GMR Ferro Alloys and Industries

Buy or not...!

Posted by : Sriman35
Price when posted : BSE: Rs 46.70 ( 3.43 % ), NSE: Rs. 43.50 ( -4.40 % )

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Hi Shock!,

I arrived at a p/e of 21 based on eps reported by rediff. Rediff says Q1 eps is 0.24. (0.24 * 4 = 0.96 Yesterday close 20.7/0.96=21.56)
Checked bse website and in ispat's website. It is 0.08. Now it is obvious that rediff reported it wrongly.

I like to ckech in rediff coz of its speed in provide the basic info.. all in 1 page.. more user friendly. But have to say they are bit erratic in presenting the stats.

As for Sesa, yes you are true. Q1 eps will be about 8 with the bonus issue. Since record date is over i assumed that their financial results will be based on enhanced equity. But it is not. Checked all major web sites. All are reporting the equity around 39Cr.
With the enahnce equity.. eps work out to 3.23 on today's closing price.

Sesa operates in India and proven here (in Indian bourses
) where as GMR ferro is just one the many companies acquired by Cronimet. Yet to see the Blue print from Cronimet w.r.t gmr ferro.

*Quote*
Yes, if it comes to 30 levels, I`ll be the big bull buying :-)
*Unquote*
Free float is very low. Hope you will give us a chance to other souls, like me, to enter into the script. ;)

Regards,
Sri...

In reply to:

Buy or not...!

Posted by : ShockMarket

Hi Sri,

Ispat\\`s Q1 FY09 earnings = Rs 0.08 (from BSE website)
Annualized EPS = Rs 0.32.

At market price of 23, the P/E would be 23/0.32 = 71. How did you arrive at 21 P/E for Ispat?

I can\\`t comment on the long term chrome rate as it is nothing more than speculation. I can only be conservative to some extent but I can\\`t be pessimist :-)

Sesa goa: I am not tracking it closely. I guess you are missing the bonus shares that were issued in addition to the stock split. In essence, there are 20 shares now for each share in the market when compared to Q1 FY09. In other words, the EPS is about Rs 32 and not Rs 60 making it a P/E of 5! To simplify, look at the stock price and EPS before the split/bonus. It was trading between Rs 3000 to Rs 4000 with an EPS of Rs 160 for Q1 FY09.

If Sesa goa can enjoy a P/E of 5, then why can\\`t Cronimet? If you look at Cronimet\\`s growth, it has been very consistent. Their strategy is to take small stakes while expanding business and increase their stake as the business gains roots. You can look at the history pdf on their site to understand that.

Overall, in 10 year\\`s time, I see a great potential in GMR Ferro given the positives that I and Shoa already mentioned before.

Yes, if it comes to 30 levels, I\\`ll be the big bull buying :-)

FYI, these days I am reading \\`The Intelligent Investor\\` by Benjamin Graham (Warren\\`s Guru) to kill boredom ;-)

Shock!

Buy or not...!

Posted by : ShockMarket
Price when posted : BSE: Rs 45.15 ( -2.27 % ), NSE: Rs. 45.50 ( -0.55 % )

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Hi Sri,

Ispat\\`s Q1 FY09 earnings = Rs 0.08 (from BSE website)
Annualized EPS = Rs 0.32.

At market price of 23, the P/E would be 23/0.32 = 71. How did you arrive at 21 P/E for Ispat?

I can\\`t comment on the long term chrome rate as it is nothing more than speculation. I can only be conservative to some extent but I can\\`t be pessimist :-)

Sesa goa: I am not tracking it closely. I guess you are missing the bonus shares that were issued in addition to the stock split. In essence, there are 20 shares now for each share in the market when compared to Q1 FY09. In other words, the EPS is about Rs 32 and not Rs 60 making it a P/E of 5! To simplify, look at the stock price and EPS before the split/bonus. It was trading between Rs 3000 to Rs 4000 with an EPS of Rs 160 for Q1 FY09.

If Sesa goa can enjoy a P/E of 5, then why can\\`t Cronimet? If you look at Cronimet\\`s growth, it has been very consistent. Their strategy is to take small stakes while expanding business and increase their stake as the business gains roots. You can look at the history pdf on their site to understand that.

Overall, in 10 year\\`s time, I see a great potential in GMR Ferro given the positives that I and Shoa already mentioned before.

