Karuturi Global Ltd: Buy

CMP: Rs.1.87

Face Value: Re.1

Book Value: Rs.16.61

Introduction: Banglore-based Karuturi Globa Ltd (KGL) is the largest producer of cut roses in the world, with are area of over 292 hectares under Greenhouse cultivation and an annual production capacity of around 555 million stems. Headquartered in India, the company has international offices located in Ethiopia, Kenya, Dubai and Holland. It exports products to countries namely Holland, Germany, United Kingdom, Italy, Singapore, Hong Kong, Taiwan, Bahrain, Muscat, Dubai, Australia, Japan, New Zealand, Brunei and North America. 

Original Photo: Mereja.com

Shareholding Pattern: The promoters hold 5.52% while the general public holds 93.19%. In the general category, Elara India Opportunities Fund Ltd, Emerging India Focus Funds, Rays Global Corporation, Maxworth Investment Ltd, India Focus Cardinal Fund, Tara India Holdings A Ltd, and SRY Crust Ltd holds 7.54%, 4.56%, 5.06%, 5.06%, 3.51%, 3.36%, and 2.89% respectively. In fact these large shareholders hold 34.34% shares of the company. Therefore, low promoters' holding is  not an issue for the scrip. 

Financials: On a standalone basis, Karuturi Global reported a net loss of Rs.1.12 crore in the quarter ended December 2014 as against net profit of Rs.9.36 crore during the previous quarter ended December 2013. Sales rose 5.03% to Rs.3.34 crore in the quarter ended December 2014 as against Rs.3.18 crore during the previous quarter ended December 2013.

On the consolidated basis however in the December, 2014 quarter KGL posted a net profit of Rs.10.31 crore, an increase of 31.34%, as against Rs.7.85 crore during the previous quarter ended December 2013. Sales of the company, however, declined 61.3% to Rs.56.98 crore in the quarter from Rs.147.31 crore during the year-ago period. In the September, 2014 quarter, the company came out with a revenue of Rs.62.14 Cr and a net loss of Rs.8.51 lakhs, this is after adding exceptional item of Rs.154. Or else the loss would have been Rs.15.7 Cr in the Q2FY15. Hence, this is a turnaround case. 

Triggers: 

(i) Karuturi Globa Ltd is the largest producer of cut roses in the world, with are area of over 292 hectares under Greenhouse cultivation and an annual production capacity of around 555 million stems and hence it has the necessary size to withstand any slowdown in the sector. 

(ii) All of you are aware of the unfortunate developments in Kenya last year. Due to continued non-cooperation of various stake holders, Company was unable to complete consolidation of financials beyond 31.12.2013. The Company experienced extremely hostile situation and despite great efforts, found resistance in debt raising.
Now, the Company has found a sudden change of fortune with the Government of Ethiopia offering debt and christening the Company’s project as National Project. Also, the Company has generated significant liquidity with sale of surplus assets. Moreover, with the lower Oil price the Company expects a huge sustained saving in its freight cost. This, it is hoped, these development will more than compensate for the weaker Euro.

(iii) During the financial year 2013 -14, the Company was able to maintain its position in the Floriculture Industry during continued European Crisis which is its key market. The Company continued to make steady progress in its Agricultural foray developing Land in Ethiopia.

(iv) The book value of the shares of the company is Rs.16.61, while its P/E is only 3.74, as against the industry P/E of 42.88. It has a market cap of only Rs.151.42 Cr at Rs.1.87. A decent P/E re-rating of 15 can take the scrip to around Rs.5, after suitable discounting.

(v) The Company continued its efforts to develop the agriculture farm. Major crops expected are corn, pulses, sugarcane, oil seeds and paddy. Company has been focusing on wet cultivation during the monsoons. Agriculture during the dry seasons will be driven by construction of canals and implementation of over 90-high-performance pumps to draw water from the river Baro. Water supply will be further augmented by bore wells.

