VBC Industries Ltd. (524310) CMP Rs. 31/-
This Hyderabad based Company is engaged in the production of Ferro Chrome with installed capacity of 13,000 tonnes. Promoters stake is 72%. Its financial performance is just average:
Q1 09 - 10 08 - 09 (12 M)
cr. cr.
Net Sales 10.57 43.00
PAT 1.24 1.88
Equity 45.18 45.18
Company has already acquired additional land and has planned to expand its production capacity to 80,000 tonnes next year. However, Company holds big investments in various power projects (gas based, Hydel, Thermal).
Q1 09 - 10 08 - 09 (12 M)
cr. cr.
Net Sales 10.57 43.00
PAT 1.24 1.88
Equity 45.18 45.18
Company has already acquired additional land and has planned to expand its production capacity to 80,000 tonnes next year. However, Company holds big investments in various power projects (gas based, Hydel, Thermal).
1) VBC Ind: Holds 30.87 mn. shares of Konaseema Gas Power by investing 30.87 crs.. Konaseema has already started power generation (Phase-I, 400 MW) as it is getting natural gas from K.G. Basin. Konaseema is implementing Phase-II by adding another 800 MW. Konaseema is likely to come out with IPO in 2010 @ Rs. 150/- per share which means, value of VBC Investment in Konaseema can be worth over Rs. 400 crs.
2) Hydel Power: VBC Ind. had promoted Orissa Power Consortium Ltd., holding 20.00 mn. shares. OPCL has already commissioned 20 MW Hydel Power Plant and trials are under way. Hydel capacity of OPCL will be expanded to 100 MW by 2011. Location of OPCL is considered one of the finest for Hydel Power Generation. This investment of VBC Ind. in OPCL will command bumper valuations (considering huge valuations given to NHPC, VBC Ind. valuation of
investments in OPCL could be more than 100 crs.).
3) Thermal Power: VBC Ind. has invested 8.83 crs. in Karthik Rukmini Energy which is setting up 65 MW Power Plant. Thus, VBC Ind. has invested in 3 spaces of Power Generation i.e. Gas, Thermal and Hydel.
Further, VBC Ind. has also made significant investments in another 2 companies. However, details about nature of business of these 2 companies still not available with us. Finally, it is reliably learnt that, some major developments are taking place. Once same are finalized and announcement is made in next 2 months, VBC Ind. scrip will be re-rated. KSK Energy does not have any Power Plant of its own and has acquired Equity stake in some upcoming Power Projects and is quoting above Rs. 200/-. Thus, in peer comparison, VBC Ind. is dirt cheap. Although at present, we are not able to put exact valuations to various investments of VBC Ind..
However, looking at extremely high valuations of Adani Power, R. Power, NHPC, KSK Energy etc. and, gut feeling as well as analytical vision of this writer, investor should not be surprised if valuation of all these investments works out to more than Rs. 1000 crs. after 18 months (because by that time, full 1200 MW of Konaseema will be operational). Moreover, once Company completes 600% expansion of its Ferro Chrome capacity, it will have substantial manufacturing turnover as well. In 2007, its share price had crossed Rs. 50/-. Scrip is being accumulated by knowledgeable circles. As per latest and reliable info available, Orissa Power will be merged with VBC Ferro. Hence, VBC Inds. will be allotted shares of VBC Ferro (in lieu of its holding in Orissa Power). Share Price of VBC Ferro is around Rs. 500/-. If VBC Ind. gets 20 lakh
shares of VBC Ferro, market value of this investment alone will be more than Rs. 100 crs. Our price target Rs. 50 - 55 in less than 6 months and Rs. 120-150 in less than 24 months. You may buy big quantity.
2) Hydel Power: VBC Ind. had promoted Orissa Power Consortium Ltd., holding 20.00 mn. shares. OPCL has already commissioned 20 MW Hydel Power Plant and trials are under way. Hydel capacity of OPCL will be expanded to 100 MW by 2011. Location of OPCL is considered one of the finest for Hydel Power Generation. This investment of VBC Ind. in OPCL will command bumper valuations (considering huge valuations given to NHPC, VBC Ind. valuation of
investments in OPCL could be more than 100 crs.).
3) Thermal Power: VBC Ind. has invested 8.83 crs. in Karthik Rukmini Energy which is setting up 65 MW Power Plant. Thus, VBC Ind. has invested in 3 spaces of Power Generation i.e. Gas, Thermal and Hydel.
Further, VBC Ind. has also made significant investments in another 2 companies. However, details about nature of business of these 2 companies still not available with us. Finally, it is reliably learnt that, some major developments are taking place. Once same are finalized and announcement is made in next 2 months, VBC Ind. scrip will be re-rated. KSK Energy does not have any Power Plant of its own and has acquired Equity stake in some upcoming Power Projects and is quoting above Rs. 200/-. Thus, in peer comparison, VBC Ind. is dirt cheap. Although at present, we are not able to put exact valuations to various investments of VBC Ind..
However, looking at extremely high valuations of Adani Power, R. Power, NHPC, KSK Energy etc. and, gut feeling as well as analytical vision of this writer, investor should not be surprised if valuation of all these investments works out to more than Rs. 1000 crs. after 18 months (because by that time, full 1200 MW of Konaseema will be operational). Moreover, once Company completes 600% expansion of its Ferro Chrome capacity, it will have substantial manufacturing turnover as well. In 2007, its share price had crossed Rs. 50/-. Scrip is being accumulated by knowledgeable circles. As per latest and reliable info available, Orissa Power will be merged with VBC Ferro. Hence, VBC Inds. will be allotted shares of VBC Ferro (in lieu of its holding in Orissa Power). Share Price of VBC Ferro is around Rs. 500/-. If VBC Ind. gets 20 lakh
shares of VBC Ferro, market value of this investment alone will be more than Rs. 100 crs. Our price target Rs. 50 - 55 in less than 6 months and Rs. 120-150 in less than 24 months. You may buy big quantity.
Source: Internet (Valuenotes by profittrack.in)
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