| Author |
Message |
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
   Topic: SAHKTI MET DOR - THE NAME SAYS IT ALL.....
Posted: 29/Jul/2010 at 9:25am |
SML is a Hyderabad based company which specializes in Special steel Doors & Windows. The company has quickly scaled up from about 7 Cr turnover in 2002 to 80 Cr in 2010. SML caters to diverse industrieslike Pharma, IT, Hotels, Construction sector, embassies etc. Do make a visit to their website http://www.shaktimetdor.com/. Visit to their Gallery section, speaks highly about theirassociation with leading architects and contractors like L&T etc. They have experience of handling largeprestigious projects like – Hyderabad Airport, Reliance Petroleum, TCS IT Parks etc.
A look at the numbers and other ratios between years 2002 – 2008
- Was growing rapidly @ 47% CAGR
- Had excellent operating margins consistently > 25%
- Has had an track record of excellent ROCE in the range of 40-50%+
- The business doesn’t involves lot of investment in Fixed Assets, Inventory and debtors.
- The company has mostly carried moderate debt.
To repeat the above growth the company had carried out an ambitious plan to triple it’s production capacity and introduce new products. The expansion was funded through internal accruals and debt. To scale up, the company also opened offices in every metro. Year 2009 & 2010 were tough years for the company as capital expenditures and opening of new buildings had slowed down…hence the nos of these years don’t look good. Yet the company was profitable in these two years.
If one looks at the last two quarterly numbers of the company, the company has done 23 Cr for Q3 & 34.33 Cr for Q4. The sales seem to be coming back and company seems all set to reap the benefits of the expanded capacities.
In last few months the promoters have increased their stake through an open offer @ 180.
As per a latest announcement on BSE, the company has intended to delist the shares from BSE. Currently the promoters are holding 56% share and would need to buy 44% of additional shares. It won’t be an easy task and if promoters are serious to de-list, lot of value-unlocking may take place.
Technically the stock has runup a lot in the last few days, but looking at forward earning which are been predicted, the stock looks still good.
Would like the fellow TEDIES to share their valuable views on this one.Will update from time to time
Note: Some part of above is taken from a web Source.
Edited by Jaishrikrishna - 29/Jul/2010 at 10:32am
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
 IP Logged |
|
|
|
 |
|
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
Posted: 29/Jul/2010 at 9:33am |
|
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
|
IP Logged |
|
|
|
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
Posted: 29/Jul/2010 at 9:47am |
THE FOLLOWING IS THE WEEKLY CHART OF SHAKTI MET-DOR FROM 2004.
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
|
IP Logged |
|
|
|
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
Posted: 29/Jul/2010 at 10:39am |
Positives and negatives:
Positives
The company operates in a profitable niche and has been able to scale up well in the last few years. The company has been able to deliver a topline growth in excess 20% in the last 10 years and bottom line growth (inspite of the recent drop) in roughly the same range.
The company has recently completed its capex cycle and with the growth in the construction, IT and other user industries, should be able to grow well. In addition the profit margins are likely to improve in the next few years, if the company is able to reduce the debt load and control the raw material costs. The improvement is not a given, but based on the past performance likely to happen.
Negatives
There are several key risks in the business. The number one risk is the delisting plan of the company (see http://www.bseindia.com/stockinfo/anndet.aspx?newsid=74aee977-fb96-4750-a406-83c78ba49e08¶m1=1). The management plans to delisthttp://www.bseindia.com/stockinfo/anndet.aspx?newsid=d4c3cc3a-d432-4d6e-a3dd-3536bc54c407¶m1=1 the company and has offered around 195/ share. The management holds 56% of the company and needs 34% more to delist. Around 100 shareholders (including the promoters) hold around 90% of the company. I do not have details of these shareholders, but if the management has an informal agreement with them, then the delisting may happen at the proposed price. The minority shareholders holding 10% of the stock will not matter much in the reverse book building process.
A consent order was passed by SEBI on non-compliance of the company of the Substantial Acquisition of Shares and Takeovers Regulations in June 2010. It seems the promoters were acquiring the shares from the market since 1998 and have not disclosed it. This information is missing from the annual reports till 2008-2009. I think this does not inspire confidence
The other risk is the increase in the accounts receivables. This may not be as much as risk as the last quarter of 2010 has seen a sudden increase in topline and hence the year end numbers could be inflated due to that. However one has to watch this number closely as the debt more than 6 months doubled in 2009 and the total debt has increased further in 2010. This increases the risk of bad debt write-offs in the future.
