Share Trading Tips

BSE Code :500102
Target Price : Rs.56 ;
Time Frame : 6months
Market Cap: 1863 crores ;
Shares O/S.: 55,55,23,839 ;
Debt/Equity Ratio: 1:1 ;
52 week High/Low : 39/17 ;
F.V. : Rs.2 ; B.V. : Rs.24.4 ;
P/E:12.5 ;
P/B: 1.3

The Paper sector is in the midst of cyclical upswing driven by improved demand and increase in the price of the products. BILT is India’s largest integrated manufacturer and exporter of paper, with a strong presence in all segments of the usage spectrum and would be the key beneficiary from the positive outlook for the sector.The company has nearly doubled its production capacity to over 1 million ton per annum. It has taken aggressive steps to penetrate the market with new capacity. If you see the Enterprise Value of the company it is ruling at 45- 50% of the value of the investments what they have been holding in all these three investments excluding the core investments into their main business. All these 3 companies are coming with IPO’s this Financial Year.

Also in the last quarter promoters have subscribed 10 crore shares (4.5 crore shares & 5.5 crore zero coupon compulsory convertible bonds). This will increase the stake from 40% to 49% in 18 months and they are subscribing to this 10 crore shares at Rs.30 pumping in Rs.300 crores. BILT declared its Q3FY10 results last week where consolidated net profit jumped 147.6% to Rs 44.29 crore and 50.30% rise in sales to Rs 1032.37 crore in Q3 March 2010 over Q3 March 2009. At the current price of Rs 34, the stock is trading at 9.71x FY10E earnings and 7.9x FY11E earnings. We recommend BUY with a price target of Rs.56, given the company’s holdings in subsidiaries and future growth potential.