Updates on Binani Cement on Target

This is another stock I recommended in mid sixties then around October 2009. Its one year since then. Though I had given a target of 50% upside in nine months it took a while. Maybe due to being commodity stock in nature.

I understand Binani Industries parent company is planning to delist the shares. Delisting price can be anywhere around Rs. 110/- - Rs. 120/- per share but then it would be speculating prices. Given the fact that Binani Industries will delist it it would be nice proxy play to buy / switch to Binani Industries shares itself.

I plan to come out of this stock in open market when delist offer comes in. Take you informative call if you have invested in this company.

Binani Cement Ltd.

Binani Cement a part of Braj Binani Group. The Braj Binani Group is a well-diversified industrial house with a 138-year history behind it. Today, the group is actively working in the core sectors of Cement, Zinc, Glass Fibre and Downstream Composite Products.

Binani Cement Limited is the flagship subsidiary of Binani Industries Limited (BIL), the Braj Binani Group. It?s a cement manufacturer with an asset value of Rs. 1779 crores and a turnover of Rs.1960 crores, with subsidiaries in Dubai, China and expanding by the day. Binani Cement has established itself as one of the top companies in the industry in terms of efficiency and performance.

3 Yr CAGR Sales (%) : 45
3 Yr CAGR Profit (%) : 25
Promoter Shareholding (%) : 64.91
FII Shareholding (%) : 2.39
Return on Equity (%) : 28.24
MCap.(Rs. in Cr.) : 1299
P/E (x) : 5.75
TTM EPS (Rs.) : 11.64
BV (Rs.) : 24.59
Div. Yield (%) : 5.3
FV (Rs.) : 10
Industry P/E: 9.x

Binani has come out with stellar set of back to back quarterly result with earlier quarter at EPS 5.25 and current Quater at 4.98i.e end Sep-09 for Half year EPS is already 10.23 with CMP at Rs. 67 is a bargain buy. Given 3 yr. CAGR profit and slaes growth at 25 and 45% it is a reccomended value pick. Besides in long run cement industry is expected to be one of the key beneficiaries of Infra Growth story.

Given past P/E ratio assigned to Binani Industry of around 8 for trailing earnings stock can be expected to touch 93 - 100 in short term 6 - 9 months i.e arround 50% appreciation from current price.

Updates on Electrosteel Castings

In the past quarter the stock had hit a 52-week high of Rs 45.85 on 17 September 2009. The stock had outperformed the market in past one quarter, jumping 29.62% as against 9.47% rise in the Nifty 50 index.
The mid-cap steel casting maker had an equity capital of Rs 28.73 crore which grew to 31.27 crore at June end to 32.67 as of now. Face value per share is Rs 1.
The company is planning for QIP placement in near future which is meant to augment the long- term resources, including working capital requirement, and to develop iron-ore mines, coking and non-coking coal mines. Part of the proceeds will also be used to build a war chest for future opportunities, reports suggest.
Promoters have raised their stake in the company over past quarter to 47.90 % against earlier 45% through conversion of warrants. Recent lapse of warrant conversion of shares (convertible at Rs. 68 and Rs.81) due to steep discounted share prices in markets has added 48 paise per share. Sucessful closure QIP issue at around CMP 44 - 45 plus level will provide good support to share prices. In recent past the stock prices have consolidated at 44 - 45 level through in past 15 days shares haven't been able to breach 45 - 46 level it has challenged those level almost every alternate trading session on good volume. Breakout over 46 on closing basis will take stock to new 52 week high of around Rs 51-55. I expect stock to trade at 50+ levels in next quarter and 60-65 level in next 6 -9 months period.

Looking at the above recommendations is to hold / accumulate at every fall in prices.

Updates on QIP
Electrosteel Castings Ltd has informed BSE that the Board of Directors of the Company at its meeting held on September 15, 2009, has approved composite QIP issue for an amount upto Rs. 6000 Million. The composite QIP issue consists of issue of Equity Shares and Non Convertible Debentures (NCDs) with warrants. This two-pronged strategy would enable the Company to derive maximum value from the fund raising process. The Equity issuance is expected to be of about Rs. 1000 - 1500 Million, and the NCDs size would be of about INR2000 Million. The NCDs shall also have the option to subscribe for the convertible warrants into Equity Shares for an amount upto Rs. 2000 Million. The warrant holder shall have an option to convert the same into Equity Shares between a period of 3 - 5 years. The issue price or Equity Shares and warrant would be determined in consultation with the Merchant banker based on the SEBI regulations. 

