Tuesday, April 12, 2011


Nowadays I am receiving lot of queries regarding the strategy to be followed on EPC Industrie Ltd ( BSE Code - 523754) . I have recommended this company @ Rs.61/- in last August (Old posting  HERE ) which is currently quoting around Rs.140/- . In my old post ,I clearly mentioned that EPC is a potential takeover target by big players. As expected ,auto major Mahindra and Mahindra ( M & M) took over this company by subscribing 65,58,065 Equity Shares @ Rs.66.10/- . Mandatory open offer for another 20 % is currently going on . On the new equity base of 17 Cr .M&M will hold close to 38 % , two foreign P/E players will hold 32 % ,old promoters will hold 16 % and the general public  will hold 14 % .On completion of the open offer ( nothing is expected to get since market price is above open offer price) , share holding will be re classified so as M& M will be the new promoters and old promoters will be moved to public category. In many of the recent interviews Mahindra's indicated their decision to concentrate in futuristic industries other than Automobile.Takeover of EPC is a bold decision in this direction.The potential of Micro irrigation in India is huge and a major portion is still untapped .As on date there is only one major player in the listed space ,ie,Jain Irrigation.Due to lack of sufficient working capital EPC could not tap the opportunities available even if it an  approved supplier to the Micro irrigation projects initiated by Gujarat and Andhra Pradesh State governments .Last year central government upgraded its micro irrigation  scheme to a national mission with an outlay of Rs 8032.90 Crore .Recent fund infusion by M&M is really a game changer for EPC which currently having a debt burden of around 30 Cr.It is indicated  that the fund raised through preferential issue will be utilized for repayment of debt , working capital requirements, capacity expansion and implementation of new generation drip irrigation technology .Moreover,doing micro irrigation projects on a turnkey basis is the money spinner now and many private parties are demanding such models .Till now EPC lacks the money power and other facilities to execute such projects ,but the situation will change in future. As a coincident , M & M recently de-merged its agri related business division Mahindra Shubhlabh Services Limited.This de-merged entity is handling  M &M's Agri Inputs Business, produces and distributes seed, seed potato ,selling  crop care products and also handling contract farming in large area for  Basmati, Maize, Barley, Cotton, Moong, Soybeans, Durum, Hyola ..etc  and other oilseeds such as Sunflower and Mustard. At this stage there is no chance for a merger of both these companies ,but we can't ruled out an integration of all the agri related businesses under the fold of  the listed EPC Industries in future.

Another point is ,tracking the trading pattern and price movement of EPC Industrie in the past few months ,I strongly feels that huge accumulation is happening in this counter even at a level double to the open offer price by  M & M . In nut shell,In the hands of a management like M & M with large network of agriculture related business( Tractor) , good reputation with money power - EPC Ind having a chance to grow by leaps and bounds especially at a time the parent is seriously thinking beyond their conventional auto business.So one should hold the stock at current level and try to add in small lots if there is any correction below Rs.120/- due to the over all weakness of the market. If everything clicks well and you have patience , EPC Ind may go even beyond your imagination. CMP is Rs.140/-                                                                                                                                                                                                                                                               


  1. Hi Sir
    After a long I can see profilts in my portfolio, i.e. just because of you only. Thanks a lot.

    Can you pls give me your valuable suggestion on Allied Digital Services Ltd.


  2. Dear Shaik

    Thanks for your kind words.You should review the performance of the companies ( not price of share but cos financials and future prospects ) periodically and take decisions accordingly. Not tracking Allied Digital ,so not in a position to comment about it.

    Happy investing

  3. Thanks V,
    I have been holding this one from 50 odd levels.

    Time and its results will tell us whether it can be another Jain.


  4. I think its tough to find value picks at current market levels where Nifty is above P/E of 22.

    Expecting to see such rare value picks even in current market levels from you.


  5. Also setup a feedburner widget so that we can subscribe to ur posts by e-mail.


  6. dear value pick,

    i invested in five of your reco,
    EPC, roto pumps, aries agro, polymedicure and TWR.

    happy to see that slowly all are turning around.

  7. Dear Neeeraj

    Which one is TWR ?.Hope you have already doubled your investment in EPC and Poly Medicure which recommended at 61 and 130

    Happy investing

  8. Dear VP Ji

    What are your views on Rungta Irrigation? You have already recommended it in the past.

    The reason for asking you this is because the floating stock is very less in the market. The promoters hold 38% and 45% is held by private corporate bodies.

  9. Hi,

    Can I still buy Vimal Oil and zFood and Roto Pumps though they have alredy run high after your recommendations

  10. dear vpjee

    what are your views on prajay engineers?

  11. Hi VP
    what are your views on ramsarup industries
    i am stuck at @50
    should i hold or sell?

  12. Dear VPJI,

    could you please give your views and advise on EID PARRY?

    Neeraj Sharma.

  13. Please comment on Jain irrigation, Its a major part of my portfolio bought at 205, what to do book loss or keep for one year.


  14. Dear Ansh

    Buy Rungta if you have sufficient patience

  15. Skeptical on the management of Prajay Engineers

  16. Not tracking Ramsarup strictly, take a decision on it only after the details of debt restructuring which may happen in near future.

  17. Dear Sharma

    Not tracking EID Parry

  18. Dear Ronald
    Jain Irrigation is a good stock to hold ,but difficult to advice with a time limit as mentioned by you.

  19. can one buy DCB here @ cmp?
    RJ added.

  20. Dear Madhu

    Buy on a consolidation and hold for LT

  21. Sir,
    Can we buy EPC ind at CMP or a better price to add for long term portfolio?



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