KCP

KCP Ltd : (Multibagger-02)

· KCP Ltd. is a Chennai based company, having 5 lakh TPA cement plant at Guntur in A.P. and two engineering units in Tamil Nadu with one at Chennai and another one at Arakonam. The company also has 12 MW hydel power (8.25 MW) and wind farm (3.75 MW) for captive requirement.

· The paid-up equity of the company is very low at Rs.12.89 crores, of which, promoters are holding about 46%.

· For second quarter ending September 07, the company posted total income of Rs.103 crores with PAT of Rs.21.56 crores, resulting into an EPS of Rs.16.73 for the quarter. For first quarter ending June 07, the total income was at Rs.92 crores with PAT of Rs.16.50 crores, resulting into an EPS of Rs.12.80

· For FY 08, the company may be able to post a total income of above Rs.425 crores with PAT of Rs.90 crores, resulting in an EPS of Rs.70. Of this, engineering division will contribute about Rs.150 crores.

· Due to strong focus of the company on engineering segment, the company should be able to post a 60% growth in FY 09 by this segment, due to strong order book, with topline expected to be above Rs.240 crores. Also, due to the cement plant of the company operating above 120% of its rated capacity, FY 09 is likely to have a total topline in excess of Rs.550 crores with PAT of close to Rs.130 crores, resulting in an EPS of Rs.100.

· The present debt of the company is close to Rs.60 crores, which is backed by net current assets in excess of Rs.100 crores, which makes the company totally debt free.

· The subsidiary of the company KCP Vietnam Industries Ltd. is a sugar mill which would be making higher profits this year, as against last year due to higher realization of sugar iand lower sugarcane price in Vietnam.

· The company has about 40 acre surplus land near Chennai, which the company is planning to use it for Container Freight Station, which would give regular income as well as huge capital value.

· The company also has surplus land of about 4 acres, in Hyderabad which is being developed for five star hotel and to be given on lease to hotel chain for operations and maintenance.

· The share is now ruling at Rs.645 which discounts FY 08 earning by about 9 times while FY 09 earning by about 6 times. The present market capitalization of the company is just Rs.800 crores, which is quite low, considering valuation of its cement, engineering and realty.

· Due to strong growth of over 60% expected from its engineering divisions; and realty development plans, the share has potential to touch four digit marks in the next 9 to 12 months, giving a return of close to 60%. A safe and excellent bet at Rs.645.