Jai balaji industries:-A King size Multibagger in making

Scripscan:Jai balaji industries
Traded in:Nse-bse
cmp:27
Marketcap:170crs

"Warren Buffett Quote":Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.

Story:Just five points which will speak the real value of this company:-

1)Company 1.1mtpa steel manufacturing company with diversified product range including pig iron, sponge iron, TMT bars, ferro alloys, alloy bars etc.Replacement cost of assets over 4000crs.Debt of 2000 odd crs.(NAV of the company 4000crs-2200crs=1800crs)

2)The company holds varying stakes in four coal blocks-Dumri and Rohne in Jharkhand and Andal and Jagannathpur in West Bengal.It posses 700mt of high graded coal.Coal valuation is all over the place(USD 3 per tonne to USD 25 per tonne).Taking most conservative value of 3USD per tonne,value comes at over 10500crs.

3)Recently it backwardly integrated by putting up a .35mtpa coke oven.Will help in saving 75-100crs input,enhancing margins.Did a CDR which further will help saving 25-40crs.Raw materials prices have started softening and product prices have jumped a bit,albeit in a very tiny manner.

4)Promoter bought over 6 lakhs shares from open market in the last few months and further allotting 1cr warrants at 50 bucks,promoter stake to move from 52% to 58% post warrants conversion.

5)Reduced pledged shares from 92% to 68% recently,should be below 60% with warrants conversion.Company may have further plans to release more pledged shares in due course.

Conclusion:So you are getting India's 8th largest backwardly integrated 3000crs revenue company with 12300crs of assets(10500crs of coal+1800crs of assets after deducting debt) at just 170crs.Sanity is not in vogue but probably will be someday.

ONLY FOR HIGH RISK INVESTORS.........

 Traditionally ,Investing in stocks considered as a high risk high return game compared with other opportunities like Real Estate ,Gold..etc.Even in stocks itself the degree of risk -return is different in the case of Blue Chips,Large Caps,small caps..etc.Investing in turnaround companies is a favourite option of high risk takers to generate maximum return at the cost of highest risk.This strategy  not at all suitable for average or below average risk takers .Investment in such stocks may make millionaire's as well as bankrupts based on the accuracy of one’s calculations.What I mean is , below is the name of such a stock/company, only for investors who are even willing to forget their entire capital invested and also having enough patience.

Ashapura Minechem

This company along with its subsidiaries are the largest exporters of bentonite from India and one among the biggest five in the world.In addition to bentonite, company is in the production of many other minerals including sizable operations in Bauxite , Kaolin, Attapulgite, Barites..etc.Its major product –Benonite- is widely used in metal casting, iron ore pelletizing, civil engineering, drilling,   paper, detergents, cosmetics..etc. Bauxite is the basic ore for producing Aluminium.Company was a darling of investors till 2008 and its share price (post FV split) was around Rs.400-500 level.A big blow came in the form of the  ban on export /sale of bauxite by the government of Gujarat in 2008-09.Only because of this unexpected ban many issues followed in the form of forex losses and claims by few shipping companies.Kaolin plant in Kerala went into trouble on account of some local issues.All these incidents derailed company’s operations and ends in big losses.New mineral policy announced by Gujarat Government in  2009 -10 bring clarity in mining policy and permitted bauxite mining again.But by that time company’s financial health eroded a lot and it declared as a Sick company in 2012.After many month’s sincere attempt by the management, now the company is in a recovery mode.Debt of the company restructured and promoters brought  more funds into the company by way of subscribing 40,00,000 Equity Shares of Rs. 2 each at a price of Rs. 36.83 per share and 40,00,000 Convertible Warrants to be converted into equity shares.Claims by shipping companies are challenged by the company in court and case with one company  already settled out of court.Management of Ashapura expecting a favorable verdict in other cases too.On the financial front company showing sharp improvement in past few quarters.In latest full year company reported a Sales of Rs.771 Cr and its bottom line also showing remarkable improvement even excluding other income component.

                                                         Due to environment related issues ,entry of new players in this segment is not very easy now and probably in future.This situation giving special advantage for existing miners .I believe ,the testing time of this company is over and it is the time for a new beginning in the history of this company .Currently stock is trading around Rs.42