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Friday, August 20, 2010

Bhatinda Chemicals: Value Buy!!

Bhatinda Chemicals (BCL Industries & Infrastructures Limited):
Current Market Price: 35.00
Market Cap: 21Cr
Sales TTM: 315.67Cr
Reserves: 26.08Cr
Debt: 54.64Cr
ROCE: 16.15%

Bhatinda Chemical has changed its name to BCL Industries and Infrastructures Limited. Companies main area of operation is Vanaspati Oil production (low margin business). Company has set up a Solvent extraction plant. Solvent extraction plant help extract more oil from the seeds and reduce the oil in the residue "Oil Cakes".
Bhatinda Chemicals had 1,38,50,000 convertible warrants at a price of Rs 50/= per warrant. issued in July 11,2008 with Jan 2010 as the expiry date for conversion of warrants.. Rs 5 was paid in advance and if the warrants are not converted then company keeps the Rs5 ie 6.9Cr
Well the stock has been quoting at 30-35 levels.. so look like the warrants did not get converted..(no increase in equity reported to BSE)

ROCE of 16.15% is really good .. but we really need to wait for the 2010 numbers to be published..as they can be skewed by the recovery writeoff's

Recently we did see that GAEL had a 10Cr profit increase between Audited and UnAudited results.

Bhatinda Chemicals also seems to be having similar problems
Audited Results March 2010 (Annual) Net Profit: 2.13Cr
UnAudited Results March 2010 (Annual) Net Profit: 1.12Cr

Thats Right thats a 90.17% positive difference between unaudited and audited results.

Negatives: Very little information available, listed only on BSE, not a liquid counter..

Conclusion: Company seems to have turned around.. stock price has been depressed to keep the investors from converting their warrants at 50 per share. Which basically means we have a company worth more than 50 per share available for 35. A Company with 315Cr Sales, 6.9Cr PBDIT (Profit Before Depreciation,Interest & Taxes) available for Market Cap of 21Cr. Not much that can go wrong with this "Cigar Butt" position. Recommended investment price is around 30-32 levels or lower ..


Culutre blog said...

Hi Deepak
I hold some good number of Rohit Ferro tec shares. CMP is around Rs.50/- What baffles me is that the management is coming out with right (2 shares for 5 shares held) @60/- per share. I am not able ot make any sense out of it? Why should I not buy from market today? Is there anything that I am missing? The company seems to be good fundamentally. Pl.let me know your views.

What'sUp Prahalad said...


No Deepak here .. its WhatsUP or Prahalad.. anyway lets look at Rohit Ferro:
Rohit Ferro Tech
MArket Cap: 277.76Cr
Debt: 316.32Cr (March 2009)
ROCE: 20.48%
Sales March 2010: 824.36Cr

1. Company does need the rights issue as it has quite a lot of debt.
2. 2:5 rights issue means that the dilution will not be much.
3. Company has been growing at a scorching pace..
2005 Net worth: 28.57Cr
2009 Net Worth: 224.25Cr

Promoters own more than 50+% so its not a question of maintaining control in the company..

Book Value is: 56.47
So rights is close to book Value.

Company should be doing better than what is being reported.. Rights issue is required as debt is growing.

Most likely promoter shareholding will increase.. I think the question is will shareholders benefit?

Submerged Arc Furnace route of metal production is expensive as it uses more energy.

Conclusion: Promoter are in acquisition phase .. so prices will be subdued.. If Rights is at a higher price and you are confident of company fundamentals then buy from market at lower price levels..

I would right now I would try to reduce my avg cost of holding as price appreciation will take its time ..

=happy investing

What'sUp Prahalad said...


Visited your blog: If you really want to understand War's then please look at a documentary called "Money Masters"

You will be surprised how "Greed" drives war efforts..

=happy investing

Culutre blog said...

Thanks Prahalad. Sorry for making mistake in your name. I got confused with one of your reader's name. Thanks for reading my blog. I had stoppred this for a while and I shall restart. I shall look at Money Masters.