Nava Bharat Ferro Alloys

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Topic: Nava Bharat Ferro Alloys

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SingleMalt
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Topic: Nava Bharat Ferro Alloys
Posted: 13/Jul/2009 at 9:16pm

Nava Bharat Ventures Ltd. (originally Nava Bharat Ferro Alloys Ltd.) is a Hyderabad based company that is a manufacturer exporter of ferro alloys with interests in production of sugar and other by-products like rectified spirit and extra neutral alcohol. From the company's website - "This foresight witnessed the evolution of the company from a producer of thermal power – intended for captive use – in 1997 to a supplier of power to the grid. To make this possible, NBFA enhanced its capacity of thermal power generation".

Annual results in brief
	Mar ' 09	Mar ' 08	Mar ' 07	Mar ' 06	Mar ' 05
Sales	1,311.98	951.84	591.41	466.27	434.29
Op. profit	549.08	399.6	161.45	69.81	157.27
Interest	30.95	16.47	15.2	12.75	10.98
Gross profit	533.77	395.33	158.43	66.56	158.08
EPS (Rs)	59.78	40.44	20.75	8.69	15.93

My capacity to analyze balance sheets is limited - so I wont go there. But from what I see, there has been a steady increase in sales/profit/eps. Debt to equity ratio is 0.49, which appears reasonable.

The stock was at its 52 week high of 328 (all time high of ~340) last month before correcting to its cmp of 270. Has anyone been following this stock? I am tempted to take a small position here.

Again, posting this in my pf thread because I cant seem to post it elsewhere. Could someone shift this thread to an appropriate location?

BTW, how long before, if at all, I am able to post new threads?

Edited by SingleMalt - 13/Jul/2009 at 9:16pm

If only I knew then what I know now...

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master
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Posted: 13/Jul/2009 at 11:44pm

1. Overall results don't reveal that it's actually merchant sale of power that has been Nav Bharat's saviour in FY09.

2. Unless you drill down to segmental revenue, you can't make out that core business of ferro alloys hasn't done too well. If i'm not wrong, manganese chrome production was stopped sometime back.

3. EBIDTA margin for Q4-09 was lower by over 10% (at 36%) compared to previous year. Though this is quite healthy per se, we can't say if the trend has further deteriorated in Q1-10.

4. As can be expected, it's other income which boosts the net & EPS given weak performance of the core business.

5. Power generation capacity is 228 MW, which they plan to double. I feel when steel cycle looks up and consequently their ferro-alloy business improves, merchant sale of power will be minimal which could impact its earnings.

Could net-net be a fair bet at current levels.

Someone’s sitting in shade today because someone planted a tree long time ago.

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SingleMalt
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Posted: 13/Jul/2009 at 12:32pm

Thanks, master. After reading your post, I went and looked at the 2008-2009 Annual report. You are right; according the the AR:

- the ferro-alloy operations of the Company took the brunt of the worst commodity cycle , especially in the second half of the year 2008-09, with consequent fall in realisations and virtual stoppage of off-takes from the dependant steel industry.

- The Sugar business of the Company was severely dented by reduction in cane availability, consequent to a change in the cropping pattern and lower recovery. As these factors are common across various industry constituents, a fall in sugar output ensued resulting in spurt in the realisations of sugar, enabling your Company to close the year on a profitable note from this division.

Anyway, here is some additional information about the company (a shameless cntlC-cntrlV exercise from the company website (http://nbventures.com/index.php):

1) It has four business divisions - Power, Ferro Alloys, Infrastructure and Sugar. The company did start off as Ferro Alloy manufacturer-exporter in 1975. It is currently the second largest in India with a 15% market share.

2) In 1980, NBFA ventured into the production of sugar and other by-products like rectified spirit and extra neutral alcohol

3) NBFA’s foray into power generation in 1997 began with the objective of self-sufficiency for its ferro alloy smelters, but the company envisioned a growing demand for energy in the future. This foresight witnessed the evolution of the company from a producer of thermal power – intended for captive use – in 1997 to a supplier of power to the grid. To make this possible, NBFA enhanced its capacity of thermal power generation.

4) By 2005, NBFA outlined its presence in infrastructure through special purpose vehicles that would focus on Special Economic Zones and Real Estate Development.

To represent better the diversified business activities, the name of the company was changed to Nava Bharat Ventures Limited (NBV) in July 2006.

Edited by SingleMalt - 13/Jul/2009 at 12:33pm

If only I knew then what I know now...

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hit2710
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Posted: 13/Jul/2009 at 10:11am

Hi,
The company did announce buyback at max price of Rs 170 sometime back. Alltime high was 351 in Jan 08

Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

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masheela222
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Posted: 23/Nov/2009 at 9:16am

Nava Bharat Ferro Alloys Ltd has decided to embark upon a major expansion programme involving an investment of over Rs 350 crore during the next couple of years.

The company plans to set up an integrated sugar, bio-fuel project and a cogeneration facility and a greenfield power project and expand into infrastructure through the special purpose vehicle (SPV) route, according to the company's Director (Finance), Mr G.R.K. Prasad.

The expansion is being taken up to offset the uncertainties arising out of the cyclical nature of the ferro alloys sector. "We have already reduced ferro alloy contribution to overall turnover through power and sugar, and going forward, we expect the contribution of ferro alloys could be brought down to around 50 per cent," Mr Prasad told Business Line.

The company, which is looking at venturing into infrastructure in a big way through the SPV route, has bid for the metro rail project (MRTS) in Hyderabad, a national highway project in Madhya Pradesh and an industry-specific special economic zone (SEZ) project.

The company recently obtained the Andhra Pradesh Government's in principle approval for allocation of 250 acres of land in favour of its subsidiary company — Brahmani Infratech Pvt Ltd — for the development of an SEZ for IT and ITES.

Edited by basant - 23/Nov/2009 at 9:21am

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kishi_1
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Posted: 21/Dec/2009 at 6:41pm

NB ventures buys 65% of MAAMBA Colliries.

http://www.business-standard.com/india/news/nava-bharat-to-buy-65-in-zambia%5Cs-maamba-collieries/81350/on

This is a great stock with higher targets.

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smartcat
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Posted: 21/Dec/2009 at 11:54am

Slowly getting popular with MFs. Now Reliance, Birla, Sundaram and UTI own this one in their funds.

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kishi_1
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Posted: 22/Dec/2009 at 8:23pm

http://www.moneycontrol.com/news/recommendations/buy-nava-bharat-targetrs-517-sushil-finance_431881.html

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