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Wednesday, September 9, 2009

Blue Coast Hotels & Resorts Ltd and Kilitch drugs:Buy/hold or sell?

1)Scripsccan:Blue Coast Hotels & Resorts Ltd(Morepen hotels)

Story:This is more of an illiquid counter; will have hardly any trading volumes taking place in this counter and it’s not a stock for a trader because getting the stock and selling the stock is a problem here. But if one looks at the fundamentals of this company, this company belongs to the Delhi based Morepen Group; they own the Park Hyatt Resort & Hotel in Goa. This hotel is built on about 45 acres of sea front land and this hotel has got location advantage in terms of its proximity to the Goa airport. They have been promoting this hotel as high-end luxury retreat with one of the world’s best spas.The financials for near future should be decent for the counter.With the hospitality slowly picking up these company can be one of the biggest beneficaries of it.So at the current price of about Rs 100 odd, this stock is trading at single digit valuations of its 1 year forawd earnings and if you compare it with the peer group,the stock looks grossly undervalued.A good buy in the hotel sector at dips.

2)Scripsccan:Kilitch Drugs India Ltd

Story:I like the stock because of the its unit, which the company has set up at Himachal Pradesh, which started operations in January couple of years ago and if one look at the numbers they has been inspiring to say the least. Not only contributed in turnover but whole lot of excise benefit and other tax benefit the company gets because of the its unit at Himachal Pradesh is very important. The company is presently operating at the new unit and as the capacity grows the numbers also topline as well as the bottomline should grow. The company presently has equity of around Rs 13.2 crore promoters own around 65% of that.It has got reserves to the tune of 50crs too which makes it one of the prominet liberal bonus candidates. For the current year, I expect PAT to be around Rs 14.5 to 15 crore which should possibly be more than double when the company operates at nearly 100% capacity and I am looking at the net profit of around Rs 20-30 crore next year which gives it an earnings of around Rs 23 to 24 per share. So I think even if we give it a very conservative PE multiple the share should atleast minimum double from here in the coming 2-3 years.

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