In the long run, stockmarkets reflect the real economy. In the short run, they seem to have a life of their own. The factory worker who buys Tiger biscuits for his school-going daughter, or the call-centre employee who uses his first salary to make a deposit on his motorcycle, are not informed by the Nifty. But their purchase decisions determine the health of fast-moving consumer goods companies and packaging suppliers, of trucking companies and gear manufacturers.

Even though the stockmarkets lost 10 per cent in one week in the last month, the Indian economy was still rolling along, propelled by the entrepreneurial energy of its people, and its ever-increasing openness to the rest of the world.

The sentiment in the stockmarket is driven not just by the sentiment in the economy but also various other factors. These factors are now increasingly globally controlled, rather than locally. So while markets flew over the last few years on increased buying by foreign investors, this same phenomenon is lending it increased volatility now.

Such downturns in the market can deepen or correct, they can last a week or a year. But they do throw up opportunities to buy good stocks cheap. Our own take is that this correction may be deep, but will not last long. An economy growing at nine per cent annually is going to find willing investors on an on-going basis.

Outlook Money crunched the numbers of companies in the 'A' and 'B1' lists of the Bombay Stock Exchange (a total of 925 companies). We looked for companies that exhibited consistent profit growth over the last four years. As a next step, we sifted down to companies that showed a net profit growth of at least 25 per cent, year-on-year (y-o-y), in results reported for Q3, FY07. Then, based on BSE closing prices on 7 March 2007, we zeroed in on companies that were available for less than 25 times earnings.

Such companies offer a price earning to growth of one or less, reasonable by any norm. Despite our exacting standards, we ended up with 112 companies - an indication of how much entrepreneurial activity is going on in India, as well as of the upside when markets recover. From this list, we culled out 10 companies, across five sectors, which show consistent growth, steady or improving profit margins, and low discounting. Take your pick!

Information technology

1. Geodesic Information Systems (Current Price: Rs 250 levels)

It is a software solutions company formed in 1999. Geodesic concentrates on software in the communications space. Its product 'Mundu Messenger' is a universal instant messaging service that facilitates collaboration across a host of Internet platforms, such as AIM, Google Talk, ICQ, MSN and Yahoo.

The company, which also offers software development in verticals such as publishing, banking, retail and healthcare, has attracted substantial overseas investment and now 51 per cent of its equity is held by foreign institutional investors.

2. NIIT Technologies (Current Price: Rs 450 levels)

It is the software solutions business, which was formed when the old NIIT split into two. Over the last year, it has demonstrated its willingness to make acquisitions to complement its organic growth; as a result, it is able to offer a mix of near-shore and off-shore IT solutions from operations in North America, Europe, Asia Pacific and Australia. The company has alliances with global IT majors, including Computer Associates, IBM, Microsoft, Oracle and SAP.

3. Zenith Infotech (Current Price: Rs 275 levels)

Focuses on banking solutions and infrastructure management. As a product and solutions company, it has a high (and growing) profit margin - for the last quarter, the operating profit was 56 per cent of the turnover. The company's banking solutions business now has over 100 customers, with its Banc724 software product either implemented or being implemented in over 3,500 branches.

This large installed base helps steady the revenue stream, thanks to the demand for maintenance services. The SAAZ infrastructure management product has more than 140 customers.

Banking and financial services (BFSI)

4. Mahindra & Mahindra Financial Services (MMFSL) (Current Price: Rs 225 levels)

A subsidiary of the leading tractor and utility vehicles company, it began as a vehicle-financing arm of the parent. As the company expanded into semi-rural and rural areas, it became apparent that there was a latent demand for a whole host of financial services that were not being met in these areas.

Accordingly, MMFSL now distributes mutual funds, and offers financial advisory services through its network of branches, which numbered 398 as on 31 December 2006. In its core area of vehicle finance, the company has extended business to finance for used commercial vehicles.

Infrastructure

5. Kalpataru Power Transmission (Current Price: Rs 1,090 levels)

One of the leading companies in the field of turnkey projects for EHV transmission lines up to 800 KV in India and abroad. It has emerged as a leading player in erecting high voltage transmission towers and lines.

Aside from India, where power generation and transmission has got to be an on-going infrastructural priority, the company has worked on projects through Asia, Africa, and as far afield as Australia and Latin America.

With an order book of over Rs 2,100 crore, the company has achieved a run rate of Rs 1,000 crore (Rs 10 billion) per annum. In the last reported quarter, the turnover was up 82 per cent y-o-y, and EPS 96 per cent.

6. Bharat Heavy Electricals (Current Price: Rs 2,000 levels)

The largest engineering and manufacturing enterprise in India in the energy-related infrastructure sector today. The company manufactures over 180 products under 30 major product groups and caters to core sectors of the Indian economy like power generation and transmission, transportation, telecommunication and renewable energy.

Though government owned, Bhel has shown the ability to respond to a buoyant market, both in India, and in the world, with projects implemented in 60 countries, ranging from the US to New Zealand.

Automobiles

7. FAG Bearings India (Current Price: Rs 580 levels)

A member company of the German FAG group, it is a leading player in the Indian bearings industry. The company manufactures a wide range of bearings across sectors - auto companies, railways, mechanical and electrical engineering industries. The parent company has identified FAG India as a sourcing base - this along with the growth of the Indian economy should help maintain buoyancy in the company's operations. It is currently growing at over 50 per cent, y-o-y.

8. Phoenix Lamps (Current Price: Rs 128 levels)

Specialises in automobile lamps sold under the Halonix brand name, though it has an extensive offering of over 500 different lighting products, including halogen lamps for general lighting and Compact Fluorescent Lamps. Last year, the private equity firm, Actis, bought out the promoters, who owned 40 per cent of the company, at Rs 152 per share with plans to aggressively invest in growth. Currently available at 12.83 times earnings, Phoenix's profits grew 46 per cent y-o-y in the last quarter.

FMCG

9. Ruchi Soya Industries (Current Price: Rs 330 levels)

It is the flagship company of the Ruchi Group of Industries and has come to occupy substantial shelf space in edible oils and soya foods across the country.

The Nutrela brand, which it owns, is the market leader in this space - with soya nuggets, granules, cooking oils, and soya flour. The company also manufactures and sells vanaspati and specialty fats to the bakery industry. Besides, Ruchi Soya is the largest exporter of soya meal and lecithin from India.

Pharmaceuticals

10. Elder Pharmaceuticals (Current Price: Rs 380 levels).

Now holds the 31st position in India's pharmaceutical industry (ORG-IMS). Relatively young, at 16 years, it is currently ranked the third-fastest growing Indian pharma business - which threw the company up in our search. In a sector that has been relatively quiet, Elder racked up a 36 per cent annual profit growth in the last quarter.

It has entered into a slew of licensing arrangements to manufacture and distribute products of international majors, while also building up an export market in some 37 countries.