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Tuesday, April 28, 2009

The three probable multibaggers

Herein, three scrips of Shamken Group are being recommended for investment.Promoted by Mr. Chaturvedi, all 3 companies fell into bad times due to mismanagement and lack of integrity. Although, all 3 companies had most modern Plant and Machinery and also had good demand for their products. Rational for recommendation is that, current market prices of all 3 companies have almost bottomed out and any news of OTS (one time settlement)can give multibagger returns.

1)Scripscan:Shamken Spinners Ltd

Story:Company has 45,000 spindles for producing cotton and synthetic yarn.Factory is located at prime land on Delhi-Agra Highway.Due to lack of funds, company, off and on has been doing job work for others.Replacement value of spinning unit of this price is more than Rs. 150 crs. Current Market cap of Shamken Spinner is Rs. 6.50 crore.Its plant is spread over huge piece of land just outside Delhi (on Delhi-Mathura Express way).

2)Scripscan:Shamken Multifab Ltd

Story:Company has weaving unit to produce furnishing fabrics for passenger cars.Its potential customers are Honda, Toyota etc.Due to lack of funds,company is operating at very low capacity and for Quarter Ended Dec. '08,it made loss of 3 crs. on sales of 7.58 crs.Current Market Cap is less than Rs. 4.50 crs. although replacement value of a Plant of such size will be more than Rs. 50 crs.

3)Scripscan:Shamken Cotsyn Ltd

Story:Company has a most modern Processing House for knitted fabrics.Due to lack of funds, Plant is not operating. Apart from Process House, Company also has 4 acres surplus land in Noida which should be worth more than Rs. 20 crores.And, current market cap of company is less than Rs. 3.50 crores.

Conclusion:Due to criminal cases pending against the promoter, banks cannot do OTS with him.It is reliably learnt that, banks are ready to finalize OTS of all above 3 companies at 15% of the principal amount (which means, 85% of principal amount, interest, penal interest will be waived). Post OTS,these companies will become debt free and new promoter will have to bring funds for working capital. These three companies have suffered due to bad promoter. Otherwise, their products have ready market and plants are capable of producing high quality products.Under leadership of new promoters, these companies should turn-around soon.Although,at present, due to bad market conditions, banks have not found a new promoter.However, as and when new promoter steps in, share price of all 3 companies can cross Rs. 10/-.At current marketprices, all 3 scrips are available at dirt cheap (setting up a small store in a metro city will cost more than market cap of Shamken) and have potential to provide multibagger appreciation. Current market cap of above companies is literally peanuts.Risk is very very negligible whereas, chances of multibagger rewards are very bright.Investors who have patience for1-2 years, can buy these scrips.

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