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Bhagyanagar Metals (BML) (Code No: 512296) (Rs.35) is attracting great interest by some investors due to some new developments in the company. Belonging to the Surana Group of the South BML with well-diversified profitable business portfolio has recently bagged a Rs.384 cr. project for the construction of a 52-acre township on land allotted by the Andhra Pradesh Housing Board. It is partnering with the Banglore-based Salapuria group for this project. BML has recently forayed into the realty sector and is exploring options for development of underutilized industrial land.
Incorporated in 1985, BML started with the manufacture of non-ferrous metal products like copper rods and lead sleeves. The product profile now includes enamelled and paper-covered copper strips, Jelly Filled Telecommunication Cables (JFTC), Poly Insulated Jelly Filled Telephone Cables, Copper Wire Rods and Conductors. Lucas, TVS, BHEL, Crompton Greaves and Sahney Paris use its enamelled and paper-covered copper strips. Given its foresight, BML has started working with advanced, diversified technologies like assembling and trading of CDMA and GSM handsets. It has entered into memorandum of understanding (MoU) with LG Electronics to supply wireless handsets.
During FY05, BML achieved 63% increased sales of Rs.139 cr. and posted 185% higher net profit of Rs.22.2 cr. yielding an EPS of Rs.5.9 on the face value of Rs.2 per share and paid a dividend of 25%. During Q3FY06, its sales jumped by 94% and net profit remained almost stagnant at Rs.7.2 cr. During the three quarters of the current year, BML has reported 14% lower net profit of Rs.17 cr. on 7% higher sales of Rs.141 cr.
BML is in sound financial health. Against its small equity capital of just Rs.7.4 cr., the book value of the share works out to Rs.26.6 on face value of Rs.2 per share. The value of its gross block is Rs.70.7 cr. With borrowings of just Rs.14.5 cr., the debt-equity ratio works out to 0.17:1. The company has a track record of rewarding its shareholders. It has to its credit three liberal bonus issues all in fairly good proportions. 1991-1:1, 1993-3:2 and in 1994, 2:1. The promoters hold 55% in its equity, 10.2% is held by NRIs, FIs hold 1.6%. Non-promoter corporate holding is 5.2% leaving 28% with the investing public.
The world is demanding more from wireless communication technologies than ever before especially in the Asian Pacific Region. More people around the globe are subscribing to wireless services and consumers are using their phones more frequently. Add in exciting 3rd generation (3G) Wireless Data Services and applications such as wireless email, Web, Digital photography & transmission and wireless networks are expected to do more than just a few years ago.
This is where CDMA Technology fits in perfectly. CDMA consistently provides better capacity for wire and data communication than other commercial mobile technology, allowing more subscribers to connect at any given time and it is the common platform on which 3G Technologies are hit.
BML is planning to venture into manufacture of copper pipes and foils for solar heaters. As far as its existing copper business is concerned, it is very positive and expects good growth in years to come. The demand for telecom related products is based on the positive growth in the telecommunication sector. In the copper segment, BML is presently catering the fast growing auto-ancillary and electrical sectors, both of which are growing far in excess of the economy.
Keeping in view the present trend of growth of telecom networks and the teledensity to be achieved by the end of 10th Five Year Plan targeted at 11.5%, the annual compound growth rate of telephones (Fixed & Cellular) would work out to around 22%, which will influence the future of the telecom companies, which is very positive.
BML is planning to restructure its business in order to give adequate focus to the Telecom, Metals, and Investment & Infrastructure businesses. It is in the process of demerging its business in the separate entities.
Based on the three quarters of FY06, BML is likely to maintain the EPS of Rs.6 on face value of Rs.2 per share. Currently, the shares of BML are available at a prospective P/E of just 5.8. Applying a conservative P/E of just 10 into the estimated EPS of Rs.6 for FY06, the share has the potential to cross the Rs.60 yielding an appreciation of about 70% in the next nine-to-twelve months. In view of the diversified business, its foray into the realty segment, its low equity and the low P/E of the share coupled with sound financial and better prospects of the segments, the BML share can be bought for decent appreciation in the medium-to-long term. The 52-week high and the low of the share has been Rs.42/23.
