Well i always look at unique plays and thatswhy you guys would find most of my companies being with monopolistic businesses.These time around am gonna suggest a steel stock-It should be prudent to note that i am not a votary of steel stock at all as they falls under the vagaries of the inevitable boom-doom period of the commodity world.But the stock which am going to recomend now is a pretty unique steel player with ability of beating the trend.Just consider:-
1)The company is going to be a 25000crs turnover company by 2014-15.It ended fy08 with a sales of around 1375crs.Well its actually hard to digest the humangous guidance given by the management but i have to go by Mr Aditya Jajodia"s word as he has got a habbit of beating his own estimates.
2)The company stunned everyone by recently announcing a mega invstment of 16000crs within the next few years.Aggresiveness at its height isnt it?Its marketcap is a mere 500crs but who dares,wins-Proverb should get vindicated.
3)Over the next 15 months expect the commissioning of sinter plant,special/alloys steel,ferro alloys,power plant,coke oven plant,rolling mills,pallet plant and ductile pipes.The company is doing everything that it can to make itself a company to reckon.A big giant in the making.
4)Jai Balaji, at present is an integrated 1.2 million tpa steel manufacturer.It expects to add 2 million TPA in another 40 months (first phase) and another 5 million TPA in the following 30 months (5 million tonnes steel, 3 million tonnes cement and 1,215 MW power plant in Purulia, for Rs 16,000 crore).So Jai balaji is going to be a 8 million TPA company by 2014.At that time it should be the 4th or 5th largest integrated steel company of india.So folks are you going to opt for the next big thing?
Conclusion:The company is in no mood to dilute its equity and assured its shareholders to have a equity cap of not more than 65crs.Now the last point which should tempt anyone to have a pie of the company-It guided an EBITDA margin of 40% by the next 6-7 years.You can surely calculate 40% of rs 25000crs isnt it?Now do onething more,cut back 20% from the total 40% for taxes,interests,depriciation etc.Its the most conservative estimate-So whats the figure coming like?Dont tell me 5000crs of profit-650rs EPS....or it so?Steel companies trades at an average PE of 4-8.Now make your own target based on the estimates.Go for it guys.
| NIFTY 
