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Thursday, May 15, 2008

Delton cables:-A power ancilary play with lot of real estates

Have suggested the company several times at several rates.At 90rs it looks a great bargain.

Scripscan:Delton Cables Ltd

[Delton cables news/analysis/prospects/land story/huge potential/power ancilary play/hidden gem/good bet to own]

Introduction: This Delhi based company is one the earliest entrant in power cable business. Although company has been growing only steadily despite industry growing tremendously and competitors also grew much bigger. Its financial performance has been reasonable:

Expansion:The company has set up a new Division for the manufacture of Switchgears at Noida.This will enhance the value of the brand 'Delton' and add to the turnover and profitability of the company.It also plans to expand in the segment of power cables and RF cables.

On its core business, scrip is reasonably priced. However, company is sitting on massive surplus assets which, as and well, utilized/sold will unlock huge value for its shareholders

Land play:In Dharuhera, Haryana (Near Hero Honda factory), its plant is situated on approx 12 acre land. At this place, company has surplus land approx 48-52 crs. Prevailing land rates here are 9-10 cr per acre. Thus, market value of this surplus land should be nearly Rs 450-500 crs.It has another factory situated in Faridabad over 2 acre plot. This is prime location and going rates are approx 30 cr per acre.Although, at present, factory is running here. However, looking at huge land value, in future promoters may decide to relocate this factory which can fetch more than 60 cr cash to the company.

No of shares are just 28,80,000 and value of surplus land works out to Rs 1800-1900 per share as against CMP of Rs 90. Floating stock is low due to high promoter holding. Company has also got some land in delhi.

Conclusion:In future, some big builders are bound to offer highly attractive valuations for company's surplus land which promoters may find difficult to refuse.Also its a cashrich company with reserves to the tune of 16.5crs.Even a liberal bonus can be there on the offing.Delton cable is one of the scrips which is qoting at a significant discount to its land value.Even if we give the counter 1/4th of the total land value the price comes at 450rs.Again like my other scrips i give the counter to you members to value it on your own ways.

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