Binani Industries (Rs. 117) (Code : 500059)
Target Price = Rs.182 ; Time Frame = 6months ;
Market Cap = 347 crores ; Shares O/S. = 2,95,96,425
Debt/Equity Ratio = 0.52 : 1 ; 52 week High/Low = 143/47
Face Value = Rs.10 ; B.V. = Rs. 68 ; P/E = 1.9 ; P/B: 1.7
The Braj Binani Group is a well-diversified industrial house with a 136-year history behind it. Today, the group is actively working in the core sectors of Cement, Zinc, Glass Fibre and Downstream Composite Products.
Binani Industries Ltd. is essentially a holding & investment company and currently holds strategic stake in listed entity Binani Cements and various unlisted entities like Binani Zinc, Goa Glass Fibre and BT Composites. While calculating NAV of BIL we have valued
Binani Cements at Market Value and all unlisted companies like Binani zinc, Goa Glass Fibre and BT Composites at historical price as they are still unlisted. Still at CMP of Rs.117, the stock is available at 68% discount to its NAV which seems to be quite attractive. Also at this price its dividend yield is 2.54%. At the current price of Rs.117, the stock is trading at 1.7x FY11E earnings. Return for investors in these companies can be two fold driven by appreciation of its investments and decrease in discount. Holding company generally trades at discount but here what we believe is that BIL is trading at a discount much higher than its historical average of 50%. We expect the discount to decrease and move towards its historical average of 50% as investors would flock towards buying these undervalued companies, keeping in mind sharp recovery in the stock market and improved sentiments. We recommend BUY with a price target of Rs.182 (50% of Current NAV per share) given the company’s holdings in subsidiaries and future growth potential.
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