As investors, often we observe the irrationality of the market and unconsciously , we contribute to the same. A stock " A " which was extremely attractive at price " X" becomes a " No " when it is available at price X/2 ... in spite of exceptional performance in the past. Here is one stock I recommend strongly - PTC India Financials.. with reasons.I expect it to be a multibagger in 03 years .
1. IPO : - IPO was in Mar 2011 ... about 6 months back at Rs 26. It was oversubscribed by about 02 times. Prior to the IPO the company raised 658 million rupees by placing 23.5 million shares with three anchor investors -- HSBC Bank Mauritius Ltd, Capital International Emerging Markets Fund and Emerging Markets Growth Fund Inc (very close to the IPO price)
2. The stock is available at less than Rs. 13. How has the company performed in the last two quarters. The gross revenue recorded in H1 FY12 was `97.07 crores, which is 89% of the gross revenue recorded in the entire FY11. Similarly, interest income on debt recorded in H1 FY11 was `54.09 crores which is 73% of the interest income on debt in entire FY11
3. Purely on performance , the company has performed exceptionally and more so in a period that is extremely challenging. . Typically such companies are valued on P/BV . PTF is available at a P/BV of 0.72. While its peers are at 1.5 or more
4. Whats more important is the business model. The company not only lends money to power projects but also has a equity stake in many ventures. So its valuation should be in between finance companies and power generation companies. That would make it more attractive.
5. At a market cap of 1200 crores (including debt), the company is giving annual profits of 100 crores plus .MFs have no stake (FII do have a stake even before IPO) , but give it sometime and as its cap increases you will see the MFs taking positions. Reputed analysts such as Aditya Birla Money have given target price of 26 .
6. It may be mentioned that post Q2, on October 05, 2011, the Company has concluded sale of investment . In accordance with the applicable accounting standards, gain of `47.61 crores arising on this transaction would be recognized in the subsequent quarter i.e. Q3. This is almost equal to a full quarters profit
7. I expect the company to start paying dividends from this FY. Make hay when the market is irrational!!!!!
1. IPO : - IPO was in Mar 2011 ... about 6 months back at Rs 26. It was oversubscribed by about 02 times. Prior to the IPO the company raised 658 million rupees by placing 23.5 million shares with three anchor investors -- HSBC Bank Mauritius Ltd, Capital International Emerging Markets Fund and Emerging Markets Growth Fund Inc (very close to the IPO price)
2. The stock is available at less than Rs. 13. How has the company performed in the last two quarters. The gross revenue recorded in H1 FY12 was `97.07 crores, which is 89% of the gross revenue recorded in the entire FY11. Similarly, interest income on debt recorded in H1 FY11 was `54.09 crores which is 73% of the interest income on debt in entire FY11
3. Purely on performance , the company has performed exceptionally and more so in a period that is extremely challenging. . Typically such companies are valued on P/BV . PTF is available at a P/BV of 0.72. While its peers are at 1.5 or more
4. Whats more important is the business model. The company not only lends money to power projects but also has a equity stake in many ventures. So its valuation should be in between finance companies and power generation companies. That would make it more attractive.
5. At a market cap of 1200 crores (including debt), the company is giving annual profits of 100 crores plus .MFs have no stake (FII do have a stake even before IPO) , but give it sometime and as its cap increases you will see the MFs taking positions. Reputed analysts such as Aditya Birla Money have given target price of 26 .
6. It may be mentioned that post Q2, on October 05, 2011, the Company has concluded sale of investment . In accordance with the applicable accounting standards, gain of `47.61 crores arising on this transaction would be recognized in the subsequent quarter i.e. Q3. This is almost equal to a full quarters profit
7. I expect the company to start paying dividends from this FY. Make hay when the market is irrational!!!!!
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