BUY BHAGYANAGAR INDIA LIMITED -SURE CALL

SCRIPT NAME:BHAGYANAGAR INDIA LIMITED

CMP:54.90(NSE)
55.20(BSE)

ENTERING LEVEL:55-57

TARGET:
LEVEL I :65
LEVEL II:75
LEVELIII:85

DURATION:1 TO 2 MONTHS

DETAILED STUDY:

BHAGYANAGAR INDIA LIMITED at 55/- Trading in NSE , BSE at 55/- in B1 Group.
This is 2/- FaceValue share trading at 55/-.

Industry type is Cable & Real Estate.

Share Equity Rs. 14 Crs.

EPS 6.5/- Annulised. Good Fundamentals.

Compare to all Real Estate companies this is cheep stock

Promoter Shares Holding 55%. FII’s 15% Corporate Bodies & NRI’s 12%

Public Only 18%. Check the BSEINDIA for Shareholding pattern.



Company Planning to Demerging of Infrastructure Bussiness.

Bhagyanagar India Ltd. is a Hyderabad based company which has forayed into real estate and infrastructure development to unlock the value of its existing land bank of 3 million square feet.
The new development projects include integrated residential townships, IT parks, and hardware parks. The present value of the undeveloped land bank and tenanted property of the company is Rs 6,160 mn.

The one million square feet technology park in Uppal is the likely to complete in 15 to 18 months. “Early next year we would have launched our housing project in Vizag in 52 acres, with 1.2 million sq ft.”

The revenues are likely to increase to Rs 3,591 mn in FY08 and Rs 5,021 mn in FY09 and the net profits likely to grow at a CAGR of 53.34% to Rs 936 mn by FY09. The company is valued at Rs 65 a share with an upside of 57% from the current stock price of around Rs 40. “For the next 4-5 years we see the company grow at 40 to 50 percent and expect 150 crores in infrastructure sales next year,” said Narendra Surana, MD, Bhagyanagar India.

Outright sale of small parcels and development of residential townships, IT parks and hardware parks on the larger land parcels is the route that works best in Hyderabad, for the company. It plans to sell the residential constructions and retain portions of commercial properties for the reason of higher rental yield on the latter. Over 6 Mn Sqft of net saleable area is likely to be developed over the next five years. A tourism project representing miniature monuments in India, a multiproduct SEZ and a resort complex are at different stages of finalization.

Bhagyanagar India has shown good Q4 Fy 07 results due to extensive real estate and infrastructure sales. The topline showed a YoY growth of 66.7 per cent and a QoQ growth of 90.02 per cent.

The company showed operating margins of 62.97 per cent as against 20 – 25 per cent in the previous quarters. Consequently the net profit jumped to Rs 487.86 mn, showing a YoY growth of 442.19 per cent and a QoQ growth of 609.31per cent in Q4 FY07.

On a consolidated basis, BIL showed a YoY growth of 35.96 per cent in the net sales in FY2007. The bottom line showed a YoY growth of nearly 170 percent.

The real estate and infrastructure division showed an impressive YoY growth of 452.68 per cent in its topline in FY2007. As the real estate and infrastructure division accounting for over 58 per cent of the company’s top line in Q4 FY07, it will remain the key area of focus. On a consolidated level, the division contributed 28 percent to the topline and nearly 76 per cent to the PBIT of the company in FY2007. The company is also keen on selling some of its unused land bank for which it is getting handsome price and subsequently investing the amount in development projects.

Karvy maintains a buy rating on the stock with a price target of Rs 65 ( fully diluted basis), valuing a real estate business at a 20% discount to its existing undeveloped land bank and other businesses at an EV/EBIDTA of 3x of FY08 earnings. While other divisions of the company such as copper based products are stable , the creative focus at Bhagyanagar has shifted elsewhere!

Bhagyanagar India Ltd has formed a special purpose vehicle (SPV), Bhagyanagar Entertainment Infrastructure Development Company Ltd, by partnering with IL&FS Infrastructure Development Corporation.

This 50:50 venture with IL&FS Infrastructure Development Corporation will focus on theme parks, special economic zones and industrial parks, according to Mr Narender Surana, Managing Director of Bhagyanagar India Ltd.

Mr Surana told Business Line that this entertainment SPV will be chaired by Mr GM Surana and Ms Rachana Gupta has been appointed as its Chief Executive.

Providing details of the venture, Mr Surana said that two projects have been identified and are ready for execution. While one is a Mini-India Theme Park, the other is the Arogya Dham project which seeks to offer traditional healthcare methods in the Health City coming up near Vizag.

The Mini-India Theme Park, jointly developed by Bhagayanagar and IL&FS, will be spread over a 30 acre site and will require an investment of nearly Rs 110 crore.

“As a part of new projects, we have applied for more clearances for infrastructure projects in the State, which would include industrial parks and special economic zones,” Mr Surana said.

Estimated EPS for this year was 8/- (Annualised).

Company Proposed EPS for 2008-09 is 15/- Karvy & other brokerages also acquiring this stock.

Lot of Accumulating is going on last 3 days.

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