The Company works with expert farming companies from South America, USA, South Africa and India who have been contributing immensely to the farming operations in Gambella. Karuturi is synonymous with responsible and good business in Ethiopia.

(vi) The cut flower business had a stable beginning in CY15 with the Euro remaining more or less stable against the USD. This has added more visibility towards margins of the company. The weather conditions till now also remained helpful to the flower business.

The Company continued its efforts for sustainable initiatives like cutting edge biological controls like Phytoselius (Predatory Mites). It has eliminated spraying for two spotted red spider mites by 95%. Moving to Hydroponics resulted in 10% improvement in production with 30% reduction in consumption of water & fertilizers. 

(vii) The Company has established an earth worm project on an area of 2000 square meters and is consulting organic scientists from the University of Nairobi for further refining the leachate. This project has already reduced the fertilizer cost by 10-12%.The above efforts have considerably reduced the operational costs and are making floriculture business sustainable for a longer period. This has been seen in the Q3FY15 consolidated results of the company. 

(viii) Karuturi Foods Private Limited (KFPL) continued its efforts to maintain its top line in food processing. The Company continued its reach to Africa,Greece, South America and East European countries besides its main markets in Russia & Ukraine Regions. In FY16, the Company would continue its efforts to spread its market across various countries to reduce its dependency on Russia which is a very price sensitive and volatile market.

(ix) To strengthen the Agri Operations, the Company had gone to nontraditional Gherkin growing areas to improve the yield as well as to source higher volumes to avoid field competition.

The Company’s factory has been certified by BRC (British Retail Consortium) besides HACCP, FDA & KOSHER, as all customers expect these Certifications as a pre-requisite for placing the Orders with KFPL. 

Conclusion: Th Company has a strategic goal to bring a larger area under Agricultural Production and simultaneously continue to create new opportunities in its Floriculture and Food Processing businesses. Moreover, Karuturi Global Ltd (KGL) has received an approval from the board of directors to offload its 53% stake in Mumbai-based Florista India Pvt Ltd, which operates a chain of floral designing boutiques across India. Florista India was an unlisted subsidiary of KGL and disinvestment was a business strategy to bring in some working capital, though the net worth and annual turnover of this subsidiary was less than 1% of its (KGL's) net worth or annual turnover.

According to some web-portals KGL has signed a 50-year renewable lease on 300,000 hectares in Ethiopia where its rentals are $1 per hectare per year. The Company is in dialogue with World Bank to insure against political risk in Africa.

Looking at the above points it can be safely concluded that the shares of the company are trading at a discount to its intrinsic worth. The risk-taking investors are therefore suggested to buy the scrip at the CMP of Rs.1.87 and keep holding for a target of Rs.5+.

Note: This recommendation was sent to the Premium (Paid) Group Members on 5th March, 2015.

Reliance Communications Ltd: Buy

CMP: Rs.75.10

Anil Dhirubhai Ambani-owned company, Reliance Communications Ltd (Rs.75.10) which is India's fourth largest mobile phone operator by subscribers, reported an 85% jump in net profit for Q3FY15, boosted by lower cost of financing debt and as more of its subscribers used the pricier data services.

It posted a net profit of Rs.201 crore for the October-December period. Revenue rose 1.2% on year to Rs.4,799 crore. The company's net finance cost fell to Rs.652 crore from Rs.749.3 crore a year back. In May, Reliance Communications raised Rs 6,000 crore from a share sale to institutional investors to reduce its debt and ready itself for the upcoming airwave auction. It used funds raised from the sale of shares to institutional players to repay loans earlier this financial year.

According to the Economic Times, 14 February, 2015: 

The telecom industry in India has benefited from reduced competition ever since the Honorable Supreme Court cancelled 122 licences in February 2012, which allowed operators to cut down on promotional offers such as free-call minutes and raise effective call rates. Additionally, a surge in the use of smartphones has pushed up the use of premium high-margin data services. These have helped most telcos improve their key parameters such as average revenue per user (ARPU) and average realisation per minute (ARPM). The carrier's data customer base grew 5.7% to 31.4 million, of which 16.7 million were on its 3G services. Total data traffic increased 16.2% on quarter and 83.3% on year, due to a rise in data subscribers and higher data usage per customer, the company said. Data services offered at a premium and add to the spending per customer, making them more lucrative for telecom companies.

