Ashapura Minechem earlier recommended as a BUY @ Rs.42 which is currently trading @ Rs.38 . Company reported excellent numbers for the June quarter even excluding exceptional item .On a consolidated basis company reported a turnover of Rs.324 Cr ( last year same period Rs.150 Cr) and a net profit of Rs.49 Cr ( last year same period Rs.88 Lakhs) .(All figures excludig extraordinary items) What is more important is - this stunning performance is reported at a time when the mining and metal industry is going through the worst period in last 10 years.Reiterating BUY at current level with substantial upside potential in long term .Old posting on this stock is re-producing below.
Check latest result HERE
-----------------------------------------------------------------------------------------------------------
This company along with its
subsidiaries are the largest exporters of bentonite from India and one among
the biggest five in the world.In addition to bentonite, company is in the
production of many other minerals like Bauxite , Kaolin,
Attapulgite, Barites..etc.Its major product –Benonite- is widely used in metal
casting, iron ore pelletizing, civil engineering, drilling, paper,
detergents, cosmetics..etc. Bauxite is the basic ore for producing
Aluminium.Company was a darling of investors till 2008 and its share price
(post FV split) was around Rs.400-500 level.A big blow came in the form of the
ban on export /sale of bauxite by the government of Gujarat in
2008-09.Only because of this unexpected ban many issues followed in the form of
forex losses and claims by few shipping companies.Kaolin plant in Kerala went
into trouble on account of some local issues.All these incidents derailed
company’s operations and ends in big losses.New mineral policy announced by
Gujarat Government in 2009 -10 bring clarity in mining policy and
permitted bauxite mining again.But by that time company’s financial health
eroded a lot and it declared as a Sick company in 2012.After many month’s
sincere attempt by the management, now the company is in a recovery mode.Debt
of the company restructured and promoters brought more funds into the
company by way of subscribing 40,00,000 Equity Shares of Rs. 2 each at a price
of Rs. 36.83 per share and 40,00,000 Convertible Warrants to be converted into
equity shares.Claims by shipping companies are challenged by the company in
court and case with one company already settled out of court.Management
of Ashapura expecting a favorable verdict in other cases too.On the financial
front company showing sharp improvement in past few quarters.In latest full
year company reported a Sales of Rs.771 Cr and its bottom line also showing
remarkable improvement even excluding other income component.
Due to environment related issues ,entry of new
players in this segment is not very easy now and probably in future.This
situation giving special advantage for existing miners .I believe ,the testing
time of this company is over and it is the time for a new beginning in the
history of this company .
Link to company website HERE
------------------------------------------------------------------------------------------------------------------------------
Disc: I have vested interest in Ashapura Minechem
Disc: I have vested interest in Ashapura Minechem
Dear VP,
ReplyDeletePlease give your opinion on dena bank, bank of India, yes bank and Steel authority of India at current prise.
NPA issue may hurt banks for some more time .On the other side, stock prices of banks already corrected substantially. One can selectively BUY in SIP route.
DeleteDear sir,
ReplyDeleteWe require your Views & future prospects on Mangalam cements/orient bell results & your disclaimer whether to hold or sell or buy. kindly quote sir, we are expecting your heartfelt views.
Considering the current situation of our economy ,performance of both cos are satisfactory .But not expecting any big up move from any sectors directly or indirecly connected with interest rate
ReplyDeleteDear VP,
ReplyDeleteI got a letter from KSB pumps inviting 150 shareholders(selected by lottery) for a factory visit in Pimpri and Chinchwadi on Sept 20th. It is a good gesture by the company :).
BR,
Shankar.
Go for it and try to collect more info about the working and future plans of the co.
DeleteDear Sir,
ReplyDeleteIs it advisable to buy banaras beads at cmp considering the dividend yield and its niche segment.
Thanks,
Ash
Stock is in PCA and no chance to come out based on current benchmarks.So one may avoid due to low liwuidity.
DeleteThank You Sir.
DeleteAsh
dear sir,
ReplyDeleteplz share with us your views on MRF...this quarter results were very encouraging with 50% NP growth..i m holding at CMP...this is the second time i m posting...hoping to get a reply...thnx in advance..u r doing a wonderful job...
NOt tracking MRF
DeleteDear Sir,
ReplyDeleteCurrent Net worth of above mentioned company is in negative with substantial amount of debt, is it still good investment ?
Don't expect a company like this at this price without these negatives.I believe worst is over for this Company.
DeleteHi valupick,
ReplyDeleteThanks for a very informative and helpful blog.
Around 86% of promoter holding is pledged in ashapura minechem. Is that a concern? Is the rehabilitation scheme filed with bifr? Sometimes existing equity may get cancelled under the scheme. pls share your views on these concerns.
I don't think pledge is a concern for this company.Major portion of pledge created when its share price was around its life time low .I beleve company's performance is improving hereon and chances are very limited for a pledge invocation due to margin call.
DeleteDear Sir,
ReplyDeleteBanks have corrected substantially from their respective highs over last 6 months. Main problem is the RBI tightening and the NPA's. In private banks Yes and Indus Ind bank look extremely attractive and is psu's Syndicate bank and Dena bank look promising considering their NPA's with reference to other psu banks.
Kindly let me know your views pls.
Thank you,
Ash
One can add banks with reasonably good balance sheet in SIP mode for long term
DeleteDear Sir,
ReplyDeleteHonda Siel Power Products has dropped below Rs 350 & is trading now @ 330 levels. Is it a good buy now or still more correction expected ?
Thanks
-Shreerang
Frequent fuel price hike may impact business growth od Honda Siel.
DeleteHai Sir,
ReplyDeleteWhat is your opinion about Firstsource Solutions, it is worth to hold.
Dear Value Pick
ReplyDeleteI am invested in Sintex for last six months. The stock price fallen to Rs. 20-24/-. What is your view on Sintex.
Ranjan.
Kolkata