Madhucon Project is a cash reach co.
It has a hefty reserve of Rs 507 cr on an eq base of just 7 cr…..just calculate the BV!
They have hefty orders of over 2000 cr.
52 week high was Rs 869 and low is Rs.268….
Np increased from 9.2 cr to 14 cr.
Madhucon Proj has interest in
1)High Way projects
2)Water Supply
3)Express Highway and Toll Roads
4)Infrastructure
5)Property Development
6)Sewage Terminal Engineering
7)Irrigation
8)Railway Projects
Expertise in project management,Design and engineering,Project execution and const management….
Moreover the Infra project arm is getting demerge from Madhucon project.
Madhucon Projects Limited
Madhucon Projects Limited (MPL) is a profit making listed Public Limited Company engaged in execution of Infrastructure Projects, such as construction of National Highways, Fly-Overs, Dams, Tunnels, Aquaducts, Bridges, Coal Handling Plants, Workshops Property Development Projects including High Rise structures, Hospitality and retail industry structures etc. & enjoying substantial non-fund based limits in the form of Bank Guarantees with Banks under Multiple Banking arrangements.
Madhucon Sugars Limited
Madhcon acquired a loss-making and sick sugar factory in the co-operative sector at Khammam and turned it to a profit making company. Madhucon Sugars Limited's (MSL) present crushing capacity is 1500 TPD, which is being augmented to 5000 TPD in stages. The sugar factory is adding an Ethanol Distillery also, apart from setting up a 22MW Cogen Plant for producing power, using bagasse as the main fuel.
Simhapuri Energy Limited
Madhucon is setting up a coal based Thermal power plant of 50MW at krishnapatnam in Andhra pradesh in two phases. In the first phase, generating capacity of 135MW in will be commissioned and in December 2009 and 135MW in March 2010. Power purchases Agreement (PPA) and coal linkage have been tied up with power Trading Corporation of India. The fuel coal for our power plant is met from our own mines in Indonesia.
PT Madhucon Indonesia
Madhucon has started open cast coal mining in Indonesia on a 100 acres site initially. We expect to mine about 3 lakh tonnes production by December 2007. The coal has higher calorific value and less ash content compared to domestic coal.
Madhucon Granites Ltd
Madhucon Granites Ltd(MGL) has an experience of over 16 years in the business of quarrying dimensional granite blocks and production of polished slabs catering to the needs of international markets, the world over. It has earned a name for quality, dependability and competitiveness in the international market for its products with a wide variety of colours and shades. MGL established its first 100% EOU in 1988, in the granite rich region of Khammam District in Andhra Pradesh.
The factory at Khammam processes a wide variety of intricately patterned monuments in various shades of Black, Black Galaxy, Vizag Blue, Paradise,etc. crafted by skilled artisans.
MGL has a reputation for excellence in terms of quality of products and timely delivery of shipments, catering to the varied needs of the customers, the world over.
MGL has a very sophisticated Processing Plant spread over 12.5 acres near Hosur on Bangalore - Chennai Highway. The-state-of-the-art facility is an epitome of excellence in design and work flow methods - equipped with Avant-Garde processing know-how from Germany and France.This Plant envisages an annual production of 7,00,000 sq. meters finished slabs of 2-4 Cms thickness and in sizes ranging from 2.60 x 1.20 to 3.40 x 2.10 meters.
Madhucon Granites owns quarries spanning over 2250 acres of land having abundant Granite deposits in the States of Andhra Pradesh, Tamil Nadu, Karnataka, Orissa and Madhya Pradesh in India. The jewel of the crown is the world famous Black Galaxy quarries in Chimakurthy area of Prakasam District of Andhra Pradesh, which alone produces about 1000 CBM of rough blocks every month.
MGL has to its credit an exquisite variety of fine Granite-earthy stones to soft corals and greens. The range displays rare varieties of textural beauty and shades such as - Steel Grey, Absolute Black, Vizag Blue, Ilkal Rose, White Galaxy, Himalayan Blue, Kashmir White, Paradise, Red Multi, Imperial Green, Seaweed Green, Tan Brown, Salem Blue, Madhura Gold, Kashmir Gold, Columbo Jupurana and Lady Dream.
MGL has its presence felt in USA, UK, Japan, Germany, France, Italy, Belgium, Holland, Middle East and Australia. MGL is developing its own distribution network in USA, Middle East, Australia and other countries. MGL has warehouses in Dubai, Australia, Indonesia & USA.
(International footing co going so cheap?)
My comments:
A company having a hefty reserve of Rs 507 cr on and eq base of just 7 cr and with so many subsidiaries and interest in almost all field needs a better valuation and one should buy this at the CMP of 298.
It is a Bonus candidate too…….
Madhucon Proj can give even 5 bonus shares for every 1 share held that much reserve it has got and still one can see no dent in it’s reserve…as it can eat only 35 cr from the reserve.This is just my view and no inside info about Bonus….
The orders are pilling up and will keep on going up.I see no problem in executing them as they have enough reserve to take care of any project to get executed.With 500 cr reserve on a tiny eq base of 7 cr any bank can open a credit for them……
According to the latest annoucement at bse ,Madhucon Project has won EPC contracts of Rs 989 cr for Thermal Power plant at Ksrihnapatnam South , Nellore dist,AP.....These are the things to come in future....
A single contract of Rs 989 cr speaks the capacity of this small co...which is in process of becoming a Goliath.....
Take your own decision……
Added token quantity at 298. Will double my holding at every 5% drop.
ReplyDeleteThanks
siva
FII's have sold major quantity in Madhucon projects during the recent fall. so i would approach buying in a staggered way rather than a bullish way. you may take ur own decision. i am just sharing the info that i know.