Yes, if it comes to 30 levels, I\\`ll be the big bull buying :-)

FYI, these days I am reading \\`The Intelligent Investor\\` by Benjamin Graham (Warren\\`s Guru) to kill boredom ;-)

Shock!...

In reply to:

Buy or not...!

Posted by : Sriman35

Hi Shock!,

Sorry for the late reply as I am occupied with something else.
GMR ferro is not part of my Portfolio. May that could be another reason for the delayed reply. Anyways coming to the point...

Thanks for the detailed reply with all the calculations.

Difference between Ispat and GMR Ferro:
aware of this, but again thanks for explaining in simple terms. bty, p/e on forward annualised Q1 eps is around 21, not 71.

Chrome rate at 1.5 USD / lbs (while it is at 1.8?):
I dont think the rate of USD 1.5/lb is sustainable for next year.

p/e of 10:
You are very generous. Counters like Sesagoa are not commanding a p/e of more than 2. (Q1 eps is 16.38, annualised eps 60 vs CMP of Rs.112)

News/Message in their website is not much a trigger point for me.

Price came down to 45 levels since my last visit to this board. Will wait for sub 35 levels or till the AGM and/or any + ve and public announcements.

Regards,
Sri

Buy or not...!

Posted by : Sriman35
Price when posted : BSE: Rs 45.15 ( -2.27 % ), NSE: Rs. 45.50 ( -0.55 % )

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Hi Shock!,

Sorry for the late reply as I am occupied with something else.
GMR ferro is not part of my Portfolio. May that could be another reason for the delayed reply. Anyways coming to the point...

Thanks for the detailed reply with all the calculations.

Difference between Ispat and GMR Ferro:
aware of this, but again thanks for explaining in simple terms. bty, p/e on forward annualised Q1 eps is around 21, not 71.

Chrome rate at 1.5 USD / lbs (while it is at 1.8?):
I dont think the rate of USD 1.5/lb is sustainable for next year.

p/e of 10:
You are very generous. Counters like Sesagoa are not commanding a p/e of more than 2. (Q1 eps is 16.38, annualised eps 60 vs CMP of Rs.112)

News/Message in their website is not much a trigger point for me.

Price came down to 45 levels since my last visit to this board. Will wait for sub 35 levels or till the AGM and/or any + ve and public announcements.

Regards,
Sri
...

In reply to:

Buy or not...!

Posted by : ShockMarket

Sri,

You can visit cronimet\\`s site for the announcement on GMR ferro\\`s acquisition and its plans:

Here is what it says:
-------------------
With this acquisition, the CRONIMET Group continues to expand its successful production business unit and CRONIMET uses this vertical integration to invest forcefully in the expansion of the value added chain in the area of raw material supplies with ferro-alloys for the stainless steel industry.

Under the leadership of the majority owner CRONIMET Mining GmbH, a consortium of German and South-African companies invested in April of this year already in the mining rights for a significant chromium ore deposit in South Africa.
---------------

It clearly mentions the plan behind the acquisition. I am not sure what more you expect to see. We can wait for the AGM and see if they have more updates to the above.

Lets look at Ispat and Balasore and their last qtr results.

Ispat Industries:
================
CMP = 23
EPS FY09 = 0.32
P/E = 71
Promoter holding = 41%
Net profit margin = 1.03%

Balasore
========
CMP = 41
EPS FY09 = 13.88
P/E = 3
Promoter holding = 46.3%
Net profit margin = 12.06%

Here is my take. While Ispat is promoted by the mittals, it is not a subsidiary of the ArcelorMittal - the famous international MNC. Still Ispat is enjoying a staggering P/E of 71 may be because of some \\`rumors\\` of acquisition. I hope you note the difference between Ispat and GMR Ferro. GMR Ferro is a part of Cronimet (no matter what %). Ispat is NOT a part of ArcelorMittal, they only have mittals in common - no business between the two - but still the market is giving it the hype.

You can see that Balasore is trading at a P/E of just above 3 may be because there are no rumors of L.N. Mittal acquiring it :-)

Show me one company which is a proper subsidiary of an international company of Cronimet\\`s size and reputation which is trading below a P/E of 10.

