According to my sources company is likely to receive more then 200 crore post tax which is higher then its current market cap,also investors who visited their kasarwadi plant said all machinery has been shifted to dahej before some time
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Updated note on Dai-ichi
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I have the following basic questions :
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Assuming that the cash received, after selling the Pune land, is not allocated for any further expansion OR in any manner that can lead to increase in EPS., how would the shareholders benefit from such a land sale ?
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Also, the current land holding value is less than M-cap of the company.
What would that translate to in the future times ?
I have been tracking the land monetisation progress for quite some time now and as mentioned by several boarders the parcel is very well located with the metro stop also in close proximity. These kind of parcels are hard to come by. Due to the metro there is a strong possibility of an increased FSI in addition to its attraction as a commercial development due to its location (leading to higher realizations per sqft).
We will have to wait and see how and when the parcel gets developed (if it happens). Labour issues have not been completely resolved as per my understanding however the location of the parcel is quite sumptuous even to a layperson well versed with that area
On the technical front, the stock price has formed a good flag pattern which may signal a reversal with a nice moving average crossover leading to a positive looking chart.
The AR is also cautiously positive in its outlook and it looks like the move from kasarwadi to dahej is moving slowly but firmly ahead.
Disc - recently invested hence biased.
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Note on DAICHI …it seems Godrej could be the buyer
My personal view is that if the land gets sold it will be at a price which is in line with land prices in that area and would be well within the current market cap of the co. Mostly big ticket deals like these are brokered by IPCs and they advise the client on the highest and best use of the land. It is interesting to note that if the land gets sold outright then the co would have taken the less remunerative route to monetize the land as a JV would have yielded much more given the land potential. This in turn would indicate that the co mgt is more interested in the core operations than becoming a JV partner to a developer which is a good sign. The co has indicated it’s intent to reduce debt after the land deal and that in my view will set the stage to a smooth transition to dahej.
Important update on Daichi & Shreedigvijay cement uploaded on our blog
I am not able to see sales growth, not quite sure why did they do the capex? Is the capex demand driven? Any idea?
https://www.bseindia.com/corporates/anndet_new.aspx?newsid=d216a10c-0d5c-40a1-a788-644c73d53e22
The unrecognised labour union has been paid 3.65 Cr to withdraw all their suits. Good to see the impasse finally come to an end. On a lighter note I think the labour union just got a tired of the heavy Pune rains and decided to move on 
The rest of the discussion around possible valuation and Godrej etc is all speculation and unsubstantiated. The land in question is industrial land in an urban area and hence subject to the ULC act. So a host of permissions are needed and there is going to be govt involvement as it’s bang opposite the metro station.
regards
Bheeshma
PS : invested and hence views biased.
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prima facie the results look good, Topline has improved by 32% yoy and now stands at 27.2cr for the quarter. Gross margins have also improved to 34.7% compared to 33.6% yoy. The co has accounted for the exceptional item of 3.65 cr concerning the labour payoff.
The mgt has in the past has spoken about growing by 30-35% in 2019 so results seem to be reflecting that. Hopefully breakeven at EBITDA level should be achieved soon. The 6 mthly cash flow position also looks good. I feel the results are in line with what the mgt has said and considering its a conservative debt averse mgt , when the land monetization takes place a major part of the debt can be repaid.
Technically, the stock price has been correcting but on very low volumes. Todays volume was just 972 shares. The prices are perched roughly around the 61.8 fib level. Hopefully prices will stop correcting and resume the uptrend in the wake of good results.
Best
Bheeshma
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Any idea regarding the current status of the transaction?
The stock has been slowly drifting down for the past few weeks.
As far as I know, the transaction is in an advanced stage of negotiation. Wrt to stock price drifting downwards maybe its because of the general apathy towards small cap cos across the board
Finally MOU signed for selling Kasarwadi land parcel at 158 crores!
da32ff1d-8aba-4e73-8cdb-fa86988a9982.pdf (126.4 KB)
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I am just tracking this company, but in my view the price is quite low than the prevailing market rates in that area. Just my view.
From the 15 acre, I think MOU for 11-12 acre has been signed and not the full parcel. I guess the co wants to hold on to the remaining parcel and not monetize it fully at one go. Rates are in line with the prevailing rates for industrial land. The developer will also need to convert the land use to residential. Generally conversion of industrial to residential costs 20% of the reckoner rate. In any case only the amount which is required by the co to pay off the debt has been monetizes which is a good move in my opinion.
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In my view, selling real estate is never easy and pricing it is tricky. The company signing a MOU to sell it in such a short time in my view is great even if its lower by 10-15%. This would help the company repay the debt and would concentrate on ramping up production.
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12 acre sold for 158 cr and hence price/sq.ft = Rs 3026. If we consider 20% cost for conversion from industrial to residential land, it costs Rs3600 per sq.ft.
Any one know the fair value of residential or industrial land value deals that has happened near this Kasarwadi as the price looks cheap considering the location as just 12 Km from Pune city center and also having good connectivity. Just want to know whether land is sold below market value which helps to judge management too.
Hi @sambandham82, residential land in kasarwadi will be available for about Rs 2200 - 2500 sqft for large parcels like 5 acres and above. There is also a premium for location, availability and other technical aspects like pipeline connectivity , sewage etc which is already there and the developer will not have to go in for those addn aspects
Then management has done a terrific job selling 20% above nominal value of Rs 2500 / sq.ft.
with this 158 cr + 30 Cr (remaining land) + 25 cr (Mumbai worli property whose rental income was 1.22 Cr in 2016 and should be 1.4 Cr at 6% yield) = 213 Cr
EV = 150 (mkt cap) + 100 (debt) - 213 (cash & realty) = 37 Cr
I assume real estate is not required for running this business.
when EBITDA will turn to at least 10+ cr remains to be seen.
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@dd1474 are you still tacking this company and holding position?
Looks like all the triggers are in place for the co: land is sold, debt is repaid and Dahej production has started
How much time do you think for Dahej plant to ramp up?
Disclosure: Tracking
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