Last Updated : Dec 30, 2015 10:59 AM IST | Source: CNBC-TV18

Jai Corp may test Rs 100, says SP Tulsian

SP Tulsian of feels that Jai Corp may test Rs 100 in next six months.

SP Tulsian of told CNBC-TV18, "Jai Corp is largely in to making of the polypropylene (PP) and polyethylene (PE) packaging products which we can call it as woven sacks or may be the jumbo bags and all that. Plus they are also into cold rolling and galvanised plain (GP) and galvanised corrugated (GC) but actually this GP-GC and steel business came to them when they acquired Sipta Coated about may be 15 years back from Lloyd Group."

"However, that plant is at Nanded has already been closed and that has been loss making business proposition for them. So, they are taking the right steps, right now they have 10 manufacturing units and two of them have already been closed. One in Indore and second is in Nanded which I referred of the steel plant having capacity of about 50,000 tonne per annum and so both these plants are getting sold now which are largely the loss making."

"If you see it is about Rs 750 crore topline company with profit after tax (PAT) of closer to about Rs 50-55 crore. Once they get out of this steel business, GP-GC business their profitability can improve. They may be able to post a bottomline of may be about Rs 70-72 crore which translates into earning per share (EPS) of closer to about Rs 4 per share on a face value of Re 1. The company has been consistently paying dividend of 50 paisa that is 50 percent," he said.

"Now come on the infrastructure and the SEZ part of the business of the company, they are holding the minority stake in Navi Mumbai SEZ which has a land of about 4,100 acres already in their possession. They are also having ownership in the Mumbai SEZ who are holding 4,600 acres. Actually both these projects are in joint development with Mukesh Ambani. Now there have all been clearances, conversion of used and all that, so the market is talking of, actually the ownership percentage of the this company and both these SEZ are not very clear."

"People are talking that it is somewhere around may be 15 percent and 12.5 percent but market is talking that probably the company is looking to exit from this and the valuation of about Rs 4,000 crore is being talked for that."

"They are developing Rewas Port near Mumbai having a draft of about 14.5 meter with 10 berth for which again 2,000 acre of the inter-tidal land has already been given by the maritime board to the company and that port will go on steam may be in the next six months to 12 months."

"Then come on their third business that is venture capital fund. They managing funds of about Rs 5500 crore which are largely invested in to the real estate. I am not going into their real estate development projects which are very small may be in the Navi Mumbai and eastern suburbs of Mumbai, I am not touching on that, that is not forming a very big chunk of that."

"The net worth of the company is about Rs 2,300 crore on an equity of Rs 18 crore. It is total debt free. They don’t have a single rupee debt and apart from that they are holding 35.22 lakh shares of Reliance Industries which are having a present market value of Rs 350 crore . We all know that in this calendar year Reliance Industries has given a return of 14 percent while the index has given a negative return of 5 percent. You can imagine the Rs 2,300 crore that means they have plenty or surplus of funds," he said.

"They have problem of parking the funds because for the simple reason that they were waiting for all this port and SEZ projects to take off and they were keeping this money surplus and ideal for realising them at the right time to make investments into these SEZs and port. I think if you take all the calls even if they continue to operate with these infrastructure projects and I am quite positive on Rewas port also. They have an investment of just Rs 50 crore in that company, by way of share capital but the valuation can run very high. I don’t think that company will eventually be looking to running that port continuously on long-term basis."

"All these projects are due for monetisation then probably one can expect either a big dividend or on a fund of about Rs 2,300 crore if they realise and the present market cap is just Rs 1,300 crore. That means a book value per share is Rs 115, debt free company having all this liquid and realisable investments; share is available at Rs 72. So, I have given a target of Rs 100 in next six months."
First Published on Dec 30, 2015 10:59 am
Follow us on
Available On
PCI DSS Compliant