Here is some projection about GMR Ferro\\`s FY09 earnings. I am being VERY VERY conservative in my calculations as you\\`ll see.

I am taking:
Chrome rate at 1.5 USD / lbs (while it is at 1.8?).
GMR Ferro\\`s annual capacity at 18750 tonnes (while it is 27500 tonnes officially).
Net profit margin at 12% (while it is 30% as per June results)
You can note that the EPS still comes to 26! And giving it a P/E of 10 the market price should be around Rs 260!! I am giving a P/E of 10 as GMR Ferro has huge growth potential given Cronimet\\`s track record. Even if you take a P/E of 5, the price should reach Rs 130 comfortably AFTER BEING VERY VERY CONSERVATIVE!

Chrome / lbs in USD = 1.5
Chrome / kg in USD = 3.3075
Chrome / T in USD = 3307.5
USD in Rs = 44
Chrome / Ton in Rs = 145530
GMR\\`s Capacity in Tons = 18750
Sales in Rs = 2728687500
NPM % = 12
Net profit in Rs = 327442500
Net profit in Cr = 32.74425
Total Shares in Cr = 1.2285
EPS in Rs = 26.65384615!!

Shock!

Buy or not...!

Posted by : shoa2546
Price when posted : BSE: Rs 45.15 ( -2.27 % ), NSE: Rs. 45.50 ( -0.55 % )

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I think it may hit 5 to 6 rs. Rgds...

In reply to:

Buy or not...!

Posted by : mukut

This is heading todward Rs26.

Buy or not...!

Posted by : mukut
Price when posted : BSE: Rs 44.00 ( -4.76 % ), NSE: Rs. 42.50 ( -7.10 % )

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This is heading todward Rs26....

In reply to:

Buy or not...!

Posted by : shoa2546

My expectation is due to synergised increased network of Cronimet and their recent accumulation of chrome ore mines in SA. Pls note recent downfall in chrome price already edged and analyst are expecting rebound in prices in 4rth qtr once again with new contracts. Rgds

NSE Announcements on MVL

Posted by : MMB Messenger
Price when posted : [MVL - BSE:Rs. NSE:Rs. 82.10 when posted]

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Mvl Limited has informed the Exchange that the auditors have conducted the limited review of the Unaudited financial results for the quarter ended June 30, 2008. A copy of the same shall be available on the NSE website (http://www.nseindia.com) under: Corporates > Latest Announcements and on the Extranet Server (/Common/Corporate Announcements)....

Buy or not...!

Posted by : shoa2546
Price when posted : BSE: Rs 52.95 ( -1.03 % ), NSE: Rs. 53.30 ( -2.65 % )

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My expectation is due to synergised increased network of Cronimet and their recent accumulation of chrome ore mines in SA. Pls note recent downfall in chrome price already edged and analyst are expecting rebound in prices in 4rth qtr once again with new contracts. Rgds ...

In reply to:

Buy or not...!

Posted by : ShockMarket

Shoa,

Thanks for the equation.

Here are my observations:
Going by your calculations, the sales for Q1 should have been Rs 105 Cr. But it is just Rs 39 Cr.

So the smelter hasn\\`t operated at full capacity for sure. If they had operated at full capacity and sold the full output (6875 tons per qtr) even at Indian rate of 70K/ton, they would have made Rs 48 Cr.

How can you assume that they will operate at full capacity for the rest of the year? What are your thoughts on it?

Thanks,
Shock!

Buy or not...!

Posted by : ShockMarket
Price when posted : BSE: Rs 52.95 ( -1.03 % ), NSE: Rs. 53.30 ( -2.65 % )

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Shoa,

Thanks for the equation.

Here are my observations:
Going by your calculations, the sales for Q1 should have been Rs 105 Cr. But it is just Rs 39 Cr.

So the smelter hasn\\`t operated at full capacity for sure. If they had operated at full capacity and sold the full output (6875 tons per qtr) even at Indian rate of 70K/ton, they would have made Rs 48 Cr.

How can you assume that they will operate at full capacity for the rest of the year? What are your thoughts on it?

Thanks,
Shock!...

In reply to:

Buy or not...!

Posted by : ShockMarket

Shoa,

Thanks for the equation.

Here are my observations:
Going by your calculations, the sales for Q1 should have been Rs 105 Cr. But it is just Rs 39 Cr.

