2 months back, when I had given a call on Sandur Manganese [Buy at 640 for a 1 year target of 855 (+33%).], many persons had questioned me whether this was a prudent call and if I was sure of what I was saying…
The answers are now available in the form of its quarterly results. The script touched a high of 918.45 today, hitting the upper circuit and is up by 43% after my call. Hold for a second target of 940 and then you may sell 50% of your holdings. Hold the rest for a target of 1000.
On Thu, Sep 2, 2010 at 9:58 AM, POWERFULPICKS wrote:
powerfulpicks research: SANDOOR MANGANESE mines manganese and iron ore. 2 years back, it was mining around 700 hectares and now it has got clearance to develop further mining land and is now mining about 2,000 hectares at present, with total reserves of 50 million tonne iron ore are and 25 million tonne manganese ore.
Company is debt free and current marketcap at market price of Rs 645 is about Rs 564 crore. It has got cash of close to Rs 170 crore and its enterprise value works out to be around Rs 460 crores and book value of Rs 214 per share. The company made and operating profit of Rs 235 crore in FY09. So this company is available at approximately 2 years of its operating profit, while it can be assumed that the company will earn revenue from these mines for around 15-20 years, out of which we have just witnessed 2 good years. At current ore prices, the company's deposit valuation works out to be arouns Rs 21000 crores. Current P/E is around 9, which makes this stock cheap compared to peers.
Promoter holding of over 70% is another big plus. It also has 74% stake in a subsidiary called Star Metallics, manufacturing ferro alloys. The company has invested close to Rs 110 crores in Star Metallics.The company's captive power plant of 32 megawatt will be operational in September 2010, which will in turn, make Star Metallics' ferro alloy plant operational and start giving returns on the company's investments in around a month's time. There are short-term concerns regarding mining restrictions being imposed by the Karnataka government and also regarding restrictions on movement of iron ore. In FY11 Q1, it made a profit of Rs 28 crores with an EPS of 32. Full year EPS may be between 120 to 145. Which makes the current P/E at current prices around 5.2. Which is very cheap. Buy at 640 for a 1 year target of 855 (+33%).
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