I am continuing to keep looking for good companies and prepare my watch list.  Keeping with this thought process; I looked at few stocks in small cap domain and applied my screening process. I have short listed following five small cap companies that I believe warrant further detailed analysis in the context of my buying objectives.

Aegis Logistics Limited, (AEGISCHEM): The company is focused in supply management of oil and gas logistics. Liquid Terminal Division provides storage and terminal facility for oil and chemical products. Gas Terminal Division provides imports, storage, and distribution of petroleum products like LPG and propane. It services are related to sourcing of product, storage and port operations, arranging road and pipeline movement, shipping, and integrated supply chain management. This is a small cap which has potential for long term buy and hold because it operates in infrastructure sector and good financial management.

• Operating Cash flow (positive, growing trend)
• Debt (Yes, and very close of operating cash flow, but manageable)
• Dividends (yes)
• Reported Net Profit (positive, increasing trend, and tends to be below operating cash flow)
• Margins (in low teens)
• Capital Usage (in low twenties)

Banco Products (I) Limited, (BANCOINDIA): It is supplier of engine cooling components and engine sealing gaskets to the automotive and industrial engines. Its products include radiators, intercoolers, oil-coolers and many different types of engine gaskets.

• Operating Cash flow (overall flat, negative once in last five years)
• Debt (high, more than operating cash flow)
• Dividends (yes)
• Reported Net Profit (positive, increasing trend, and less than operating cash flow)
• Margins (high single digits)
• Capital Usage (twenties)

Graphite India Limited, (GRAPHITE): The Company is the largest manufacturer of graphite electrodes (90% of the revenue). It also provides impervious graphite equipments and GRP/ERP pipes and tanks (10% of revenue). It end customers, and applications are in metallurgical (ferrous & nonferrous), chemical and process, and aerospace industry.

• Operating Cash flow (overall increasing, but reduced in 2005, 2006, 2007)
• Debt (very high, and less than cash flow)
• Dividends (yes)
• Reported Net Profit (positive, and below operating cash flow for last four years)
• Margins (low twenties, and increasing trend)
• Capital Usage (high teens)

Indraprastha Medical Corporation Limited, (INDRAMEDCO): It is a Delhi-based healthcare company which operates through Indraprastha Apollo Hospital. It is the largest corporate hospital in India. The group owns 12 hospitals and four clinics. It offers a range of diagnostic, medical, and surgical facilities for the care of its patients. In addition, it also provides diagnostic services, ambulance and air ambulance services, and out patient consultation services. In my view, Indraprastha is a pioneer in corporatization of healthcare services.

• Operating Cash flow (positive, flat, but growing for last two years)
• Debt (Yes, and on many occasions more than cash flow)
• Dividends (yes)
• Reported Net Profit (positive, flat, and below operating cash flow)
• Margins (high single digits)
• Capital Usage (high teens)

Numeric Power Systems Limited, (NUMERICPW): It provides power continuity and clean power through its total power management solutions. The product portfolio includes uninterrupted power supply (UPS) systems, servo stabilizers, isolation transformers, inverters, DC power, custom-built power conditioners, power quality management products, active harmonic conditioners, and AC-DC converters. In addition, it also undertakes contractor projects to offer end-to-end solutions in SCADA/EMS packages, power transmission support systems, large network of industrial process, and distribution management.

• Operating Cash flow (increasing trend)
• Debt (low and flat)
• Dividends (yes)
• Reported Net Profit (positive, increasing, but above operating cash flow)
• Margins (low teens)
• Capital Usage (mid-to-high twenties)

It will take me some time to read about these companies and come to any sort of conclusion. I will post my views one company at time. Meanwhile, I would also like to know your thoughts on above companies. So you may either leave your message below, or send me an email using the Contact Me form.

(Photo Credit)

Arungsg, Raju, and Student of Market thanks for your suggestions.

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