The fundamentals of the 14 stocks summarised below are part of the portfolio of 19 stocks shortlisted by the research house based on their business credentials and ability to produce super-normal returns.

Bharat Earth Movers

Current price: Rs 340.75

Price-earnings ratio: 51.63

BEML is the largest manufacturer of earth moving equipment in India and the second largest in Asia. It manufactures heavy earthmovers, rail coaches, military tanks, heavy-duty trucks, trailers and high-powered diesel engines.

Its products find application in all infrastructure segments, mining and defense. It has manufacturing units at Bangalore and Mysore. The company plans to diversify into underground mining equipment and leasing and financial services.

• As the largest manufacturer of earth moving equipments in India, it commands around 70 per cent market-share.
• It recently entered into a 15-year contract with Rotem of South Korea to make stainless steel metro rail coaches.
• It exports to over 25 countries in Europe, Africa and West Asia.
• The company enjoys a good order book position.
• Rising steel prices in the international markets.

Outlook: The stock currently trades at Rs 340.75, which discounts its FY04 earnings by nearly 51.63 times -- BEML also gets a near monopoly stauts in the domestic market. Overall recovery and growth of the economy will create huge demand for its products.

Hence, the prospects of this company are very good for the coming years. We expect it to post a robust growth in earnings on the back of cost efficiencies. A potential multi-bagger.

Hero Honda

Current price: Rs 508.7

Price-earnings ratio: 13.94

The company enjoys the status of India's largest two-wheeler company. Its product range includes Karizma, Ambition 135, CBZ, Splendor, Splendor+, Passion+, CD100SS, CD100 and CD DAWN. It exports to around 31 countries.

It is the first two-wheeler company to cross Rs 50 billion in sales in FY04. During this period its volumes also surged by around 23.4 per cent, which is a record in itself.

• It is a leader in the economy and executive segments.
• In FY04 the company has been successful in regaining its lost market share; it achieved market share of around 36.7 per cent.
• It has increased its distribution reach and has tie-ups with banks to boost sales.
• Increased competition has put pressure on the price of the products. But due to intense cost control activities it has been able to maintain its operating margins quite effectively.
• It has a track record of paying good dividend to its shareholders over the years.
• High competition poses a threat to the pricing policy of the company.
• It depends on good monsoon for its success. Hence vagaries of monsoon can be a threat to the bottomline of the company.
• Increased fuel cost can also be a cause of concern.
• The company has high share of related party transactions.
• Fall in other income will also have impact on the bottomline of the company.

Outlook: The company's stock currently trades at Rs 508.7 which discounts its FY04 earnings by 13.94 times. The automobile industry is on a growth trajectory and considering the fact that Hero Honda is the leader in the two-wheeler industry in India it is in a better position to leverage this growth.

The company is consistently showing good performance and in FY04 it has been successful in regaining its market share. Hence the stock looks attractive at the current valuations taking into consideration its growth potential.

A potentially high growth story with earnings CAGR over the next two years to approach the 20 per cent mark.

ACC

Current price: Rs 316.80

Price-earnings ratio: 28.05

ACC is involved in manufacturing and marketing of cement, readymix concrete, refractories and refractory products. It is also into consultancy and engineering services.

Its manufacturing base consists of 14-cement plants spread all over India, two refractory plants - one each at Maharashtra and MP - and 6 RMC plants near to four metros of India and Bangalore.

The company meets around 83 per cent of its power requirements through its captive power plants. Its marketing is done through a network of 11 regional marketing offices, 16 area offices and 160 warehouses.

