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Friday, October 01, 2010

Batliboi: Watch and Buy at lower levels.


Batliboi  http://www.batliboi.com/
Current Market Price: Rs 35
Market Capitalization: 100.39Cr
Reserves: 31.29Cr
Total Debt: 50.82Cr
Sales March 2010: 98.19Cr
Gross Profit: 3.01Cr
Net Profit: -ve 4.12Cr
Batliboi is one of the oldest engineering companies in India. Its area of operations are Machine Tools division, Textile Air Engineering, Textile Machinery, Air Conditioning, Environmental Engineering, Wind Energy, Motors, International Marketing, Logistics.

Batliboi has in recent years acquired
- Quickmill - A leading manufacturer of large area CNC Gantry and Bridge Milling and Drilling Machines is based in Peterborough, Canada http://www.quickmill.com/
- AESA Air Engineering, SA, France. - is one of the premier global companies in the business of Air Engineering for Textiles, Paper and Tobacco industries http://www.aesa-ae.com/

On first look the company seems to be on a perpetual decline and has been reporting losses for 2009 and 2010 that might just be the case but with 81.73% shareholding by the promoters is there something we are missing.

Consolidated revenues provide some data. Consolidated numbers for Year ending March 2010:
Consolidated Sales: 197.50Cr
PBDIT: 5.58Cr
Net Profit: -ve7.84Cr

Consolidated levels also we donot see the profits.. however cash flows from Operations for year ending March 2010 and March 2009 are positive 12.09Cr and 11.66Cr respectively.

Company does have 24.3Cr worth of Free hold land and 18.50Cr of buildings.

Conclusion: All said and done it is really tough to say Batliboi is a value buy .. but I am looking at the promoters (80+% shareholding) and cash flow (12Cr) of the company which gives me confidence to invest in the Batliboi stock at these levels. Once the company starts reporting profit we can expect Batliboi to quote at 1 times Consolidated Sales which will be close to 300Cr The land bank is something of a bonus ..so right now its a Cigar Butt and we can get a few puffs from this stock. It will however take a 2-3 year horizon to really get some good value from batliboi

PN: These are my personal views and opinion.. please do your own deep dive before investing.

13 comments:

Anonymous said...

Do you know anything about management quality, Also stock seems to be illiquid.

One more thing is they complain about margin pressures in their annual report

Any Thoughts..........

What'sUp Prahalad said...

Anonymous:

Promoters own 81% so yes not much in the hands of the public..

Margin: Yes for the past 2 years ie 2009 and 2010 company ROCE has fallen.

It is not the best of picks.. but can give you some good returns if they can take advantage of the Quickmill and AESA Air engineering.

Also on 18th August 2010 1,93,900 shares and 50,000 shares were issued to Nirmal Bhogilal and Pratap Bhogilal as 1:1 bonus.. I wonder why?

There is a lot of unknowns..management is the same all along and should be fair ..

=happy investing
whatsup-indianstockideas.blogspot.com

Purushottam said...

Prahalad:

Batliboi Limited has informed the Exchange that at the Board Meeting held on October 30, 2010 the Board considered and approved : (1) Issue of Redeemable Non Cumulative Preference Shares by the Company to promoters..

Why do company issue redeemable non-cumulative preference shares?
Can you please put your view...

Purushottam said...

Prahalad:

The consolidated balancesheet shows the Net profit as -6.09 lakhs to last years -100 lakhs.. Seems like coming quaters we can expect good results... Your suggestion of holding it for long term seems to be working...

What'sUp Prahalad said...

Purushottam:

The stock is cheap no doubt..
Preferential capital is generally issued to raise capital and sometimes to milk the business .. off its earnings in the form of interest..

Look at arvind products.. it is the largest player in voiles (blouse piece used with sarees..) and has a lot of great assets.. but will be always reporting losses because of the preferential capital.. (-ve)

Preferential capital is also issued to tide over high cost debt..
This could be the reason why batliboi is issuing preferential capital.. cause the company does have debt and credit markets are tightening..

Batliboi is a good stock to buy cheap as promoter holding is large and its well established in its line of business.. and has acquired assets which can become productive..

=happy investing
whatsup-indianstockideas.blogspot.com

chetan said...

I am buying BAtliboi just because of its huge huge current market price of multiplr lacs mtr factory land not costing less than couple of few hundres crores on 3 digit. Just see view of Surat Factory. It can cover thousnads of small units. Just compare neighbour locations. Just grab it.
http://wikimapia.org/#lat=21.1430002&lon=72.851876&z=17&l=0&m=b

Purushottam said...

Prahalad:

The quaterly balance Sheet of Batlioboi is amazing..
Standalone Sales: 338.92 .
Net Profit :17.43 (increase of 400% from Last quarter of 5.31).
Operating Profit Margin 11.21

I would say a buy .. What would you suggest..?

What'sUp Prahalad said...

Chetan Bhai:

You buy a stock for the business.. not for the land..

Its quite possible that the land valuation will never materialize..

All said and done batliboi is a good company available cheap.. but value unlocking will take some time..

generally you need an investor/operator to enter long term to push stocks.. look at VIP and Venky's .. its because of consistent push to stock price that the stock will enter the next levels..

Batliboi will also do but need patience.. there is value and it can be unlocked for sure..

=happy investing
whatsup-indianstockideas.blogspot.com

What'sUp Prahalad said...

Purushottam:

Yes its a value buy.. but buy on dips.. that is the suggestion..

Company no doubt will deliver..
and its a value buy..

=happy investing
whatsup-indianstockideas.blogspot.com

chetan said...

NIrmal Bhogilal of Batliboi is important person on board of Director of HCC ( Hind Const Company) as per data from other board and I also checked HCC balamnce sheet today. This is very potentila that he is respectable since Batliboi exits since last 123 years. LAnd in Surat has tremendous value. They will shift opeartion sooner or later. That's why they hold 82 % and keep on increasing.
My tage is too high is we consider property value.

What'sUp Prahalad said...

Chetan:

land story is always a possibility..
lets wait and watch .. I do have some Batliboi in my portfolio

chetan said...

yes , and it is always wise decision to switch to other location for their actual size need and they can encash this multi cr hidden treasure.

What'sUp Prahalad said...

Chetan Bhai:

there was another company called
Bhoruka Gas with property next to
brigade Metropolis in bangalore..
http://wikimapia.org/1112034/Bhoruka-Gases-Ltd
I had bought a ton of shares at around 30.. they delisted the company at 40 levels..

Bhoruka gases was a very bad experience.. because during this period it got delisted and I actually had to wait for more than a year after delisting and finally gave in..

this land is in the heart of bangalore.. and was easily worth atleast Rs 500 per share..

That is why land bank stuff is really difficult to cash out.. unless the management wants you to be part of the game..

Batliboi is a good company no doubt .. but its the manufacturing assets that make it valuable .. land is a bonus..

=happy investing
whatsup-indianstockideas.blogspot.com