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Monday, October 17, 2011

Medi Caps Ltd:-Buy/sell/growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Medi Caps Ltd
BSE code:523144

Story:Medi Caps is the second largest gelatin capsule manufacturer. The interesting aspect about this company is a very small company with Rs 20 crore of marketcap but it has Rs 38 crore worth of debt mutual funds in the company’s investment accounts. So you are getting the business of Rs 20 crore virtually free. Along with that you still have Rs 18 crore of mutual fund in addition.Apart from this the company has entered into a joint venture (JV for a Pithampur SEZ spread over nine acres for manufacturing gelatin capsules. We feel that the potential for this particular SEZ on this nine acre land for the company is somewhere around Rs 70 to 80 crore. Given it is a 50% partner it adds Rs 40 crore or Rs 45 crore to the balance sheet in terms of the market share.So, if I add Rs 45 crore plus Rs 38 crore of mutual fund, plus Rs 25 crore of actual value for the business—it roughly works out to be Rs 100-102 crore. Given it is a small company and it should trade at some discount we feel there is still tremendous juice left into the stock.This stock is definitely undervalued from that perspective because you are getting the core business absolutely free if one goes and sells the mutual fund. There is no debt into the balance sheet of the company.

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