• It is the largest and oldest cement manufacturer in India.
• Extensive R&D facility as well as expertise in manufacturing all types of cement.
• It has a widespread distribution network throughout the country.
• It has commenced the establishment of 1.3 mtpa clinkering unit along with a 15 mw captive power plant at Chaibasa. The project cost is estimated at Rs 2.85 billion and is expected to be completed by 2005. This would mark the conversion of all its plants into the cost efficient dry process.
• During FY04 it acquired 86.79 per cent equity stake in IDCOL Cement, now renamed as Bargarh Cement. ACC had no significant presence in Orissa. BCL has 1 mtpa integrated cement plant in northwest Orissa. Hence this acquisition has instantly provided a sizeable market share in Orissa and is expected to further strengthen the company's position in the eastern market.
• High cost of inputs such as crude oil, petroleum products, coal, etc puts pressure on the bottomline.
• Cement is one of the highly taxed commodities in India.

Outlook: The stock currently trades at Rs 316.80, which discounts its FY04 earnings by 28.05 times. There are huge prospects of cement industry growth in the coming years. Housing and infrastructure are the key demand drivers for the cement sector.

ACC being one of the oldest and largest cement players is in a good position to leverage this growth. It's thrust on divesting non-core business activities is also providing additional benefits to the company. Another solid stock, which should comfortably provide 25 per cent plus earnings CAGR during the current fiscal and next.

Ahmedabad Electricity Co

Current price: Rs 120

Price-earnings ratio: 16.22

AEC has a transmission and distribution network having a generating capacity of 500 mw. Besides the generation and distribution of electricity, the company's power services division undertakes project management of power plants, electrical installation contracts and operation and maintenance assignments of other power stations in the country.

• The most significant achievement of the company in FY04 was reduction in its transmission and distribution loss by more than 2 per cent. It carried out a massive drive against illegal connections and for a slum electrification programme.
• During the FY04 various measures were undertaken for the upgradation of the system network.
• The Electricity Act 2003 has ushered in a new era of long overdue reforms in the Indian power sector.
• It is participating in a 1095 mw power project being established near Surat under Torrent Power Generation.
• State Electricity Boards and central public sector companies mostly dominate power sector.
• The Electricity Act will also increase the risk of growing competition.
• Quality and availability of coal supply is also a cause of concern.
• Establishment of captive power plants can also cause loss of bulk customers.

Outlook: The stock currently trades at Rs 120, which discounts its FY04 earnings by 16.22 times. The overall industrial growth will increase the requirement of power.

Also, the company has taken various measures to upgrade its system network. It has also undertaken various power projects. There is huge growth potential for this company. The earnings CAGR over the next two years is likely to exceed the 25 per cent mark.

Grasim Industries

Current price: Rs 1269.75

Price-earnings ratio: 14.94

Starting operations in 1947, a manufacturer of textiles from imported raw materials, Grasim Industries has successfully diversified into manufacturing of viscose staple fibre, cement, sponge iron and chemicals. Recently it has taken over the cement division of L&T.

After the merger of the L&T's cement division known as Ultra Tech Cemco with Grasim, it will achieve the position of market leader in the cement business. The company has successful joint ventures abroad that include a viscose staple fibre plant in Thailand and Indonesia and carbon black plants in Thailand and Egypt and pulp plant in Canada.

• Over the past three years it has undertaken significant business restructuring as a result of which it has discontinued non-core businesses such as trading, sold off its loss making textile unit and closed down the unviable VSF unit. Also a significant balance sheet clean up has resulted in reducing its size by 5 per cent and raised cash.
• Acquisition of Ultra Tech Cemco will go towards making Grasim a leading player in the cement business. This will generate significant synergistic cost savings apart from an increase in market share.
• The company has abilities of strong operating cash generation.

Outlook: The company's stock currently trades at Rs 1269.75 which discounts its FY04 earnings by 14.94 times. A potentially high growth story with earnings CAGR over the next two years likely to push the 30 per cent mark.

HCL Infosystems

Current price: Rs 801.20

Price-earnings ratio: 41.51

HCL Infosystems is one of the pioneers in the Indian IT market. The company manufactures computer systems at Noida, Uttar Pradesh and computer peripherals at Chennai. It also manufactures multi-user super-minis and engineering workstations, the technology for which is being provided by Hewlett Packard Co, US.

The company has got a wide distribution network and enjoys the status of largest hardware vendor.

