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Friday, December 11, 2009

Surya Chakra Power Corporation Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis

Scripscan:Surya Chakra Power Corporation Ltd

Story:The company is a power producer basically a biomass based power generation company.Now,Revenue and earnings potential from biomass-based power generation in our country is not very attractive and the company has no experience in this business.The company knows it too and thus at present it is in the process of establishing solar power plants in several States, including Madhya Pradesh and Orissa, and a coal-based plant in Orissa.The main fuel for the biomass plants is agricultural waste such as rice husk and cotton stalks.The biggest disadvantage is that this is the maiden foray of the company into this business.The company or its subsidary has power trading license,Though there is good scope in the power trading business, it may be difficult for a small player to break into the industry, which has such major players as PTC India and NTPC Vidyut Vyapar Nigam.The only way to make money will be to increase trading volumes.It is doubtful if SPCL will be able to do that.Now as far myself is concerned,a visionary entreprenur backed by a solid pedigree team is everything for me.I would buy a company with huge losses,huge liabilities,bankrupt one bought by an influential man rather than buying a company with modest financials,good background but run by dullminded and lethargic owner.The promoters of SPCL were earlier in the aquaculture business and two of their listed companies — Suryachakra Sea Foods and Kalyan Sea Foods — fell into difficult times when the aquaculture projects were banned by the Supreme Court in 1996. These companies were subsequently delisted by the BSE, and the Securities and Exchange Board of India slapped penalties on them for non-compliance. Some cases are also pending in different courts against the promoters and some of the group companies for not repaying loans, including one filed by the Marine Products Export Development Authority (MPEDA).Am not sure whether inspite of all these it deserves a market cap of 160crs or not.Maybe the promoters would do something great ths time,maybe all the projects of the company would fructify and reap huge benefits for the stakeholders,maybe surya chakra would be a household name among the small retail investor fraternity.Considering all these and "hoping against hope",I rate a hold rating on the counter.

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