Blog Viewer Queries and my responses…..Birla Power Solutions at Rs 1….Tulsyan NEC at Rs 46…..Marg at Rs 90+,Sanghvi Movers at Rs 110+,NIIT Tech at Rs 180+….Sabero Organics at Rs 97 +……Deccan Gold at Rs 20+…Garnet Constructions at Rs 12

Blog Viewer Queries

  • Birla Power at Rs 1
  • Tulsyan NEC at Rs 46
  • Marg at Rs 90+
  • Sanghvi Movers at Rs 110+
  • NIIT Tech at Rs 180+ 
  • Sabero Organics at Rs 97 +
  • Added later…..Deccan Gold at Rs 20+
  • Added later…Garnet Constructions at Rs 12

Thought I would give my brief observations on all of the above queries from blog viewers…..am reproducing both viewers queries and my brief responses  as this seperate blog post for wider and easy viewing

BIRLA POWER SOLUTIONS AT RS 1

BSReddy Says:

May 29th, 2011 at 7:34 pm 

Dear Sir ,
What about Birla Power Solution Ltd ,which is near Rs 1 /

 Gaurav Parikh Says:
May 29th, 2011 at 9:55 pm

Hi B R Reddy…thanks for your response…this specific blog post listed ten scrips between 20 and 30 and what you think they would be in 2012 if sensex is between 20k and 30k….A few years ago I had cautioned on Birla Power Solutions….I had a quick relook at it at par Rs 1 as this is the FV too …..Volumes are currently 15 lakh shares though average six month daily volumes are 75000 shares…. 52 week high/low is Rs 2/Rs 1…but margins and profits are very low…profits are in a few crs though sales crossed Rs 230 crs last year and will have crossed Rs 250 crs for FY 2011…amusingly it declared a 1:5 Bonus last year as well as a dividend of 7.5%…it carries debt of over Rs 100 crs while funds tied up in Debtors and Inventories last year aggregated over Rs 175 crs..Sales were Rs 238 crs….currently manufacturing portable gensets and engines for gensets it now plans to enter the field of power generation through two subs Birla Energy Infra Ltd and Birla Urja Ltd…it needs funds…has constantly….has raised Authorised Capital to Rs 425 crs….With Profitability in single digit Rs crs and Equity at Rs 215 crs,don’t expect any dividend for FY 11 that just passed….if they do foolishly declare one,they will have to dive into GDR proceeds of earlier years to distribute,if any are yet available….while I feel the downside is 75 paise,any uptick from here will be more on momentum,hype,sentiment and anticipation and blind faith in a Birla Company rather than on fundamentals…Yash Birla Group companies do not command much respect or premium on the bourses or in business…another of his group companies is Birla Shloka ….it is just Rs 15…it has a 52 week high of Rs 94 and the FPO in Jan 2010 was at Rs 50 for a FV Rs 10 share….if you wish to make monies in Birla Power, don’t depend on fundamentals to support upmoves from Rs 1….more likely on collective hype and hope…Cheers !

TULSYAN NEC AT RS 46-RS 49

AMIT GUPTA Says:
May 30th, 2011 at 3:50 pm  

whats your view on tulsyan NEC

Gaurav Parikh Says:
May 31st, 2011 at 12:05 pm 

Amit……Tulsyan NEC suffered from a very high Debt…over Rs 220 crs last year from a Total Capital Employed of Rs @Rs 285 crs…recent 2:1 Rights Issue at Rs 49.50 will triple Equity to Rs 15 crs and move Networth to Rs 120 crs…this will reduce Debt Equity towards 2:1…..Consolidated Turnover is Rs 876 crs for FY 11 but bottomline is a mere Rs 9 crs because of the high Interest outflow of over Rs 32 crs…they also faced huge Power cuts…40% in FY 10…affected capacity utilisation…they also faced some price hurdle to source sponge iron….they have since bought out a 35000 MT Sponge Iron Manufacturer Chitrakoot and are setting up a 35KV Thermal Power Station…Steel sales account for near Rs 700 crs of the turnover…rest is poly packaging synthetic division sales…it is a dividend paying company…65% + equity is held by the Promoters….I see little downside from here….Trading Volumes are low….would keep it as a ScripWatch rather than ScripSelect right now…Interestingly Market Cap is only @ Rs 70 crs on enhanced capital with share price in the mid Rs 40s levels…it remains a small company in this sense…sold 1.5 lakh ton of Steel and @ 12000 t on Packaging…has over 1500 employees …..will get re-rated only when Debt levels drop significantly to Rs 100-Rs 150 crs range and therefore Debt/Equity to 1:1….Keep a watch …..Cheers