Reliance Communications had net debt of Rs.36,330 crore ($5.9 billion) at the end of September, 30, 2014, down from Rs.40,220 crore three months earlier, according to a company filing. 

The company may also bid in a government auction of wireless spectrum next month, which is expected to raise as much as $15.6 billion from service providers and put at risk their efforts to reduce borrowing, ICRA Ltd said in January. All licenses held by the company in the most popular 900 megahertz frequency band are up for renewal, according to the local arm of Moody’s Investors Service. 

Recently, there were media reports that  Reliance Communications has awarded a contract for technology overhaul of its business process outsourcing centres to US communications systems major Avaya for an undisclosed sum. A person familiar with the matter, however, said the contract may mean an outflow of Rs.400-500 crore for Reliance Communications (RCom) over three months, followed by about 15% of that to service it over the next three years. Under the agreement, Avaya will modernise tools, processes and best practices resulting in operational efficiencies by managing cost through consolidation.

Another person familiar with the deal said the move was in anticipation of work from Reliance Industries' Jio Infocomm. Reliance Communications Ltd (RCom) has a deal with Mukesh Ambani-owned Jio, under which RCom will manage the call centre operations for Jio. The Jio agreement also said RCom would upgrade its technology and fibre for the purpose. At the moment, RCom uses its legacy IVR, or interactive voice response system. Technology today allows more efficient approaches to ensure fewer drops and call back options to maintain continuity of conversation.

Besides, according to The Financial Express, 10 February, 2015:

Facebook has tied up with Reliance Communications to offer free access to subscribers of Anil Ambani-led firm to the social networking site as well as about three-dozen general information websites. Besides accessing Facebook, RCom subscribers can also access 33 websites offering news and information on weather, jobs, government services, and health without incurring data charges.

According to the Deccan Herald, 17 February, 2015:

Reliance Communications Ltd, part of the Anil Ambani-led group, which is the global telecom sponsor of the ICC World Cup 2015, has partnered with Twitter to provide its customers with a platform to follow the global commentary as the world's 14 best cricketing nations compete for the tag of the champion team, with no data charges. Customers who do not have a Twitter account can also access cricket-related Tweets by logging on to www.rcom.co.in/cricket on their mobile phones throughout the duration of this global event -- from Feb 13 to March 31, 2015, a company statement said here Tuesday. 

According to the Reuters, 17 February, 2015: 

India's Reliance Industries  and seven other firms including top mobile phone operator Bharti Airtel  have applied to participate in next month's auction for mobile phone airwaves, several people directly involved in the process said.

The total spectrum put to auction is 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band and 99.2 MHz in 1,800 MHz band – a total of 380.75 MHz in 800, 900 and 1,800 MHz. The government will also put on sale 5 MHz in the 2,100 MHz band, which is used for 3G services in 17 out of 22 telecom areas.

The reserve price approved is Rs.3,646 crore pan-India per MHZ in 800 MHz, Rs.3,980 crore for 900 MHz band pan-India ; and Rs.2,191 crore pan-India in 1,800 MHz band.

The government also approved a reserve price of Rs.3,705 crore per megahertz for third generation services.

According to reports, the government expects to mop up Rs.75,000-Rs.100,000 crore from the auction which was mandated after the so-called 2G scam following the previous UPA government’s junking the auction system for a first-come-first-serve basis spectrum distribution that led to charges of large-scale corruption and eventual fall of the government of Prime Minister Manmohan Singh.

Auction of telecom spectrum due March 4 may may increase call and data charges, experts have opined.