• India's premier information enabling and integration company.
• It is at number one position in the desktop PC segment.
• This is a volumes led business; so the company has to take steps to maintain as well as achieve more volumes.

Outlook: The company's stock currently trades at Rs 801.20, which discounts its FY04 earnings by 41.51 times. The hardware sector has very low penetration levels in India, which provides it with enough opportunities for growth.

With the current boost in the IT sector along with the increased IT awareness and overall recovery in the economy there is huge potential for a further growth of this sector.

It is amongst the top three hardware companies in India and with its wide distribution network it has got huge potential to leverage IT growth. A potentially high growth story with earnings CAGR over the next two years likely to exceed the 25 per cent mark.

ICI (India)

Current price: Rs 220.55

Price-earnings ratio: 8.26

ICI (India) manufactures and markets paints, speciality chemicals, rubber chemicals, adhesives and starch. It markets its paints under the brand name Dulux. ICIL's adhesive products have significant marketshare in book-binding, soap wrapper and wood working. Its polymers are used in the personal care segment and starches are used by the FMCG industry.

• Marketing efforts have been stepped up for the premium portfolio of the Dulux products with significant investments in brand building.
• A slew of new products has been launched in the decorative category to enhance the market share of the company.
• It continues to enjoy its leadership position in polyurethane-based automotive refinishes. A number of new products were also introduced in this segment.
• A large number of projects are in progress to develop new products and further improve the quality of the existing range of products.
• Huge competitive pressures are resulting in under performance of the crop protection and Healthcare segments
• Despite decent volume growth, margins of the rubber chemical business are suffering due to low selling prices and high input costs.

Outlook: The stock currently trades at Rs 220.55, which discounts its FY04 earnings by 8.26 times. Housing sector is on a growth trajectory. This will have a positive impact on the paints industry with the exterior segment likely to maintain its fast growth.

The company already enjoys leadership position in polyurethane-based automotive refinishes. Hence growth of the automobile industry will also open new growth avenues for the company.

It is well positioned to improve its share in the growing market due to its extensive R&D capability, innovation and market reach. A potentially high growth story with earnings CAGR over the next two years to breach the 15 per cent mark.

Cadila Healthcare

Current price: Rs 571.45

Price-earnings ratio: 25.06

Cadila Healthcare's operations include pharmaceuticals, diagnostics and herbal skin-care and OTC products.

• It is one of the leading pharmaceutical companies in the domestic market.
• Company has accelerated initiatives to expand into the high-growth generics markets in USA and Europe.
• In its very first year of filings in FY04 the company has been successful in filing 12 ANDAs which is the largest number of filings by any Indian company in the first year.
• It has a good research base.
• It is the fifth largest player in the domestic formulations market.
• Over the years the company has made major acquisitions so it is difficult to ascertain its actual core growth.
• It has a fairly high presence in anti- infectants segment.

Outlook: The stock currently trades at Rs 571.45, which discounts its FY04 earnings by 25.06 times. The company's various initiatives along with its internationally approved manufacturing facilities and increased focus on research and development will enable it to accelerate its entry into the global regulated generics market.

The company is expected to further improve its market position through new product launches.  A potentially high growth story with earnings CAGR over the next two years set to comfortably exceed the 20 per cent mark.

Ashok Leyland

Current price: Rs 21.90

Price-earnings ratio: 13.69

ALL, the flagship company of the Hinduja group, is the second-largest manufacturer of medium and heavy-duty vehicles in India. It is also into the manufacture of industrial marine engines. Its manufacturing facilities are located at Ennore, Ambattur, Hosur, Bhandara, Hyderabad and Alwar. It has launched a new range of intermediate commercial vehicles, which fall between the light and heavy class.

