These companies have strong underlying economic growth prospects, they are off the radar of most analysts and their stock prices have not already run up 

• Auto components maker Minda Industries is growing at a steady pace

Delhi-based Minda Industries (MIL), the flagship company of the Minda group, manufactures a range of automotive components and supplies to global original equipment manufacturers (OEMs). The group has an annual turnover of Rs930 crore.

MIL designs, develops and manufactures switches for two- and three-wheelers and utility vehicles. The company also manufactures batteries for two-, three- and four-wheelers and utility vehicles. It enjoys more than 70% market share in the two- and three-wheeler segment in India.

The Automotive Component Manufacturers Association of India (ACMA) expects that the Indian auto components industry will achieve an annual turnover of $110 billion by 2020, and towards this it is likely to make an investment of $35 billion. An estimated $80 billion of the turnover is expected to come from the domestic sector and the remainder from exports.

MIL is well-positioned in this growing market. The company has eight state-of the-art facilities. Its manufacturing plants are located in Gurgaon, Pune, Hosur (Tamil Nadu), Delhi, Aurangabad and Pantnagar (Uttarakhand).
Among its clients are Yamaha, Bajaj, Hero Honda, Mahindra & Mahindra, Toyota, Tata Motors, Ford, Honda, General Motors and John Deere.

With the revival in the auto sector, MIL has improved its performance too. The company's net profit rose 50.86% to Rs22.87 crore in the year ended March 2010, from Rs15.16 crore in the previous year. Total revenues rose 31.40% to Rs598.57 crore in the March 2010 period, from Rs455.54 crore in the previous year. Net profit in the June 2010 quarter also registered a 158.66% increase to Rs10.71 crore, from Rs4.14 crore in the previous corresponding quarter. Revenues also increased to Rs195.48 crore in the June 2010 quarter, up 62.23% from Rs120.73 crore in the year-ago period. 

Sales and operating profit grew 62% and 37%, respectively, in the June 2010 quarter over that in the year-ago period. The June 2010 quarter operating profit margin stood at 10%, which is not encouraging. Based on the June quarter annualised sales and annualised operating profit, market-cap to sales was 0.50 times and market-cap to operating profit was five times. Return on equity last year was 25%. Buy the stock at around Rs330.

• Expansion plans to help Atul achieve higher turnover

Atul Ltd operates through six business divisions, namely, agrochemicals, aromatics, bulk chemicals and intermediates, colours, pharmaceuticals and intermediates and polymers. Its colours division is the largest supplier of dyestuffs in India and the company also exports 40% of its production to 40 countries. Atul's aromatic division is one of the world's largest manufacturers of p-cresol, p-anisic, aldehyde and p-anisic alcohol, which are mainly used by flavours and fragrance, personal-care and pharmaceutical industries.

Its crop protection division is among the world's leading manufacturers of 2-D, 4-D range of chlorophenoxy derivatives with a nearly 8% market share, while its bulk chemicals and intermediaries division is a market leader with a 36% market share.

Atul manufactures over 700 products at three units in India and at the facilities of four overseas subsidiaries. It has around 2,800 employees and over 1,000 distributors. Atul also has offices in the US, the UK, Germany, China and Vietnam, servicing international clients.

The company has also made a significant contribution in the development of infrastructure in villages in Gujarat. It has already built over 1,000 houses, two schools, a medical centre, a sports complex, an open-air theatre and a community centre.

Steady growth in revenues has been a catalyst for continuous expansion. In the year ended March 2009, Atul's crop protection capacity increased by 1,500mt (metric tonnes) or 14%, fragrance intermediates capacity increased by 2,400mt (40%), chemicals intermediates capacity increased by 1,000mt (71%) and composite intermediate capacity increased by 540mt (68%) over the previous fiscal.

The company is hoping to improve its manufacturing efficiencies and bring down costs in a bid to enhance its competitiveness. On 18 June 2010, Atul had announced that its polymer division has acquired Polygrip, the country's leading rubber and polyurethane (PU)-based adhesive brand, for Rs10 crore. The acquisition will give Atul access to the rubber and PU-based adhesives market. Atul has chalked out plans for manufacturing new products. It also proposes to expand the existing capacity of para-cresol and set up facilities for the manufacture of sunscreen chemicals and an aromatic product - para-toluene sulphonic acid. 

The outlay for the new projects is pegged at Rs150 crore. The International Finance Corporation (IFC) is likely to extend a corporate loan of $15 million (Rs67.5 crore). IFC had earlier extended a loan of $16.3 million for the company's expansion project. In the June 2010 quarter, Atul's sales and operating profit grew by 26% and 5% respectively. It paid a total dividend of 40% in fiscal 2009-10.

On the basis of the June quarter annualised sales and operating profit, Atul's market-cap to sales ratio was 0.32 times and market-cap to operating profit was 3.14 times. In a market where reasonably priced stocks are hard to find, Atul is attractively priced. Return on equity in 2009-10 was 172%. Buy the stock at around Rs120.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security).