VICTORY PROJECTS:-The scrip to rock your portfolio

Scripscan:VICTORY PROJECTS LTD
cmp:21
Code:530595

Story:Promoted by Mr. Maruti Ram (IIT,IIM Alumni), company had come out with IPO in 1995 for Aqua-Farming. However, this project did not take off due to bleak prospects of this industry caused by anti-dumping duty imposed by U.S. Thereafter, promoter decided to venture in I.T. field and developments of various new age softwares. Now, company is on threshold of launching a unique software and hence, the recommendation.

Rationale for recommendation:
a)Its 90 acre land valued at approx. Rs. 90-100 crs. in the midst of Rs. 2 lakh cr.'Petro Corridor' SDA Project of APIIC.
b)Launching Telecanor Suite which is the only VoiceXML Compliant IVR Suite suitable for multilingual non-TTS responses.

Financial Performance:For 07-08, company made 1.17 cr. PAT on equity of 5.40 crs. Such performance had been achieved through nominal I.T. related activities as during the year, company had neither used its land bank nor launched Telecanor. However, now, company will undergo a seachange as company is inducting some strategic partners who will infuse funds for launching Telecanor and use of its land bank.

Land Valuations:Company holds around 90 acre land outside Vizag which is emerging as one of the most promising industrial area in India. Govt. is planning to notify this area of 473 sq. km. as a petroleum, chemical and petro-chemical investment region (PCPIR). While, Govt. will invest 19,000 cr. to build ports, roads, airport, railway network, total investment including private sector may touch 15,000 cr. Investment in PCPIR is planned to be 3.43 lakh crs. which will generate 12 lakh jobs. Gangavaram Port is hardly 10 Km. away from VPL land. A new airport S. Rayavaram is also planned. HPCL is setting up a refinery in the same area. In view of such developments, land of VPL may be used (after 1-2 years) for setting up SEZ or logistics business.

Software Business:Company has developed following projects:
1.Telecanor Suite.
2KeenBank Banking Suite.
3.eTackle ERP Solution.
4.eduKeen.
5.PerFit Personal IT Planner.
6.Tims migration system.
7.TCops Corporate Performance Management System.

Future Outlook:

08 - 09 09 - 10 10 - 11
cr. cr. cr.

Total Income 3.50 14.00 32.00
PAT 2.00 6.50 14.50
Equity 5.40 11.12 11.12
EPS Rs. 3.70 5.85 13.00

Recently, company has issued 57.27 lakh convertible warrants to finance its business plans (to open various offices, servers, marketing team etc.). It will also get required regulatory approvals in next 3-4 months.Company expects to get clients for TeleCanor from Q4 onwards.

Valuations:
1)Land is valued at Rs. 90-100 crs. On fully diluted equity (next year), value of land works out to Rs. 80/- per share.Current market cap is just 12 crs.as against land value of 90-100 crs.
2)TeleCanor is a unique product which has huge potential. If, company is successful in marketing the same and grabs few prestigious clients, VPL can get multibagger valuations.Name of the company is being suitably changed to reflect new nature of its business and in near future,VPL may be re-christened as "TeleCanor eGateway Ltd."

Conclusion:Considering land bank alone, company deserves share price of Rs. 35-40. Once, TeleCanor is launched, company is bound to catch attention of everyone. Projections given above do not include any contribution from landbank and are only from TeleCanor. If, company manages to achieve above projections, share prices can be in 3 digits in less than 2 years. A riskfree buy which may become a shining star in Payment Gateway Industry.
Source:Hemantbhai

Regards,
Arun
I can be reached at:arunanalyst@rediffmail.com