Scripscan:Jai balaji industries
"Warren Buffett Quote":Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.
Story:Just five points which will speak the real value of this company:-
1)Company 1.1mtpa steel manufacturing company with diversified product range including pig iron, sponge iron, TMT bars, ferro alloys, alloy bars etc.Replacement cost of assets over 4000crs.Debt of 2000 odd crs.(NAV of the company 4000crs-2200crs=1800crs)
2)The company holds varying stakes in four coal blocks-Dumri and Rohne in Jharkhand and Andal and Jagannathpur in West Bengal.It posses 700mt of high graded coal.Coal valuation is all over the place(USD 3 per tonne to USD 25 per tonne).Taking most conservative value of 3USD per tonne,value comes at over 10500crs.
3)Recently it backwardly integrated by putting up a .35mtpa coke oven.Will help in saving 75-100crs input,enhancing margins.Did a CDR which further will help saving 25-40crs.Raw materials prices have started softening and product prices have jumped a bit,albeit in a very tiny manner.
4)Promoter bought over 6 lakhs shares from open market in the last few months and further allotting 1cr warrants at 50 bucks,promoter stake to move from 52% to 58% post warrants conversion.
5)Reduced pledged shares from 92% to 68% recently,should be below 60% with warrants conversion.Company may have further plans to release more pledged shares in due course.
Conclusion:So you are getting India's 8th largest backwardly integrated 3000crs revenue company with 12300crs of assets(10500crs of coal+1800crs of assets after deducting debt) at just 170crs.Sanity is not in vogue but probably will be someday.
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