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Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I might have the dkiscussed companies in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments
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Wednesday, October 19, 2011

Bombay Burmah Trading Corporation Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis outlook,multibagger

Scripscan:Bombay Burmah Trading Corporation Ltd
BSE code:501425
cmp:450

Story:Bombay Burmah has got a very strong balance sheet and this is one reason that I like this particular stock, may be the stock would bore you from a longer term perspective also and it will be hobbling around at 400 to 500 odd mark and right now it’s trading at 450 odd levels. So I think one can take a call of 20% from next 8-12 month perspective.Now if I take a call from its balance sheet perspective it owns through its subsidiaries almost 51% in Britannia Industries. Current market cap of Britannia is 5600 odd mark. 51% roughly works out to be that Rs 2800 odd crore, the market cap is Rs 600 crore. As a holding company it warrants that 20% discount.So it’s fairly valued.Now take a call it’s exposure to Bombay Dyeing, it was almost 14% so again a safe bet. Now what interesting is that Britannia industries is available at a dividend yield of 1.6%, so similarly with Bombay Burmah. So they will be getting Rs 35-40 crore in terms of free cash flows to equities just through dividends through Britannia.Last year they sold their JV into the rubber JV. This year they have sold their sunmica division so there is some reorganization that is going into Bombay Burmah or let’s say Wadia group. So I think there is lot of potential even going forward because now if I take a call in their core business, which is their tea and plantations that is available in Tamil Nadu and Karnataka.They have got good presence and they have got good ability to generate free-cash flow to equity. So from fundamental perspective if I ignore the balance sheet value it will be somewhere around Rs 180-200 and on conservative side if I see the replacement value of this plantation business it again works out to be Rs 180-200, so Rs 400 plus the investment.People try to get into at Rs 380 to 400 because they have actually generated free cash flow of equity of close to Rs 165 crore. If I see this year Rs 100 crore of sunmica division and Rs 65 crore from JV ventures sell, so it’s a cash rage company with limited downside and a potential target of Rs 500. One can take a trading bet in this turmoil times.
Source:Fort

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