MARG AT RS 90+,SANGHVI MOVERS AT RS 110+ AND NIIT TECH AT RS 180+

Swaroop Says:
May 29th, 2011 at 11:41 am 

My ‘value picks’ at this juncture would be:
1)Marg Ltd (They operate a very profitable port at Karaikkal in TN which alone could be worth 900+Crore with IDFC picking up a 30% stake in it). So in effect you are getting the port+thousands of acres of land bank+a reasonably good EPC business with order book in excess of 3000 Cror+Real estate business+upcoming 1Mn sq ft mall in Chennai for a bargain basement price of 350 Cr(market-cap). Only issue here is huge debt on books & pledging by promoters. Recent underperfomance is due to election verdict & public’s misplaced notion of AIADMK being unfavourable for Marg. A great,albeit risky, contra bet.
2)Sanghvi Movers :India’s largest crane operator & the 10th largest in the world. Is out of favour currently as infrastructure is going through a slowdown & results have been stagnant for close to 3 years. But if you believe in India’s infra growth & the need to put up huge power plants, refineries, wind turbines, etc then this is one pf your best bets!
The best part of their business model is that they depriciate their cranes rapidly to lower their tax & so they are carrying the assets at a significant discount to their ‘real’ value . The value of cranes alone should be around 1000 crore while mrketcap is just 500cr!
Company has great return ratios but debt is on the higher side which can easily be pared by selling some old & unnecessary cranes. This one is only for patient investors with confidence in the infra story
3)NIIT Tech : Great parentage,high cash levels+low debt+ super-low price & a great dividend yield ===great buy!!Gaurav would appreciate your feedback on my picks.
Disclosure: I have positions in all the stocks mentioned
Cheers!
 
 

 

 

 

 

Gaurav Parikh Says:

May 29th, 2011 at 8:39 pm  

Swaroop…even God gives a second chance to Promoters !….so if you can assume some risk stepping out of your safe zone for some exposure can be hugely rewarding….your selections are all above Rs 30…and are available near their 52 week lows…Marg is being recommended by many leading brokers…but the volatility is high…52 week was Rs 244…it’s now 92 near.. 52 week low of 87…..there are a few concerns on project execution and debt….I know a few who are holding this from Rs 190 cost…had told them to be wary at the time but they went by glossy reporting and recommending by leading brokers….Quite a few years ago I met the Sanghvi Owners in a one to one meeting…their share price was Rs 16 then and they were growing very fast…but I waited for their results to confirm…was a bit too late by then to pick this multibagger share up…then the brothers had a falling out…..NIIT Tech has the least volatile 52 week spread…looks interesting…Cheers for your long and lovely response

SABERO ORGANICS AT RS 97+

VIKRAM GARG Says:
May 31st, 2011 at 11:24 am  

COROMANDEL INT is buying a stake in sabero organics @ 160/share…whats your outlook on sabero organics

Gaurav Parikh Says:
May 31st, 2011 at 11:48 am  

Vikram,

I had recommended Sabero very strongly more than once in earlier years from Rs 20 + but got turned off them on some disturbing news on ethical business issues..recommended exit at Rs 65 levels…it fell sharply after this…now this news of Coromandel buying it out for Rs 160 + non compete fee of Rs 38 + is going to propel Sabero very fast…the news was out to insiders a few days ago…see the pattern last week…it had reached new highs every single day virtually….Coromandel will acquire 42 % from Chuganees and also another 31% from remaining shareholders….Sabero is already on upper circuit at Res 97 + on BSE…it should move strongly past Rs 125 now with a more credible and stronger promoter…..it will get rerated strongly too…However expect SEBI to investigate insider trades last week…Cheers

Added later

DECCAN GOLD AT RS 20+

ROHIT Says:
May 31st, 2011 at 12:14 pm

Dear Mr Gaurav,

I see that you have mentioned Deccan Gold Mines in your list. I have been holding on to 1000 shares of Deccan Gold Mines for more than 5 years. It has not seen much appreciation barring few sparks in the last few years due to speculative news and grapevine. Just wanting to check when and if they find gold after they get the requisite permissions from the Government, whether DGML will be a multi bagger for the future. Can I accumulate at these levels for a decent appreciation in the next 2-3 years.

Gaurav Parikh Says:
May 31st, 2011 at 2:19 pm

Dear Rohit….please don’t read these ten scrips between Rs 20 and Rs 30 as my recommendations….there is a reason why I have termed these Scrip Teases….and Deccan Gold especially…..last October I commented on Deccan Gold while comparing another scrip with it….reproducing my comments below…..