So the smelter hasn\\`t operated at full capacity for sure. If they had operated at full capacity and sold the full output (6875 tons per qtr) even at Indian rate of 70K/ton, they would have made Rs 48 Cr.

How can you assume that they will operate at full capacity for the rest of the year? What are your thoughts on it?

Thanks,
Shock!

BSE Announcements on MVL

Posted by : MMB Messenger
Price when posted : [MVL - BSE:Rs. NSE:Rs. 84.95 when posted]

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MVL Ltd has informed BSE that the auditors have conducted the limited review of the unaudited financial results for the quarter ended June 30, 2008....

Buy or not...!

Posted by : ShockMarket
Price when posted : BSE: Rs 53.50 ( -7.84 % ), NSE: Rs. 54.75 ( -5.93 % )

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Sri,

You can visit cronimet\\`s site for the announcement on GMR ferro\\`s acquisition and its plans:

Here is what it says:
-------------------
With this acquisition, the CRONIMET Group continues to expand its successful production business unit and CRONIMET uses this vertical integration to invest forcefully in the expansion of the value added chain in the area of raw material supplies with ferro-alloys for the stainless steel industry.

Under the leadership of the majority owner CRONIMET Mining GmbH, a consortium of German and South-African companies invested in April of this year already in the mining rights for a significant chromium ore deposit in South Africa.
---------------

It clearly mentions the plan behind the acquisition. I am not sure what more you expect to see. We can wait for the AGM and see if they have more updates to the above.

Lets look at Ispat and Balasore and their last qtr results.

Ispat Industries:
================
CMP = 23
EPS FY09 = 0.32
P/E = 71
Promoter holding = 41%
Net profit margin = 1.03%

Balasore
========
CMP = 41
EPS FY09 = 13.88
P/E = 3
Promoter holding = 46.3%
Net profit margin = 12.06%

Here is my take. While Ispat is promoted by the mittals, it is not a subsidiary of the ArcelorMittal - the famous international MNC. Still Ispat is enjoying a staggering P/E of 71 may be because of some \\`rumors\\` of acquisition. I hope you note the difference between Ispat and GMR Ferro. GMR Ferro is a part of Cronimet (no matter what %). Ispat is NOT a part of ArcelorMittal, they only have mittals in common - no business between the two - but still the market is giving it the hype.

You can see that Balasore is trading at a P/E of just above 3 may be because there are no rumors of L.N. Mittal acquiring it :-)

Show me one company which is a proper subsidiary of an international company of Cronimet\\`s size and reputation which is trading below a P/E of 10.

Here is some projection about GMR Ferro\\`s FY09 earnings. I am being VERY VERY conservative in my calculations as you\\`ll see.

I am taking:
Chrome rate at 1.5 USD / lbs (while it is at 1.8?).
GMR Ferro\\`s annual capacity at 18750 tonnes (while it is 27500 tonnes officially).
Net profit margin at 12% (while it is 30% as per June results)
You can note that the EPS still comes to 26! And giving it a P/E of 10 the market price should be around Rs 260!! I am giving a P/E of 10 as GMR Ferro has huge growth potential given Cronimet\\`s track record. Even if you take a P/E of 5, the price should reach Rs 130 comfortably AFTER BEING VERY VERY CONSERVATIVE!

Chrome / lbs in USD = 1.5
Chrome / kg in USD = 3.3075
Chrome / T in USD = 3307.5
USD in Rs = 44
Chrome / Ton in Rs = 145530
GMR\\`s Capacity in Tons = 18750
Sales in Rs = 2728687500
NPM % = 12
Net profit in Rs = 327442500
Net profit in Cr = 32.74425
Total Shares in Cr = 1.2285
EPS in Rs = 26.65384615!!

Shock!...

In reply to:

Buy or not...!

Posted by : ShockMarket

Shoa,

Thanks for the equation.

Here are my observations:
Going by your calculations, the sales for Q1 should have been Rs 105 Cr. But it is just Rs 39 Cr.

So the smelter hasn\\`t operated at full capacity for sure. If they had operated at full capacity and sold the full output (6875 tons per qtr) even at Indian rate of 70K/ton, they would have made Rs 48 Cr.

How can you assume that they will operate at full capacity for the rest of the year? What are your thoughts on it?

Thanks,
Shock!