ReplyDeleteregards,
shree.
shree,
ReplyDeleteif FII has sold then better go all out buy....
as when they will again start buying one will not get it cheap....and for sure they would come to buy this great fundamental story...
ofcourse that is my view
Hey Rajeev,
ReplyDeleteI remember that in the subprime crash
Bear Stearns & Co. had liquidated 7.63 per cent, to make up for its own losses, I guess this is no reflection on the company.
Also they are setting up most of their infra projects into an infra company, and Madhucon will remain the holding company, maybe an IPO in the offing ?. 298 is really a fair value for the company , day to day movements can come and go but value is there for all to see...
Hie Rajeev,
ReplyDeleteI have been following Madhucon, but I am still a little unsure in the Mid /Small-cap Infrastruture space beteeen Maducon, Gayatri Projects, JMC Projects and Sanghvi Movers (Rental company).
Can you shed some light on preferences among the onces listed above, which are in the same sector as Madhucon?
monil,
ReplyDeletethat is a difficult question to answer.
But surely Madhucon comes first.
I like JMC ahead of Gayatri because it belongs to Kalpataru Power gr..
Shanghvi is totally different sector.It comes in peers like ACE Const, Mcnally Bharat etc gr....
Rajeev,
ReplyDeleteFound some data on Madhucon Projects on money.rediff.com
Report card
PE ratio 20.70 18/08/08
EPS (Rs) 14.21 Mar, 08
Sales (Rs crore) 239.66 Jun, 08
Face Value (Rs) 2
Net profit margin (%) 7.81 Mar, 07
Last dividend (%) 30 03/08/07
Return on average equity 9.28 Mar, 07
As you see this counter has the FaceValue of Rs.2/- and very high PE of 20.
If you look at any of the small & mid-cap infrastructure companies, they are quoting at a PE between 5 & 10. I wonder why Madhucon is still quoting PE 20.
Is there any inherent reason behigd such high PE?
Please share your views.
Thanks in advance.
And also the volume is very very less, just 2000 traded on BSE.
ReplyDeleteIs this a sign of accummulation or is it an illiquid stock.
Madhucon is Hyd based company and they are well known in Andhra as they are one of first co's which built all the flyovers during 90's but I dont have a clue why its in S section.
Guyz, i am from andhra. i have a bad experience in investing in companies in andhra. They give superb returns when you buy them at bargain price.May be Madhucon might be an exception to it as you can see many orders coming in.
ReplyDeletereal,
ReplyDeleteThe reason it is in S section is because it has a very SMALL eq base of 7 cr.
All co having small eq base hsa found place in "S" sectror of stock market..
Real, now that is where one has to learn.Why market is giving 20P/E though its peers are quoting well below that level?
And that is what I try to write here.
1)It has already come dowm from 898 to 249!and
2)now Madhucon getting a single contract as big as 989 cr is no less an achievement when L&T and Ril Infra , NCC, HCC,Punj Llyod,JMC etc are there to claim any orders.
3) It has a hefty CASH reserve OF 507 CR!
4)It has interest in all sector..
I think market is giving a thumps up for this small co.
That doesn't mean that it can't come down but seems that down side is capped around 249 according to me.
The reason for a Bonus issue I thought was ,it lacks liquidity and hence if they give 5:1 Bonus then enough liquidity comes in.More over with such a big orders they need to have bigger eq to dealt with.
I have debated somewhere else that we are not the judge of valuations,especially high valuations.......we seldom gets it correct.We have no infrastructure nor man power to judge it.
When research analyst and fund managers goes wrong horribly we are just peanuts.
Hence my suggestion is that don't think like an expert.Don't be so confident about your call.Keep an open mind.Try to believe a story which is coming up.Develop foresight to read between the lines.
Nick wrote me a view which I do not concur.But he has made up his mind that the co which will get demerged will have everything and Madhucon will remain a holding co.I can't help him, his way of thinking.Seems he must have meet someone in the management and got the news that Madhucon is going to be the holding co and hence he may be talking with so much of confidence....He must have first hand information which others do not have.Therefore I didn't reply to him.It then become very obvious that share holders who are holding Madhucon shares will be shown a thumb.I maybe wrong and nick may prove right.
Now my this type of writing makes many feel that I do not like view that are opposite to me and I become harsh on them.But I see no valid point in thinking that Madhucon can remain only a holding co.....and hence sometimes I gets irritated and may write some thing which people do not like....
Real, I again write to everyone that includes nick that read my each and every sentence and word properly.It has its own meaning.I never write causally.
hi rajeev,
ReplyDeletemarket very unpredictable these days.not worried thogh as i m ivested on a long term basis.i just wanted to inquire about ur old pick sree rayalaseema hi strenght hypo. i had not invested in that at that time.was just going through all ur picks, so came across this one and found the results very encouraging.whats ur take on this one now as for the current market scenario.please enlighten.thanks
raima
Hey Rajeev,
ReplyDeleteI have no prior information from the management or otherwise...
Its just from the anouncements on the BSE, about forming an Madhucon Infra Co.
& moving all the Road , BOT projects to that company at arms length.
Post doing this most companies either demerge or go in for a IPO of the non listed entity.
I cannot really make out whether this is a positive or negative for existing stock holders.
What I gave earlier was just official information...{IPO or demerging is a conclusion I drew,
didnt mean to misguide anyone.}
I apologise if this meant something
else...
Cheers
Hi Rama,
ReplyDeleteShree Rayalaseema Hi Strenght Hypo is looking good.
The problem here Rama is , everyone are too ST.Even when the chips are down they expect returns soon.
This co will give good return in times to come...Chemical Ind seems will do
well...