Introduction: Prajay Engineers Syndicate Ltd (PESL) was promoted by Mr. Chandra Mohan Reddy. It was a twenty five years old partnership firm which was converted into a public limited company in the year 1994. It is a pionner in construction activities in the twin cities of Hyderabad-Secunderabad. Its Key developments include, residential flats, townships, shopping malls, office buildings and group housings.The Company has developed around 6.7 million square feet over the past twenty years in more than 75 projects and a further 10.7 million square feet of land is under various stages of development. It has a significant presence in the hospitality sector also, with three landmark ventures in the city. Its luxury resorts are the Celebrity Holiday Retreat and the 30 room Celebrity Boutique Hotel (located 500 metres away from the airport). Prajay Engineers Syndicate Ltd has been the leader in identifying new locations that are today of strategic importance, which has given it huge cost advantage. The Company Focuses on Premium Apartments, Ultra-modern Townships, Development of Golf course, Independent premium bungalows, development of 3 (three) and 5 (five) star hotels, Infrastructure development, Shopping Malls. These are all high volume and high margin activities.Shareholding Pattern: According to the data available for 31st December, 2008, the promoters hold 18.55% while the general public holds 81.46%. An interesting point in the latest share holding pattern is that FIIs hold 70.78% of the shares of the company. Even the General Electric Pension Trust holds sizeable number of shares of the company indicating the stableness of return from the scrip—as pension money is generally invested in less volatile scrips across the world.
- The company has earned 94% of its revenue from Real Estate and 6% from Hospitality segment in 2006-07.
- In March 2007 the company posted a turnover of over Rs. 200 Cr and profits of around Rs. 80 Cr. It achieved Rs. 1,00 Cr turnover in one quarter.
- In January 2007 the company signed a joint venture with Sunway Group, Malaysia for development of residential condominiums projects in Hyderabad.
- Prajay Engineers' Land bank stands at approximately 825 acres 80% of which is in and around Hyderabad. This is huge considering other major players in this space.
- In the last twenty years of its existence, PESL has delivered 75 projects and developed around 6.7 million square feet.
- The increased demand for residential units and commercial, office space for the IT and ITES companies suggest that the spurt will continue for years to come. An estimated inflow of Rs. 5,508 billion investments in this sector will usher in development at a remarkable pace.
- Government thrust on infrastructure spending has given a tremendous boost to construction sector in terms of market size, resulting in higher demand across the sector.
- Prajay's base in the twin cities of Hyderabad and Secunderabad offers it a myriad of opportunities in the real estate sector. The rapidly growing IT/ITES industry in Hyderabad has its roots in the proactive role of the state government pitching Hyderabad as the 'Hi-Tec' city of India. The Company will grow along with this high tech city.
- The Government's decision to launch Bio Tech Park and Fab City has further given a boost to technology driven growth in Hyderabad.
- The company currently has around 31 projects underway and plans to construct around 37.6 million square feet in the next four to five years. All projects have credit Rating of A+ by FIs (Financial Institutions).
- With its visionary approach, contemporary building practices, cutting edge management discipline, Prajay is at the forefront of imparting dynamism to infrastructure development industry.
- The company is foraying into Tier II cities of Andhra Pradesh like Vizag and Vijaywada. It is also thinking of entering other Tier-II, and III cities in India.
- The company want to invest around Rs. 500-600 Cr in the coming years in the hospitality sector: to create 1000 room capacity by 2009 in the 5 star, 4-star and the 3- star business class categories; and to develop 31 projects including residential, commercial, retail and hospitality projects, aggregating to around 37.57 million square feet over the next five years.
- PESL’s 100% subsidiary Prajay Holdings, has received a commitment from FDI recently to the tune of rupees equivalent of US $ 3.6 Cr for one of its prime projects at Hyderabad wherein a development of around 40 lac square ft has been planned by the company.
- The company is riding high on the real estate and infrastructure boom: it has set a target of reaching Rs. 1000 Cr turnover by 2008-09.
- And the most important: The Company is convening Extra Ordinary General Meeting on February 22, 2008 to consider and approve increase in FIIs limit from 74% to 100%. If this is approved (according to grapevine the said approval, is a foregone conclusion), then this could give further boost to the share price of the company.
Conclusion: Considering all the factors mentioned above it has been found that the investor could take position in the scrip of Prajay Engineers Syndicate Ltd at the CMP of Rs.320 for at least 70%--80% upside within the next 12 months time frame. This stock is suitable for investors who need steady and guaranteed returns from the market. But please start booking partial profits once it breaks Rs.374 in its upward movement and again enter when the scrip on dips. Conversely if the scrip crosses Rs.376, then it could cross Rs.400 with ease. The movement of the scrip in the upper direction should start once it crosses Rs.330 and stays there for at least 2 (two) days or moves up with good volume.