I have been following AB Chemicals for some time now. The company is an old world company making chemical products for industrial customers.
They recently acquired Kanoria Chemicals for expanding their production capacity.
What is interesting is the current valuation:
CMP (as of 11th May): 78.5
Book Value: 150.83
It is trading at nearly half the BV. Moreover, their income, PAT and EPS have been consistenly growing year on year.
Net cash flow from operations has also been positive over the last five years. The company has declared 15% dividend but cut it to 5% last year.
Their EBITDA is around 90Cr. Even assuming a DSCR of say 3, the company can support interest expenses of 30Cr which means it can take a loan of say upto 300Cr (assuming BPLR to be 10%)
Clearly, the current MCap is lower than what a prudent banker would lend to AB Chemicals. This is one of the main reasons I feel it is a value buy.
Request for comments and insights please.