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Posted byHitesh Patelat October 02. 2012
JB Chemicals seems to be a good value pick.
current market cap of around 640 crores.
Company has cash and investments of around 550 crores and debt of around 70 crores.
Effectively company has cash and equivalents of 480 crores. (this i assume after calculating the special dividend paid to shareholders of around 40 rs per share.)
So one gets the company at effective price of 160 crores. This for a company which has presence in India, and a lot of other export markets.
June qtr revenues has been around 190 crores. Some rough extrapolation gives yearly sales figure of around 800 crores. Company is available at market cap to sales of 0.2 which seems very attractive.
Company last year sold off its OTC business in Russia and CIS countries for a net income of 760 crores. It paid special interim dividend of 338 crores and tax thereon of 55 crores.
Jb chemcials seems to be in deep undervaluation territory with company available at an enterprise value of 160 crores and market cap to sales ratio of 0.2.
Going through the fy 12 AR, management seems upbeat about the prospects of remaining parts of the business which mainly includes Indian operations and Rest of World exports.
Looks like a low risk high return kind of scenario for the patient investor bcos once the company gets its act together post selling the Russian-CIS OTC business, there could be a strong appetite for the stock even as a growth stock.
Interesting to note here that Ashish Dhawan (formerly of Cryscapital) has been consistently increasing his stake in this one over the past few quarters and currently holds around 10% stake.
disc: Initial entry into the stock at around 75 per share.