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G. Madhan

EXPOSURES can be considered in the stock of Ramco Industries as the prospects of steady growth and improving fundamentals could lead to a higher valuation for the stock over to one-to-two year period. This small-cap stock, which trades at seven times its expected FY'05 earnings, is appropriate for investors with a penchant for risk.

The valuation is attractive vis-a-vis its peers such as Hyderabad Industries, Everest Industries and Visaka Industries.The track record of the promoter group - its part of the Ramco group, which also owns Madras Cements - is also a factor that inspires confidence.

Ramco Industries makes asbestos cement sheets. This segment is growing at nine per cent (in volumes) a year. The demand outlook for these sheets, which find application in cost-effective housing, industrial sheds and warehousing, appears to be bright as it offers advantages such as relatively lower cost and properties such as lower heat conduction.

Ramco has steadily ramped up its manufacturing capacities over the past couple of years. This augurs well over the long-term as volumes are a key driver of revenue and earnings growth in this industry.

The company's foray into calcium silicate boards, a substitute for gypsum and plywood boards, may also bolster its revenues. The steady increase in the `other income' category, which includes dividend from its subsidiary in Sri Lanka and income from the wind power generation, would continue to rev the bottomline.

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