Vipul looks undervalued: Ashish Chugh

Chugh told CNBC-TV18, "Vipul Limited is ignored stock in the real estate sector. This company has its operations primarily in Gurgaon. Over the last few years this company has expanded to other cities also. They are currently executing projections in Ludhiana, Bhuvneshwar, Kolkata, Faridabad and Hyderabad besides Gurgaon. What we like about this company is that it has got a land bank of about 1,400 acres out of which the economic interest of Vipul in the land bank is more than 1,000 acres. This land bank is situated at Gurgaon; they have about 425 acres of land, Hyderabad they have 400 acres, Ludhiana is 130 acres, Faridabad is about 95 acres besides they have small pockets of land at other places also.”

He further added, “Company in the year 2007 had given 15% stake to Wachovia at a price of about Rs 1,300 per share which when adjusted for the stock split translates into price of about Rs 260 per share as against that the stock is available between Rs 55 and Rs 60 and its been consolidating for a while in that range and if you look at a recent deal which has happened in Gurgaon, DLF has bought about 350 acres in Gurgaon from Haryana State Industrial Development Corporation (HSIDC) for a total consideration of Rs 1,750 crore. This deal is significant in two ways; one, it talks about the valuation of the land bank in Gurgaon and second, it also talks about the change in the attitude of real estate developers; they were earlier risk averse and they were shying away from buying any fresh land bank. Now real estate developers have started buying land bank at places where they see good sales potential.”

“Vipul has got about 425 acres of land in Gurgaon. This land is close to Sohna Road in Gurgaon and this land also has good sales potential and with Commonwealth Games coming up, you have totally renovated domestic and international airports in Delhi. The new toll road Delhi-Gurgaon has also come up nicely. I think all these factors augurs well for companies
like Vipul and with 425 acres in Gurgaon where the sales potential maybe high and land banks at other places also at marketcap of about Rs 350 crore, the stock looks undervalued."   

Disclosure: It would be safe to assume that me, or my family would have investments in the company.