Scripscan:Andhra Cements Ltd
cmp:12
Code:532141
Story:Andhra Cement Ltd. (Andhra Cement) incorporated in 1936 is one of India’s oldest cement manufacturers and a part of Duncan Goenka Group with two manufacturing plants in AndhraPradesh.At present, Andhra Cement has two operative plants at Guntur and Vishakhapatnam, Andhra Pradesh with an annual installed capacity of 0.8 MTPA and 0.6 MTPA respectively, aggregating 1.4MTPA capacity.Andhra Cement is in the process of upgradation and expansion its existing plant capacity to 3.5 MTPA from 1.4 MTPA.On successful completion of the project, Company’s topline and bottomline is expected to post robust growth.Andhra Cement’s enjoys institutional patronage by premier Insitutes like Fidelity Capital Investment (5.06% holdings), IDFCL td. (10.79% holdings) and HDFC Ltd. (8.42% holdings).➢ Large Domestic Financial Institutions like HDFC and IDFC have partly funded upgradation cum expansion plans of Andhra Ce-ment through a mix of debt and equity of more than Rs 300 Crs.In September 2010, Andhra Cement allotted 69.9 Lacs Equity Share at Rs 24/share each to HDFC and IDFC by way of converti-ble debentures, this sets a benchmark rate of Rs 24/share for the Company. Thus HDFC holds 8.42% stake and IDFC holds 10.79% stake in the Company as on 30th September 2010.Andhra Cement with 3.5 MTPA of installed capacity could fetch valuation of around Rs 400 Crs /MTPA, a standard valuation for a Cement Plant with a benefit of premium of 15% for acquiring con-trolling interest in the company.Andhra Cement’s Promoters have pledged 94.14% of its 8.80 Crs Equity Shares in the company of which 21 Lacs pledged shares are sold by Pledgee thereby I believe their is a distinct possibility of the Company to be sold resulting into huge unlocking of value for its investors.Offlate in the last few years their has been lot of acquisitions which happened in the cement sector-Mysore Cements got acquired by Heidelberg at valuation of about USD 117 per tonne. Shree Digvijay Cement got acquired by CIMPOR at USD 162 per tonne, Ambuja Cement was taken over by Holcim at USD 200 per tonne and the latest acquisition in the cement space has been private company called My Home and Industries which is a Hyderabad based company which happened at about USD 235 per tonne. So even if I take a base case scenario of USD 100 per tonne which is probably the worst case scenario, the likely scenario in this case would be anywhere between USD 150-200 per tonne, which means significant upside in the stock value from these levels.Expect a gain of 40-50% in this stock on a horizon of 9-12 months.
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