• It has posted record profits in FY04 owing to the strong demand in the domestic CV industry.
• It has outlined investment plans, which include increase in capacity and new product development for the higher capacity vehicles.
• It is exploring export opportunities, which includes a JV in China.
• Buoyancy in CV demand is expected to continue due to Government's increased focus on infrastructural development.
• Recent collaboration with ZF of Germany for manufacturing 9-speed synchromesh gearbox will also boost earnings.
• It enjoys huge geographical penetration. It provides spare and service support to all the remote areas of India. Extensive training is also provided to drivers to minimize breakdowns and increased availability of their vehicles.
• Entry of global players in the Indian market facilitates competition in the industry.
• Consumption of raw materials is increasing. Steel and steel products accounts for around three fourths of its cost. Hence increased steel prices will have an impact on the bottomline of the company.
• Fuel cost as well as poor monsoon is one of the threats to the industry in general.

Outlook: The stock currently trades at Rs 21.90, which discounts its FY04 earnings by 13.69 times. CV industry saw a good recovery in the previous year. This growth is expected to continue in the coming years as well.

Ashok Leyland benefited from this demand growth as it achieved record profits in FY04. Being the second largest manufacturer of medium and heavy-duty vehicles in India the company has got enough potential to scale new heights. A potentially high growth story with earnings CAGR over the next two years to set comfortably exceed the 20 per cent mark.

Container Corporation

Current price: Rs 803.40

Price-earnings ratio: 19.31

Concor has a network of inland container depots all over the country. It is a carrier, terminal and warehouse operator.  The company owns about 2000 containers and has around 2500 containers on lease.

• Concor enjoys a monopoly in handling the nation's trade in containers through the rail route.
• It has the ability to provide modal choice (road, rail or air) according to the needs of the shipper and lead from the port.
• It has a strong relationship with Indian Railways coupled with an MoU providing for guaranteed transits on "liner corridors".
• As part of the overall strategy to increase market share Concor will also provide multi-modal, transportation and logistics consultancy services.
• While there is no specific threat of competition in rail transportation of containers, however logistics is a highly competitive field.
• Main threat to the company's road services is from road transportation of goods by trucks.

Outlook: The stock currently trades at Rs 803.40, which discounts its FY04 earnings by 19.31 times. Concor has many positives for its advantage. It enjoys a near monopoly in container services through rail route.

Completion of the Golden Quadrilateral will result in a further increase in traffic. Therefore the future prospects of the company look very attractive. A potentially high growth story with earnings CAGR over the next two years to approach the 15 per cent mark.

Bajaj Auto

Current price: Rs 1062.70

Price-earnings ratio: 14.70

Bajaj Auto has a strong presence in the manufacturing and marketing of scooters, motorcycles, and three wheelers. Their motorcycle range comprises of Bajaj BYK, Boxer, CT100, Caliber 115, Wind125, Pulsar and Eliminator. Their scooter range comprises of Chetak, Super, Legend, Spirit, and M80 Major. Its three-wheeler range comprises of FE DAC 2S, FE Delivery van 2S and FE Pickup van 2S.

• Strong rural demand and lower financing rates are set to drive two-wheeler growth.
• Launch of K-60 should be the next big trigger, which could boost its market share in the executive segment.
• Launch of CT 100 in the entry level in May 04 helped it to increase its market share. After its launch company enjoys the position of market leader.
• The company enjoys robust R&D capabilities, marketing acumen and financial strength.
• It plans to set up offshore assembly units in Indonesia and South America to tap growth opportunities.
• It has the ability to consistently generate large free cash accruals. This is invested into government bonds and units. In the growing interest rate scenario, this will help in increasing already growing other income.
• The industry suffers from high competition, which puts pressure on both volumes and margins.
• Monsoons are the key area of concern for the growth of the overall two-wheeler industry.
• Increasing raw material prices may put some short-term pressure on operating margins.

Outlook: The stock is currently trading at Rs 1062.70, which discounts its FY04 earnings by 14.7 times. With the success of the CT100 at the entry level and the expected launch of the K-60 September in the executive segment, BAL is set to achieve new heights.

The automobile industry is set to grow in the coming years and BAL with its business and company specific advantages as well as new launches is in a good position to leverage this growth potential. A potentially high growth story with earnings CAGR over the next two years set to comfortably exceed the 20 per cent mark.