Deccan Gold Mines

Quote on BSE
Rs 23.25

  • Face Value
    Rs 1Quoted at No of Times FV
    Over 23 times !Activities
    Gold Mining in KarnatakaNetworth
    Rs 14 crsEquity
    Rs 5.85 crs

    Book Value
    Rs 2.41

    Price/BV
    Nearly 10 times

    Debt
    Nil

    Status
    Yet to Generate Revenues from Gold Mining in Karnataka…reached last stage where Mining Lease will allow commercial extraction of discovered gold ore …therefore expected to begin generating revenues inside a year or two for atleast half a tonne of Gold…that’s Sales of over Rs 100 crs at current Gold Price of Rs 20000/ten grams

  • Added later

    GARNET CONSTRUCTIONS AT RS 12

    rajan sinha Says:
    June 1st, 2011 at 2:28 pm 

    sir,

    though a bit late pls share your comments on 1) garnet construction ( their mumbai property alone should worth more than 350 cr) 

    Gaurav Parikh Says:
    June 1st, 2011 at 5:08 pm  

    Hi Rajan Sinha…checked out Garnet for you…not really impressed…Rs 12 for a FV Rs 10 share….loss of over Rs 8 crs in FY 11 more than sales of Rs 7 crs ! on an Equity of Rs 13.9 crs of which only 33% held by Promoters Kedias….60 lakh warrants were converted at Rs 75 into shares in June 2009…..of the 600 acres you talk off,400 acres are Magic Hills property in Khalapur Raigad….Other Residential are Magic Heavens 28 kms from Vshi and Crystal Springs in Lonavala….all yet to be completed…moreover sales returns have been happening as the Land is declared now to be part of High Flood Zone….Reserves show Rs 39 crs….so book value is Rs 38…but don’t get excited here…the balance sheet reads funny….loans at just Rs 8 crs,while networth at Rs 60 crs ! at FY 10 end…now Rs 52 crs at FY 11 end….but No sales in FY 10 yet Debtors shown at Rs 70 crs and Inventories at 36 crs !…..market cap is mere Rs 16 crs…clearly they are window dressing the balance sheet….are not adequately capitalised to implement and complete projects on hand…… they actually are more known for the Industrial Sheds they construct…most on the Mumbai Pune Road or off it…..these are not fast selling areas and development will take 5 to 10 years….price may be low but risk is too high…as far as the property value of Rs 350 crs that you state,the books do not reflect any strong Fixed Assets or WIP or Inventories…so I am assuming ,that like they propose BOT development at a Goregaon Property,likewise they would be adopting this model to develop the properties mentioned above….in other words even if the value you state is more or less accurate,they will not be entitled to it…..Rs 12 is near 52 week low…Rs 28 was the 52 week high…..Seems they need Funds….Price may be Low but Risk appears high…Cheers

    6 thoughts on “Blog Viewer Queries and my responses…..Birla Power Solutions at Rs 1….Tulsyan NEC at Rs 46…..Marg at Rs 90+,Sanghvi Movers at Rs 110+,NIIT Tech at Rs 180+….Sabero Organics at Rs 97 +……Deccan Gold at Rs 20+…Garnet Constructions at Rs 12

    1. Hey Vikram…good for you that Coromandel rescued your position from one of a loss to one that should get you probably triple digit % gains !…Cheers !

    2. Dear Sir ,
      Thanks for your comment on Birla Power Solution ,where I had a quantity of 26000 shares which were accumulated from Rs 40 onwards i.e 2008 onwards ,Still holding . I have to wait another two to three years to get the stock back to Rs 3/

    3. sir,

      though a bit late pls share your comments on 1) garnet construction ( their mumbai property alone should worth more than 350 cr) 2) HCC, risk reward hugely in favour 3) Lok Housing

    4. Hi Rajan Sinha…checked out Garnet for you…not really impressed…Rs 12 for a FV Rs 10 share….loss of over Rs 8 crs in FY 11 more than sales of Rs 7 crs ! on an Equity of Rs 13.9 crs of which only 33% held by Promoters Kedias….60 lakh warrants were converted at Rs 75 into shares in June 2009…..of the 600 acres you talk off,400 acres are Magic Hills property in Khalapur Raigad….Other Residential are Magic Heavens 28 kms from Vshi and Crystal Springs in Lonavala….all yet to be completed…moreover sales returns have been happening as the Land is declared now to be part of High Flood Zone….Reserves show Rs 39 crs….so book value is Rs 38…but dont get excited here…the balance sheet reads funny….loans at just Rs 8 crs,while networth at Rs 60 crs ! at FY 10 end…now Rs 52 crs at FY 11 end….but No sales in Fy 10 yet Debtors shown at Rs 70 crs and Inventories at 36 crs !…..market cap is mere Rs 16 crs…clearly they are window dressing the balance sheet….are not adequately capitalised to implemnt and complete projects on hand…… they actually are more known for the Industrial Sheds they construct…most on the Mumbai Pune Road or off it…..these are not fast selling areas and development will take 5 to 10 years….price may be low but risk is too high…as far as the property value of Rs 350 crs that you state,the books do not reflect any strong Fixed Assets or WIP or Inventories…so I am assuming ,that like they propose BOT development at a Goregaon Property,likewise they would be adopting this model to develop the properties mentioned above….in other words even if the value you state is more or less accurate,they will not be entitled to it…..Rs 12 is near 52 week low…Rs 28 was the 52 week high…..Seems they need Funds….Price may be Low but Risk appears high…Cheers

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