Facor Alloys

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   Hi I just have a few brief points that I am aware of Facor Alloys
-the company is basically in the business of making carbon chrome which is an input for stainless steel
-the stock trades at around Rs 7-8
some key points I was observing
Reasonably valued- the stock is having a market cap of about Rs 151 cr + debt 17 cr and free cash of 45 cr this gives it a enterprise value of about Rs 125 cr
the cash is nearly 1/3 market cap this gives it a safety cushion
Fluctating Earnings Performance - the firm has reasonably good EBIDTA , however it does fluctuate with steel prices Y on Y
Key Costs- the key costs for the company are raw material and power supply accouting for nearly 75% of the COGS
Related Party Risk-this is one of 3 companies of the FACOR group which consists of Ferro Alloys, Facor Alloys and Facor Steel. About 25% of business comes from the other 2 companies to this firm, plus Facor Alloy is the most undervalued and the promoters may use the cash for their benefit rather than minority share-holders
In the news because Lakshmi Mittal has decided to enter India by stakes in related steel companies and there is speculation that he might be interested in this firm. The promoters also want to sell a stake as they are looking to expand in power sector. So it is a type of special situation investing.
Besides this it would be great if other people can give info on how this could play out and whether it is a value buy??


Edited by vinvestor2010 - 23/Apr/2010 at 3:48pm