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Tuesday, June 16, 2009

Mid Cap Stock Idea - ICSA India Limited - Good Infrastructure Stock To Buy

ICSA India, a mid cap stock has seen a phenomenal growth in past 3 years. All this growth has been on the back of growth in power related projects in India.

ICSA India, if you look at the business, it is clearly a power play and we believe that infrastructure and within that power will definitely be given importance by the Congress led UPA (United Progressive Alliance) government.

ICSA has been growing at a 100% growth in terms of revenues and profits for the last 2-3 years. Going forward, if you look at the order book and its composition, it has a Rs 1600 to1900 crore order book which has to be executed in a 1 ½ time and therefore we see a clear 30-35% growth, while we see some margin pressure there.

Even after considering current slowdown, if it slides from around 30% or 28% operating margins they will be still at around 22% or so. Net profit growth will be around 30-35% and the stock is trading at 3.5 to 4 multiples which even compared to its own category midcaps is quite cheap. With these facts in mind, one mey to buy stocks of ICSA as it markets will value the stocks at appropriate times.

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