vishal_1986
Par 100 posts (V.I.P)
A fresh buy call is now initiated on the stock in view of the facts discussed hereunder.
Gayatri Projects Ltd. (GPL) has filed a revised prospectus dated March 29, 2006 with SEBI on April 4, 2006 which can be accessed at the following link:
www.sebi.gov.in/dp/gayatridraft.pdf
Videocon Appliances Ltd. (VAL) (BSE Code 500945, NSE Code VDOCONAPPL)had sold 4.6 lakh shares to IL&S Private Equity Fund. As per the revised prospectus, the company has sold a further 3 lakh shares to 2i Capital PCC in another private equity deal. According to sources, both these deals took place at Rs.285 per share.
VAL's investments in GPL were not reflected in the former's annual report. However, the latest annual report of VAL for the Y.E. September 30, 2005 clearly shows these investments. Further, the carrying value has been shown as NIL, which means that the entire sale proceeds will go to VAL's bottomline.
The VAL Board meets today to declare results for the March 06 quarter. The gains from the above transactions will add pre-tax profits of Rs.6.52 per share for this quarter.
The remaining 9.5 lakh shares will be sold in the proposed IPO cum-offer for sale.
The final dates for the issue has not yet been announced but one can safely expect the GPL IPO to hit the markets in the first half of May 06.
The pricing, as I had mentioned earlier was likely to be in the region of Rs.330 to Rs.350. According to sources, the minimum price for the IPO will be Rs.315 per share.
Accordingly, in the June quarter, this will add another Rs.9.02 per share to pre-tax profits.
The overall debt burden will come down by around 10% and the recurring interest costs (which were very substantial) will come down to the same extent.
The adjusted book value is around Rs.140 per share.
The EPS for the Y.E. September 30, 2006 is expected to be more than Rs.20 per share.
Another possible trigger for the stock would be a merger of VAL with Videocon Industries Ltd.
In line with past trends, there is every likelihood that this merger will happen, going forward. Since both book value and market price will be considered for the purpose of the swap ratio, VAL should be a clear beneficiary and the swap ratio can be safely expected to be skewed towards VAL.
Although no merger plans have been announced as of now, if the group's bid for Daewoo succeeds, then the merger should happen sooner than later.
Since Videocon Industries Ltd. has a stronger balance sheet, the acquisition of the consumer-durable major Daewoo will be routed through it and not through VAL, in spite of the fact that the business model of Daewoo overlaps with VAL.
In such circumstances, there would be synergistic benefits in the event of the merger.
The most opportune time to buy the stock is now.
The stock can be reasonably expected to retest its recent high of Rs.42.80 and possibly surpass that.
The movement should be in 3 spikes as under:
1) When the March quarter results are announced in a short while from now.
2) When the GPL IPO price and date are announced in a few days from now.
3) When the GPL IPO opens early next month, around which time profits can be booked.
Gayatri Projects Ltd. (GPL) has filed a revised prospectus dated March 29, 2006 with SEBI on April 4, 2006 which can be accessed at the following link:
www.sebi.gov.in/dp/gayatridraft.pdf
Videocon Appliances Ltd. (VAL) (BSE Code 500945, NSE Code VDOCONAPPL)had sold 4.6 lakh shares to IL&S Private Equity Fund. As per the revised prospectus, the company has sold a further 3 lakh shares to 2i Capital PCC in another private equity deal. According to sources, both these deals took place at Rs.285 per share.
VAL's investments in GPL were not reflected in the former's annual report. However, the latest annual report of VAL for the Y.E. September 30, 2005 clearly shows these investments. Further, the carrying value has been shown as NIL, which means that the entire sale proceeds will go to VAL's bottomline.
The VAL Board meets today to declare results for the March 06 quarter. The gains from the above transactions will add pre-tax profits of Rs.6.52 per share for this quarter.
The remaining 9.5 lakh shares will be sold in the proposed IPO cum-offer for sale.
The final dates for the issue has not yet been announced but one can safely expect the GPL IPO to hit the markets in the first half of May 06.
The pricing, as I had mentioned earlier was likely to be in the region of Rs.330 to Rs.350. According to sources, the minimum price for the IPO will be Rs.315 per share.
Accordingly, in the June quarter, this will add another Rs.9.02 per share to pre-tax profits.
The overall debt burden will come down by around 10% and the recurring interest costs (which were very substantial) will come down to the same extent.
The adjusted book value is around Rs.140 per share.
The EPS for the Y.E. September 30, 2006 is expected to be more than Rs.20 per share.
Another possible trigger for the stock would be a merger of VAL with Videocon Industries Ltd.
In line with past trends, there is every likelihood that this merger will happen, going forward. Since both book value and market price will be considered for the purpose of the swap ratio, VAL should be a clear beneficiary and the swap ratio can be safely expected to be skewed towards VAL.
Although no merger plans have been announced as of now, if the group's bid for Daewoo succeeds, then the merger should happen sooner than later.
Since Videocon Industries Ltd. has a stronger balance sheet, the acquisition of the consumer-durable major Daewoo will be routed through it and not through VAL, in spite of the fact that the business model of Daewoo overlaps with VAL.
In such circumstances, there would be synergistic benefits in the event of the merger.
The most opportune time to buy the stock is now.
The stock can be reasonably expected to retest its recent high of Rs.42.80 and possibly surpass that.
The movement should be in 3 spikes as under:
1) When the March quarter results are announced in a short while from now.
2) When the GPL IPO price and date are announced in a few days from now.
3) When the GPL IPO opens early next month, around which time profits can be booked.