Sunday, March 4, 2012

BAJAJ HINDUSTHAN - BUY



 
We have discussed stocks from sugar sector few months back when most of them at their all time lows.( For old posting Click HERE) Even if many of them appreciated more than 30 % in an average from that level,there is still chances in this sector for long term investors.Even now there is full of skepticism about this sector and these skeptics are looking only to the negative factors around and not considering the sharp correction in the prices of stocks from sugar  sector. I have mentioned three stocks in my earlier note .Today ,let us take Bajaj Hindusthan which is one of the largest sugar producers in our country.Company having 14 sugar plants in India with a  crushing capacity of 136,000 TCD (tonnes crushed per day) and has Industrial Alcohol/Ethanol producing capacity of 800 KL per day.It also having a co generation facility for producing 428 MW of power.Under three SPV’s ( Bajaj Energy Private Limited, Lalitpur Power Generation Company Limited, Bajaj Power Generation Private Limited )company is in the process of setting up thermal power capacity of 4410 MW in Uttar Pradesh.Its another subsidiary Bajaj Eco-Tec Products Limited (BEPL) is Manufacturing Medium Density Fibre (MDF) boards and Particle boards from sugarcane baggese. BEPL is expected to break even in next few years. This integrated nature of the company is reducing the risk of sugar price volatility to a certain extent. As all of you are aware, sugar companies are currently going through a difficult situation due to price erosion of sugar because of over supply situation.Now in whole sale market ,sugar is traded even below its production cost.But this situation is expected to change in coming years due to crop loss in major producing countries on account of weather conditions,shift of farmers to other crops..etc.In countries like Brazil more cane is expected to divert for ethanol production due to rise in crude prices. All these factors are pointing  to a recovery in sugar prices in next few years.Being a company with huge capacity ,such a situation will immensely benefit Bajaj Hindusthan.In December quarter company posted a loss of Rs.45 Cr .Last year company collected 1,479.75 crore through a rights issue to part finance its various expansion programs and retire a part of its debt. At current market price of Rs.35/- ,Bajaj Hindusthan is a good bet for long term investors with enough patience.

8 comments :

  1. Dear vpji,

    A good script; but profitablity is declining; P/E ratio is near about 200. What appreciation are you projecting?

    Neeraj Sharma

    ReplyDelete
  2. Dear Neeraj

    I already mentioned company is even in loss,then what is the significance of calculating P/E Ratio ?.I don't think Only P/E ratio is the benchmark for buying/selling any stock.Share price movement will be always in tandem with the future earnings and not on the past.

    ReplyDelete
  3. Dear VP,

    What is your call on sintex, BGR? I am holding Sintex @ Rs.120 and BGR @ Rs.500. What would you suggest?

    ReplyDelete
    Replies
    1. Not tracking Sintex,BUY BGR on dips.

      Delete
  4. sir,

    please suggest your views on nile,arshiya international,liberty phospate and nitco

    thanks,
    mathew

    ReplyDelete
  5. Dear Mathew

    Hold all for long term

    ReplyDelete
  6. Dear Sir,
    Can you please shed some light on SURANA CORPORATION
    Regards
    Raghavendra

    ReplyDelete
  7. Dear Sir,

    What would be your advice on Bajaj Hindustan now?

    ReplyDelete

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