Scripscan:Rain Commodities Ltd
Cmp:150
Traded in:Nse-Bse
Story:Rain Commodities Ltd is the largest producer of CPC in the world with installed capacity of 2.49 million tonnes spread over 9 plants in India and USA. CPC division also has total 125 mw cogeneration power capacity.Its cement plant has capacity of 3.16 mn tonnes.Company had acquired CPC operations of USA ofr 619 million dollars. Now, Rain stands to benefit hugely from this acquisition. Present valuations to CPC industry worldwide range between 7.50x8.00 EBIDTA. Based upon this, current value of cpc biz comes to more than Rs 6700 crores which translates into around 1.50 billion dollars. Against same, marketcap of Rain is just 1100 crores. Company has NET debt of 568 mn dollars only. As per our sources, Rain CII Carbon LLC USA (which is holding co) will launch IPO in Q3 of current year in USA by divesting part of holding to raise around USD 300 million(which will more than its current market cap) In cpc biz, its converter margin was just USD 95-100 in June-July 2010 which now has ZOOMED to USD 150-160 per tonne. As per sources, Rain can achieve EPS of Rs 85-90 for CY11. And its book value will rise to Rs 275.Rain has raised usd 400 mn by issuing 8% Senior Secured Notes mainly to refinance 11% hhigh yield bonds (USD 219 MN) and partial repayment of Existing Senior Debt (USD 109 mn) and its new energy projects in US (USD 40mn).In current year, this alone should reduce its interest cost by approx Rs 45-50 crores.Rain has declared dividend of Rs 4.60 per share and has also announced stock split 5:1 which means scrip will become Rs 2 face value.Considering that Rain has emerged as the largest producer of CPC in the world and sales likely to cross 1 billion dollars in current year, Scrip is available at extremely cheap valuations.Looks to be a worth betting candidate for the next 3-5 years.
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