Infosys Technologies

Current price: Rs 2089.10

Price-earnings ratio: 45.02

Infosys Technologies is mainly engaged in custom software development, maintenance, re-engineering services, e-commerce and internet consulting as well as dedicated offshore software development centre for certain clients. It also develops and markets certain company owned software products.

• First Indian company to be listed on NASDAQ.
• Higher dividend payout in FY04 will help in reversing the trend of declining ROCE.
• The company enjoys strong financial performance, simple corporate structure, strong balance sheet with zero debt; low receivable days, high return ratios and high margins.
• Its disclosure norms have always exceeded those required by law.
• The company crossed $1 billion revenue mark in FY04. It has 2 accounts generating in excess of $50 million annual revenue and another four generating more than $40 million. This is comparable to the top account traction of the big global vendors.
• Stable pricing and cost management can boost its earnings momentum.
• Salary inflation is the key risk which can be faced by the company. 

Outlook: The stock currently trades at Rs 2089.10, which discounts its FY04 earnings by 45.02 times. Infosys has a track record of delivering above investor's expectations over the years.

Information Technology has still got a huge potential to grow and Infosys is certainly in a better position to leverage this growth potential. A potentially high growth story with earnings CAGR over the next two years likely to push the 30 per cent mark.

Crompton Greaves

Current price: Rs 268.15

Price-earnings ratio: 19.86

The company is mainly concentrated in power and industrial systems, consumer products and digital businesses. It is engaged in manufacture, distribution and sale of electrical and electronic equipments. Its products include transformers, switchgear, motors and fans.

• It enjoys leadership position in most of its product lines.
• Company's focus is on developing products that are eco friendly, energy efficient and have intelligent monitoring and control systems.
• Huge competitive threat from the small scale and unorganised sectors for the consumer products group.

Outlook: The stock currently trades at Rs 268.15, which discounts its FY04 earnings by 19.86 times. There are huge prospects for power sector and industrial sector growth in the coming years, which will certainly result in demand augmentation for transmission and distribution equipment.  Crompton Greaves, being the largest private sector company in the sector, has huge growth prospects. Another prospective 25 per cent plus CAGR earnings growth company.

Finolex Cables

Current price: Rs 160.95

Price-earnings ratio: 16.59

Finolex Cables is engaged in the manufacturing and marketing of cables that are used in a wide range of electrical and communication applications.

• It is the most diversified largest cable manufacturer in the country providing "total cable solutions".
• The company has undertaken installation of balancing equipment to enable manufacturing of light duty electrical cables at one of the two JFTC (jelly filled telecom cable) plants while retaining the option of producing JFTCs.
• It is making a foray into new export markets while endeavoring to consolidate its position in the existing exports market.
• It has developed new varieties of LAN cables for diverse networking applications.
• It has an extensive network of channel partners and dealers running through the entire nation. It also has a good distribution network overseas.
• Backward integration into copper rod manufacturing has helped the company in ensuring the desired quality of input with a timely supply.
• High cost of principal raw materials such as copper and PVC is a cause of concern.
• As a result of techno-commercial issues between the company and the supplier of the equipment for the optic fibre project the matter has been referred to arbitration for resolution. Due to this the commissioning of the first phase of the project has been kept on hold.

Outlook: The stock currently trades at Rs 160.95, which discounts its FY04 earnings by nearly 16.59 times. TDemand outlook for electrical cables is quite positive. The government's initiatives in the agriculture sector and for managing water scarcity are expected to boost the demand for winding wire and 3 core flat cables.

Continued growth in the automobile sector is expected to increase demand for automotive wires and battery cables. Spurt in domestic construction activity will help the company to increase its market share in this business.

The industrial recovery would boost the demand for flexible wires, power and control cables. The company being a leader is expected to grow in the coming years along with the overall growth of the economy. A potentially high growth story with earnings CAGR over the next two years to approach the 15 per cent mark.