Ess Dee, XL Tele debut: Are they worth your money?

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In line with global cues, the markets opened strong today. Nearing the New Year, the bulls have definitely taken the reins in their hands as the markets see a fifth day of green on the screen.

 

Ess Dee Aluminum , EDAL, and XL Telecom listed today. EDAL, oversubscribed 32.5 times, opened at Rs 265, up 17.77% over its offer price of Rs 225 on the NSE and at Rs 260 on the BSE.

 

XL Telecom, oversubscribed 8.68 times, opened at Rs 177.10, up 18.06% over its offer price of Rs 150 per share on the BSE and at Rs 165 on the NSE.

 

These two stocks got great listings, and the managements of the two say that the prospects for their respective companies are very good. Experts scan the companies and offer their advice.

 

Ess Dee Aluminum is a packaging company offering its services to the pharmaceutical sector. Its clientele includes Cipla , Pfizer , DRL and Wockhardt .

 

Packaging is an integral function for a number of industries and currently there are not many listed Indian entities operating purely in pharma packaging. As the pharma sector looks very promising, Ess Dee has great potential going forward.

 

CMD of the EDAL, Sudip Dutta says that the company has increased its aluminium foil capacity to 9100 tonne. Regarding high raw material costs, he says the company has hedged itself against higher aluminium prices.

 

"Today there's a big opportunity in the pharma space for everybody because Indian pharmaceutical companies have now become Indian MNCs. Everyday they are taking over some new foreign company and therefore it is a big opportunity for us too," he avers.

 

In accordance with Sudip Dutta statements, Amit Dalal of Amit Nalin Securities says that Ess Dee is a good business, provided the management is able to maintain what they plan to do.

 

Moving on, Hyderabad-based XL Telecom has interests in mobile handset assembly, solar photovoltaic system and ethanol. XL Telecom helps to keep the world connected through its range of world-class heat shrink-wrap around cable jointing kits.

 

XL's large state-of-the-art manufacturing facility in India boasts of the finest in every sphere of activity. Backed by sophisticated equipment, the production is totally automated and adheres to the most stringent parameters.

 

Managing Director of XL Telecom, Dinesh Kumar expects 85% revenues in FY07 and 70% in FY08 from their telecom business and 15% revenues in FY07 and 30% in FY08 from their energy business.

 

He is particularly bullish on the energy sector. "Two products in our portfolio are related to non-conventional energy, which is poised to grow extremely rapidly in the coming years."

 

As regards their solar and ethanol business, Kumar says that they have a number of contracts in the pipeline.

 

Expert - Amit Dalal believes that the telecom equipment business is an interesting business because there is a huge growth of numbers coming in from the telecom consumer space and therefore perhaps there is a case to be made for the telecom business of XL Telecom.

 

"With regard to its energy and ethanol, I don't have much knowledge on what he is going, but if it is basically like the sugar companies where they are converting and are going to sell to the oil refining companies, it's a thin margin business," he adds. 

 

By Crystal Barretto