Jaggu's World of Stock Investing

Shristi Inra- this Shrisit has any place for shareholder value?

Shristi Infra caught my attention during Mar-09 when there was huge insider buying in this stock- around 4% stake was bought by promoters from open market at avg price of 390. On intial QAD analysis I figured that is was very illiquid stock as the promoter own 49% and Opulent Venture Capital Trust (group realted co) owns another 46%, leaving just 5% free-float with public. As the stock price kept falling to current 250 levels another closer look was required. The Mcap of the co is 555 cr . Currently the only operational parts of the co are its construction biz and Durgapur city center.

Construction biz: 100% owned by the co. Sales of 85 cr, Ebitda of 17.5 cr, net debt of 48cr. This biz if valued at 40 cr mcap (17.5*5-48cr debt), it could support around 7% of the current market vauation (555cr mcap)

Bengal Shristi (49.78% JV)-
1)Durgapur city center project-500,000 sq.ft. commercial complex- operational.
2)Raniganj square- 560,000 sq. ft commercial complex- under construction.
3)Asansol Township- 6 million sq. ft township- under construction.
Bengal shristi has debt of 62 cr as of Mar-09. As one project only is operational the full value of bengal shristi can not be ascertained.

Vipani -retail mall in udaipur, Haldia international sports city, Krishnanagr centrum, 5 star hotel at Rajarhat, kolkata, vedic hotel cahins, commercial complex at agartala are the other projects of the co. All these are at different stages of implementation. Some of them are at planning stage, some are under construction.Majority of the projects are in westbengal.

These big ticket commercial projects have high implementation risks especially given most of them are initial stages of implementation and the current real estate market scenario. I am puzzled by the 555cr mcap of this co.

Why didn't this co take IPO route for listing, instead it got listed thru reverse merger with listed peerless finance? With current free float of just 5%, the stock is more prone to price manipulation.

posted by jagadish @ 8:44 AM