The Company would now seek the approval of the Shareholders.

Other significant updates on warrant conversion:
The promoters stake has gone up to 47.90 on enhanced equity capital by addition of approx. 1.40 crore shares on conversion of warrants.
Meanwhile, the ECL board has cancelled the warrants issued in March last year. The company had allotted 87 lakh warrants convertible at Rs 68 per share to a foreign entity on 11 March 2008. The company had also received Rs 5.91 crore representing 10% of the total consideration towards the allotment of the warrants. The warrants were convertible within 18 months from the date of allotment, and the last date of conversion was 11 September 2009. However, the applicant did not opt for the conversion as the ruling market price was at a steep discount to the conversion price. As a consequence, the entire amount received has been forfeited and the warrants cancelled.
Electrosteel Castings Ltd has informed BSE that subsequent to the approval of the shareholders in its meeting dated January 25, 2008, the Board of Directors on March 24, 2008 allotted 12137146 convertible warrants issued for cash of Rs. 81/- per share to a Foreign Company. As per provisions of SEBI (DIP) Guidelines, the Company had also received Rs. 983.11 Lakhs representing 10% of the total consideration towards allotment of said warrants. In terms of SEBI (DIP) Guidelines, the said warrants were convertible within 18 months from the date of allotment and the last date of conversion was September 24, 2009. As the applicant did not opted for conversion of said warrants within the permissible time of 18 months, the entire amount received thereon from the applicant stands forfeited and accordingly, all 12137146 convertible warrants stands canceled.

Based on lapse of warrants issued by the company and forfeiture of amount Rs. 15.74 crore. This work out to around 48 paise per share on equity capital of 32.67 crore.

Buy One Rupee at 80 paise only - DCM Shriram Consolidated Limited (DSCL)

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.

Click this link for detailed report

Valuation Parameters:

Electrosteel Castings Ltd.

Electrosteel Castings Limited (ECL) is a water infrastructure company providing techno-economic solutions for water supply and sewerage systems. The Company is India’s largest manufacturer, and one of the few manufacturers in the world, of ductile iron (“DI”) spun pipes. Lack of safe drinking water and proper sanitation is a major problem in India, and the demand for safe drinking water is increasing at a rapid pace. In order to transport sufficient quantities of water from different sources, i.e. rivers, lakes or wells, to a treatment plant with minimal loss and then transport the treated water to the end-user, a reliable pipe material is required that is strong, long-lasting, corrosion resistant and reduces the risk of contamination. DI pipes possess these qualities and are currently the single most widely used type of pipe for the transportation of water and sewage.. The company is headquartered at Kolkata and having their manufacturing facilities at Elavur in Tamilnadu, Khardah and Haldia in West Bengal.Electrosteel Castings Ltd was incorporated in the year 1955.

Website : http://www.electrosteel.com

Recently 2,54,50,414 equity shares were allotted on preferential basis to two foreign investors @ Rs.38/- per share. This company at current market price has dividend yield of 3% available at Price to book value of 0.94. Given the government thrust on rural spend and increased budget allocation on various schemes like NREGS.

Overall looking at key financial ratio this is a good value pick in midcap and theme on rural infrastructure. In the long run 2 years it would be a multibagger.

NOTE: It is safe to assume I have vested interest in the stock and standard disclaimers apply


Key Financial Ratios

Rs. in Cr.	Mar-09	Mar-08	Mar-07	Mar-06	Mar-05
Share Capital	28.73	28.05	20.76	20.76	16.19
Reserves & Surplus	1,372.27	1,166.22	801.56	752.02	536.28
Face Value	1.00	1.00	10.00	10.00	10.00
Equity Dividend (%)	136	125	125	125	125
Earning Per Share (Rs.)	4.48	1.77	48.69	35.76	52.96
Book Value	44.21	41.38	396.11	372.24	341.24

Q on Q Sales Growth (%)	-26.53		Q on Q Net Profit Growth (%)	27.64
3 Yr CAGR Sales (%)	24.66		3 Yr CAGR Profit (%)	24.6
Debt to Equity Ratio (x)	0.75		Net Profit Margin (%)	6.95
Promoter Shareholding (%)	45.57		FII Shareholding (%)	3.41
Return on Equity (%)	9.83		EV to EBITDA (x)	6.23

CMP	41.5		* P/E	7.09
* EPS (TTM)	5.85		Industry P/E	9.01
* Price/Book	0.94		Div Yield(%)	3.01