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Wednesday, March 6, 2013

Jai balaji industries:-A King size Multibagger in making

Stock idea:-

Scripscan:Jai balaji industries
Traded in:Nse-bse
cmp:27
Marketcap:170crs

"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.


Btw:People looking for midcap/small cap positional call professional service may rush a mail at my mail id arunsharemarket@gmail.com to know more about it.

19 comments:

Arihant said...

Arun,

Based on your earlier reccomendation, I had bought this share at 190. In huge losses already. Do you still reccomend this stock?

Arun Mukherjee said...

Yup..Not only you but even promoters bought shares worth 12crs at around 200rs couple of years back.

Anonymous said...

the company is making huge losses for the last 6 quarters then how you are saying it is a king size multibagger.

Amudhan

Arun Mukherjee said...

Stock market is all about discounting future.Its making losses but always its not gonna make losses.Times would come when company would be in black,stock price by then would be in sky.

Anonymous said...

Dear Arunbhai

I have purchased Gulshan polycols 900 shares at an average price of 128/- based on your recomendations in Dec 2009 and now the stock trading @ 57/- now can i hold the share or book loss and come back because the scrip has not move upward for the last 3 years despite good results and EPS @ aroung Rs.20/- per share

Pls advice.
Amudhan

arun said...

Good company with good business.Should move up sometime

Anonymous said...

Dear Arunbhai,

I am a paid member of your blog upto Jan 13 after that i am not able to renew my subscription due to my investment money blocked in some scrips which are now 50% to 60% lower than my purchase price. Now i want to invest in Jai Balaji & JHS sevenguard. Can i invest now at the current market price what is the long term target of these two scrips (2-3 years horizon)

Amudhan

Anonymous said...

Dear Arun

Jai Balaji has dropped further to a single digit point. Would like to know your views on whether to still hold it or there is no future in this scrip.
Would also like to know if there are an developments in JHS Sevengard

Ashish

Arun Mukherjee said...

Jhs is moving up on some takeover buzz.If it happens would happen at a much higher price than cmp.As I have always maintained,jhs intrinsic value is way too high.

Arun Mukherjee said...
This comment has been removed by the author.
Arun Mukherjee said...

Jai balaji's numbers would be pathetic.Its in an entire mess and thus the price.The saving grace can be its couple of coal blocks.If rohne and dumri stays,it will move up,if not the mess will continue.But again book value is around 70 bucks,so again intrinsic value is way too high.It needs to survive coming few months,needs to have those two blocks desperately.Else a gone case as far the short term prospects are concerned.

Anonymous said...

Sirji,

What about Marg ltd and IVRCL ?Holding huge quantities(20K) at 45 and 27 respectively.Any chance to recover the cost price ?Or is it a sell at CMP?

Arun Mukherjee said...

Both having the horror of their life.Would take a lot of time to get back to your cost.

your blogger said...

Hi Arun,

The fact that you allow posts without an upfront filter is very commendable.

Coming to Jai Balaji, Coal Ministry has not de-allocated a single block where the company has a stake (despite big names such as Adani and Jindal losing out their blocks).

Keeping this in mind, any new comments/updates from your side?

Arun Mukherjee said...

Ya buddy you are bang on.Also they have got now 9 months time to secure the final stage 2 clearence for their two coal blocks(on operation they would save 350crs)so a lot of relief has come in finally.With Veerappa moili in the environmental ministry,its just a matter of time before the clearence is passed.Also steel cycle has seen a slow uptick and is expected to see further growth in the coming period.The condition for the company has certainly changed and price should see good spikes steadily.

Anonymous said...

What is latest on Jai balaji Industries ?

Arun Mukherjee said...

Worst over for the counter.Stock price to rise now.

Anonymous said...

Hi Arun,
Is there any posibility that BJP cancel all coal blocks after coming to power. (I am refering to the statement, given by Arun Jaitley).

Regards
Rohit

Anil Bhatia said...

Dear Arunji,
I have been reading your comments and following up. I do not think jaiBalaji will revive back ?
Any possibilty that it goes to single digit (<10) in near future,
Why i am saying is that i was holding this since mar'13 with > 100 price avg, and not sure anymore , hence your expert advise is needed please.

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