Incorporated in 1985, BML started with the manufacture of non-ferrous metal products like copper rods and lead sleeves. The product profile now includes enamelled and paper-covered copper strips, Jelly Filled Telecommunication Cables (JFTC), Poly Insulated Jelly Filled Telephone Cables, Copper Wire Rods and Conductors. Lucas, TVS, BHEL, Crompton Greaves and Sahney Paris use its enamelled and paper-covered copper strips. Given its foresight, BML has started working with advanced, diversified technologies like assembling and trading of CDMA and GSM handsets. It has entered into memorandum of understanding (MoU) with LG Electronics to supply wireless handsets.
During FY05, BML achieved 63% increased sales of Rs.139 cr. and posted 185% higher net profit of Rs.22.2 cr. yielding an EPS of Rs.5.9 on the face value of Rs.2 per share and paid a dividend of 25%. During Q3FY06, its sales jumped by 94% and net profit remained almost stagnant at Rs.7.2 cr. During the three quarters of the current year, BML has reported 14% lower net profit of Rs.17 cr. on 7% higher sales of Rs.141 cr.
BML is in sound financial health. Against its small equity capital of just Rs.7.4 cr., the book value of the share works out to Rs.26.6 on face value of Rs.2 per share. The value of its gross block is Rs.70.7 cr. With borrowings of just Rs.14.5 cr., the debt-equity ratio works out to 0.17:1. The company has a track record of rewarding its shareholders. It has to its credit three liberal bonus issues all in fairly good proportions. 1991-1:1, 1993-3:2 and in 1994, 2:1. The promoters hold 55% in its equity, 10.2% is held by NRIs, FIs hold 1.6%. Non-promoter corporate holding is 5.2% leaving 28% with the investing public.
The world is demanding more from wireless communication technologies than ever before especially in the Asian Pacific Region. More people around the globe are subscribing to wireless services and consumers are using their phones more frequently. Add in exciting 3rd generation (3G) Wireless Data Services and applications such as wireless email, Web, Digital photography & transmission and wireless networks are expected to do more than just a few years ago.
This is where CDMA Technology fits in perfectly. CDMA consistently provides better capacity for wire and data communication than other commercial mobile technology, allowing more subscribers to connect at any given time and it is the common platform on which 3G Technologies are hit.
BML is planning to venture into manufacture of copper pipes and foils for solar heaters. As far as its existing copper business is concerned, it is very positive and expects good growth in years to come. The demand for telecom related products is based on the positive growth in the telecommunication sector. In the copper segment, BML is presently catering the fast growing auto-ancillary and electrical sectors, both of which are growing far in excess of the economy.
Keeping in view the present trend of growth of telecom networks and the teledensity to be achieved by the end of 10th Five Year Plan targeted at 11.5%, the annual compound growth rate of telephones (Fixed & Cellular) would work out to around 22%, which will influence the future of the telecom companies, which is very positive.
BML is planning to restructure its business in order to give adequate focus to the Telecom, Metals, and Investment & Infrastructure businesses. It is in the process of demerging its business in the separate entities.
Based on the three quarters of FY06, BML is likely to maintain the EPS of Rs.6 on face value of Rs.2 per share. Currently, the shares of BML are available at a prospective P/E of just 5.8. Applying a conservative P/E of just 10 into the estimated EPS of Rs.6 for FY06, the share has the potential to cross the Rs.60 yielding an appreciation of about 70% in the next nine-to-twelve months. In view of the diversified business, its foray into the realty segment, its low equity and the low P/E of the share coupled with sound financial and better prospects of the segments, the BML share can be bought for decent appreciation in the medium-to-long term. The 52-week high and the low of the share has been Rs.42/23.