Saturday, August 10, 2013

ASHAPURA MINECHEM - REPEAT













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

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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



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 Disc: I have vested interest in Ashapura Minechem

21 comments :

  1. Dear VP,
    Please give your opinion on dena bank, bank of India, yes bank and Steel authority of India at current prise.

    ReplyDelete
    Replies
    1. 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.

      Delete
  2. Dear sir,

    We 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.

    ReplyDelete
  3. 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

    ReplyDelete
  4. Dear VP,
    I 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.

    ReplyDelete
    Replies
    1. Go for it and try to collect more info about the working and future plans of the co.

      Delete
  5. Dear Sir,

    Is it advisable to buy banaras beads at cmp considering the dividend yield and its niche segment.

    Thanks,
    Ash

    ReplyDelete
    Replies
    1. Stock is in PCA and no chance to come out based on current benchmarks.So one may avoid due to low liwuidity.

      Delete
  6. dear sir,

    plz 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...

    ReplyDelete
  7. Dear Sir,

    Current Net worth of above mentioned company is in negative with substantial amount of debt, is it still good investment ?

    ReplyDelete
    Replies
    1. Don't expect a company like this at this price without these negatives.I believe worst is over for this Company.

      Delete
  8. Hi valupick,
    Thanks 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.

    ReplyDelete
    Replies
    1. 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.

      Delete
  9. Dear Sir,

    Banks 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

    ReplyDelete
    Replies
    1. One can add banks with reasonably good balance sheet in SIP mode for long term

      Delete
  10. Dear Sir,

    Honda 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

    ReplyDelete
    Replies
    1. Frequent fuel price hike may impact business growth od Honda Siel.

      Delete
  11. Hai Sir,
    What is your opinion about Firstsource Solutions, it is worth to hold.

    ReplyDelete
  12. Dear Value Pick

    I am invested in Sintex for last six months. The stock price fallen to Rs. 20-24/-. What is your view on Sintex.

    Ranjan.
    Kolkata

    ReplyDelete

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