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
|
IP Logged |
|
|
|
srisaurabh2000
Senior Member
Joined: 10/Dec/2009
Online Status: Offline
Posts: 397
|
Posted: 29/Jul/2010 at 10:55am |
The volumes are bad, and probably not a good time to enter. Would be interesting for people who already hold.
Also remember seeing somewhere mentioned that the promoters were interested in delisting as the stock markets had not been rewarded inspite of good results. Guess they have been able to generate and market the stock now.:)
Manish, Can you please correct the spelling in the Topic else it does not come in search? Thanks.
Edited by srisaurabh2000 - 29/Jul/2010 at 10:57am
|
|
IP Logged |
|
|
|
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
Posted: 29/Jul/2010 at 11:03am |
Manish, Can you please correct the spelling in the Topic else it does not come in search? Thanks. [/QUOTE]
I would request the administrator to do that, it's my typing mistake and can't do it myself, as there is no provision for editing the title.
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
|
IP Logged |
|
|
|
Shadofax
Senior Member
Joined: 27/Nov/2007
Location: India
Online Status: Offline
Posts: 193
|
Posted: 29/Jul/2010 at 11:38am |
Good find Jaishrikrishna
Something more:
As on 31st Dec 2010
Other Companies stake: 12.84%
Shares %
|
SRI SHIRIDI SAI ENTERPRISES PVT LTD |
207600 |
7.54 |
|
FIRST SECURITIES(P) LTD |
97700 |
3.55 |
|
EUREKA STK SH BKG SERV |
7500 |
0.27 |
|
ANGEL BROKING LIMITED. |
6578 |
0.24 |
|
EUREKA STK SH BKG SERV |
6450 |
0.23 |
|
RUSHABH MANAGEMENT SERVICES PVT LTD |
6300 |
0.23 |
|
ASHIKA STOCK BROKING LTD. |
5903 |
0.21 |
|
TRISYS ON THE NET PRIVATE LIMITED |
4500 |
0.16 |
|
EUREKA CREDIT FINANCE PRIVATE LIMITED |
2500 |
0.09 |
|
LAXMISIVANI CHEMICALS P LTD |
2100 |
0.08 |
|
SYKES & RAY EQUITIES (I) LTD. |
1350 |
0.05 |
|
JAINAM SHARE CONSULTANTS PVT. LTD |
600 |
0.02 |
|
KARVY STOCK BROKING LTD |
600 |
0.02 |
|
POTHULURI HIRE PURCHASE & FIN P LTD |
600 |
0.02 |
|
M ANANDAM CONSULTANCY SERVICES PRIVATE LIMITED |
500 |
0.02 |
They have purchased a lot of shares off market.
----------------------
I have this one question?
What happens if they acquire 90% and delist. What happens of the other shares holders (other 10%)
Do they get dividend? Whats the harm except the investment is illiquid.
Is the harm that the company transfers all the funds to other companies? But would they do all this just to avoid the other 10%?
|
|
$
|
|
IP Logged |
|
|
|
Jaishrikrishna
Senior Member
Joined: 06/Sep/2008
Location: India
Online Status: Offline
Posts: 1132
|
Posted: 30/Jul/2010 at 2:25pm |
|
Hi Dhruvesh,
As the co. has appointed a scrutinizer for the result of postal ballot, only on 30th july we will come to know the out come of that, till then we can only guess.
Will come to know on the co's website the result of the postal ballot.
1. I don't think if the co. gets delisted, the remaining 10% will get benefited by any means.
2. They raised the money from shareholders to expand their business and now when the time has come to share their part with the share holders, they are type of backing out, by doing this buyback.
So this raises questions on the management part, wanting to be selfish, but then one has to make out how much business increment is actually going to happen going forward...........IT MUST BE HUGE (That's what one can make out from all of this).
Any ways, lets wait for the results of postal ballot.
As, i am writing this, the price is locked up at 5% circuit, again.
Edited by Jaishrikrishna - 30/Jul/2010 at 2:28pm
|
|
Don't Buy and Hold, Buy and Homework / Fish see the bait,but not the hook; Men see the profit, but not the peril.
|
|
IP Logged |
|
|
|
Active Topics
Memberlist
Calendar
Search
Help
Register
Login
