tonnes of insulators with 8000 tonnes for substation insulators and the balance 8000 tonnes for transmission insulators. Interestingly, 95% of transmission insulators are sold domestically whereas the majority of the substation insulators are exported. Hence to cater to the domestic demand for substation insulators, WSIL is setting up a greenfield plant with a capacity of 8000 tonnes in Visakhapatnam, Andhra Pradesh. In short, the company is doubling the manufacturing capacity of substation insulators.

HEREIN LIES THE GREATEST CATCH, but how?? Let us find out.............. Since the company sells 95% of the transmission insulators domestically and hence it is not affected too much by the Rupee Fluctuations giving a stability to its earnings. Moreover, since the domestic margins are high as compared to the overseas orders, hence the profitability ratio will be good here. But then these are normal issues and let us dig further and see what is more interesting here......

Yes, the real interesting part is that W S Industries Ltd's Vishakhapatnam plant in Andhra Pradesh will become OPERATIONAL FROM NEXT MONTH, GIVING A SUDDEN SURGE IN REVENUES AND INCOME. Besides, it is looking to scale up its capacity for executing turnkey projects and is even scouting for a strategic alliance for this business. My close sources have confirmed that some names in terms of strategic alliance partners have been sorted out and soon a name could be announced. This give additional kick to the stock to move ahead.

Hence we have four stories in Case of W S Industries Ltd: 1. It's 14 acres of surplus land, transferred to its subsidiary, WS Electric, is being developed into a 16 lakh sq. ft. IT park through a joint venture. 2. Since it gets majority of its revenues from the domestic market and hence less tension as regards to where the rupee stands in terms of dollars. Besides huge investments in the power sector by the GOI will help it immensely both in terms of selling its electrical goods and also in terms of taking turnkey projects. 3. The company is almost doubling its capacity of production of substation insulators from next months, giving a sudden boost in revenues and profitability. 4. Siemens and Areva TD who are its clients will get benefits from the Indo-US nuclear deal and hence W S Industries Ltd could get indirect benefit from this nuclear deal.

This was my motive of recommending the stock some days back. If the market conditions were not that bad, the stock would have reached Rs.80 by now.....and after announcement of this breaking news it would have shot past Rs.100.

This stock is excellent both for the short term and medium term (I define short term as 6 months and medium term as 9 to 12 months).