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Monday, February 14, 2011

Suryavanshi Spinning Mills Ltd :-Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Suryavanshi Spinning Mills Ltd

Story:Share of this Hyderabad based textile co looks underpriced as it has fallen 50% from recent high of Rs 45.Its current market cap is less than 30 crores whereas company has:-

1)One lac spindles having replacement cost of 375 crores
2)4 ton per day yarn dyeing plant
3)2.50 tonne fabric per day knitting factory
4)Garment factory with capacity of 3 million garments per annum
Combined replacement cost o f above assets is nearly 500 cr(and market cap just 30 cr).Company has long term debt of just 49 cr.

For 9 month ended dec 2010, company has reported sales of 209 cr and on equity of 13.27 cr, EPS stands at 7.87 cr as Pat for 9 months is 10.45 crores. Suryavanshi should end FY11 with EPS of Rs 11-12 and scrip is trading at just 2XFY11E Eps.

Other potential triggers:-
One its factories is just outside Hyderabad city. This land is 45 acres and prevailing price there is more than 4 cr per acre.Management may shift this plant to another cheaper location and unlock value (around 200 cr) of this land .Company has already acquired 100 acres land around 100 km away from Hyderabad where it may set up fully integrated textile plant.Group co is promoting 200mw power plant in which Suryavanshi should acquire equity stake.Altogether a sound bet with minimal downsides.

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