Abhishek Corp is promoted by the Mohites of Kolhapur…earlier the company was merely a Yarn Spinner…building up a capacity of 33000 spindles….Last year in Feb 2007 it came out with a IPO at Rs 100 (FV Rs 10)…the price has never been reached since then on listing…it dived to Rs 26 in July this year and has revived to Rs 47/48….the Equity is Rs 14 crs but Book Value is pumped high at Rs 90 due to the premium in the IPO …..The Company has forward integrated to Yarn Dyed Fabrics and set up a Rs 220 crores plant which is to go on stream this month …the Debt is high at Rs 180 crores although the Loan is under the Technology Upgradation Scheme and is therefore entitled for a 5% Interest rebate…the debt equity is over 1
71% of the equity is owned by the Mohites…there is no institutional equity participation….yarn players say it will be difficult payback period to recoup Rs 220 crs project cost….suspicion of inflated costs ?
The prospectus does not throw light on possible capacity utilisations of the expansion and therefore cannot fathom out possible turnover levels….awaiting third and fourth qtr performance to figure out if this is truly a great Yarn play or just a Great Yarn
Oh ! it’s also into Construction…no orders on hand though they finished Morbhe Dam recently…it’s a registered contractor with the PWD trying to move up the levels
Low Equity should facilitate a High EPS Performance if the results are good….High Promoter Stake and low floating stock would make it easy to “market make’ the share price to desired levels…From poor volumes of below 1000 shares daily,yesterday the scrip registered a gain of 7 % with volume of over 30000 shares
There’s more rise to come………as it attempts to regain IPO levels with the commerical production begginning on the expansion….how much it produces….how much it sells…at how much it sells…..all should reflect in the coming quarters….upward share price movement begins in anticipation and hype
It’s not the same company as Abhishek Industries…that’s a different company and Mohites are fighting a legal battle for the brand “Abhishek”
I may have confused you by putting this Blog under “Investor Mistakes” too…but that’s the beauty and risk in Equities…Abhishek Corp could just turn out to be just another Big Yarn