Company background:
DSCL is an integrated business entity, with extensive and growing presence across the entire Agri-rural value chain and Chloro-Vinyl industry. The Company has added innovative value- added businesses in these domains. With a large base of captive power produced at a competitive cost, the Company aims at maximizing value creation in its Chloro-Vinyl businesses. The high-value and knowledge based business being incubated by DSCL include Hariyali Kisaan Bazaar, Fenesta Building Systems and Hybrid Seeds.
Promoters are holding more than 55% of the equity and other significant shareholders are DII and corporate bodies, see shareholders details as of Jun-09.
| Major Shareholders | % |
| Promoter | 55.26 |
| Life Insurance Corporation of India | 8.06 |
| Stepan Holdings Ltd | 4.27 |
| Reliance Growth Fund | 3.30 |
| Ristana Services Ltd | 2.90 |
| New India Assurance Company Ltd | 1.20 |
| Sundram BNP Paribas Select Midcap | 1.13 |
| 76.12 |
Snapshot:
DSCL has built a diversified set of revenues streams, DSCL is in a good position to ride any variability in the operating environment. With major expansions complete and stability across various businesses, I believe that DSCL is in sound operating and financial health to be able to report continued progress in the future. The company has completed all its major capex plans in FY09. It plans to consolidate operations and deploy cash surpluses to strengthen its balance sheet in FY10.
DSCL has strong presence in diverse sectors – agri-rural businesses and Chloro-Vinyl businesses – with multiple revenue streams and swing capabilities enabled DSCL to optimize earnings and face the volatility much better in FY09 and Q1FY10. In Q1FY10, DSCL reported revenue of Rs. 893.6 cr, 12.6% higher y-o-y. The revenue growth was largely contributed by Sugar, Agri Inputs and Hariyali Kisaan Bazaar businesses.
Given the current focus of the government in raising the rural spend and thrust on rural economic through various government scheme may augur well for DSCL. At current market price of Rs. 61.70 it available at discount to book value of Rs 75. In short I can say by investing in this stock you will get Re. 1 at only 80 paise which in itself is value buy. Besides this companies varies lines of business gives diversification to Chemicals, Plastic, Agri segment, Sugar, Cement and Retail (rural segment). Though its difficult to project earning in such a diversified company, its a good bet on domestic consumption sectors. I expect this stock deserves to be re-rated as analysts look for value picks as Sensex is already at price earning multiple of 21x, whereas this stock is available at price earning ratio of 8.71, and price to book of 0.83. I expect target of Rs. 77/- followed by Rs. 93/- in next 6 to 12 months i.e. a rise of 50% from Current Market Price and rate it as an out performer.
Valuation Parameters:
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