- The company/stock selected for the current issue of "Business Insights" is a flagship company (market leader in its zone) belongs to one of the big business house operating in commodity.
- Major financial institutions have picked up around 15% stake in the company; which gives a sense of confidence that some big names are associated with the company whose Mcap is below Rs50 Cr.
- Mcap of this company is well below Rs50Cr, but the total sales of the company for FY2008-09 stood at around 16 times its Mcap, while the operating profit was more than its Mcap. Do we really need to say that it’s a huge value buy.
- The company has spent Rs 200+ Cr on its first phase of expansion & it has plan for total investment of another Rs 2000+ Cr in 5-7 years to take the total capacity multiple times higher.
- The current stock price is below Rs 20 & trading well below the book value which is 4 times its CMP. Promoters has bought the shares at around Rs 50/share which provide huge margin of safety.
- Considering the improvement in performance due to capacity expansion coupled with better margins in next 3-4 years, on account of self-sufficiency and backward integration. Also, during the peak of cycle, the commodity stocks easily trade at a P/E of 14-15. So, there’s very high probability of this counter giving return in excess of 15-20 times in next 3-4 years.
Are you still waiting!!! Grab this potential 20 bagger stock in next 3 years from MPS Unit.
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-Team HBJ Capital