All these makes Reliance Communications Ltd as one of the most happening stocks in the telecom sector.. The scrip should cross Rs.100, within the next six months. The investors are strongly suggested to buy the stock at the CMP of Rs.75.10, for a short term target of Rs.84-97. This could be another Pipavav Defense and Offshore Eng Ltd (Rs.69.10), which was recommended on September 28, 2014 at Rs.38.75; after which it made a 52-week high of Rs.74.40 on 12/02/2015.

Firstsource Solutions: Buy in Bulk

CMP: Rs.29.35

Firstsource Solutions Ltd is a global provider of customized BPO (Business Process Outsourcing) services to the Banking & Financial Services, Insurance, Telecommunications, Media and Publishing and Healthcare sectors. The company’s clients include Fortune 500, FTSE 100 & Nifty 50 companies. Firstsource has a “rightshore” delivery model with operations in India, Philippines, Sri Lanka, UK and U.S.

Prime Triggers: 

(i) Firstsource Solutions’ wholly owned subsidiary - Firstsource Group USA, Inc., has successfully

made its seventh quarterly repayment of $11.25 million on its outstanding debt on December 31, 2014.

(ii) According to the latest shareholding pattern, the promoters' holding in the company stood at 56.25% (controlling stake), while ICICI Bank Ltd, the ace investor, Rakesh Jhunjhunwala and Goldman Sachs India Fund Ltd holds 4.85%, 3.76% and 1.27% respectively. FIIs hold 8.25% of the shares of the company.
(iii) It is from the reputed RP-Sanjib Goenka group, who are also the promoters of CESC Ltd (Calcutta Electric Supply Corporation, the flagship company of the RP-Sanjiv Goenka Group). In 2012, the Kolkata-based CESC Ltd (RP-Sanjiv Goenka Group) agreed to pay around Rs.400 crore for a 49.5% holding in the ICICI-promoted BPO firm, paving the way for the partial exit of existing shareholders ICICI Bank, private equity firm Temasek and Metavante Investments. Now, Firstsource Solutions Ltd is a step-down subsidiary of CESC Ltd. It is pertinent to mention here that, Sanjiv Goenka's brother Harsh owns mid-sized IT services provider, the BSE and NSE listed Zensar Technologies Ltd.
(iv) India-based BPOs have been steadily moving up the value chain as low-value call centre operations move to locations such as the Philippines. In the immediate future, impending healthcare reforms in the US and Banking reforms in India, are likely to give BPOs like Firstsource a boost.
(v) In November, 2014, there were media reports that Anand Rathi, which has the stock among its high conviction ideas, believes with the interest-cost burden lightening because of debt repayments, and focus shifting to accelerating growth, return ratios could improve.
(vi) Over the past two years, the company has been trying hard to go up the value chain by going beyond the low cost offerings. The company's revenue growth expected to gain momentum as the company concentrated on growing revenues and improving profitability by weeding out low cost contracts and undertaking price increases. The elevation of Rajesh Subramaniam — who was part of the founding team — as CEO and acquisition of majority stake by the Sanjeev Goenka group were seen as big positives.
(vii) On the back of improved margin Firstsource Soultions, the IT arm of  the R P Sanjiv Goenka group, reported a 36.8% rise in net profit at Rs.61.2 crore for the quarter ended September, 2014 compared to a net profit of Rs.44.8 crore during the corresponding period last year. The Business Process Management (BPM) services company’s net sales for the period declined 2.1 per cent to Rs.774 crore, against Rs.790 crore. “Our focus has entirely been on bottom-line growth. We have closed a number of loss making accounts, beside other cost cutting measure,” said Sanjiv Goenka, chairman, RP-Sanjiv Goenka Group.
(viii) The company has won deals worth $45 million in the September 2014 quarter, up from $36 million signed in the June 2014 quarter. Revenue from top clients also grew at a healthy pace of 4.8% Q-o-Q, while revenues from the top five clients declined marginally. With the large telecom client walking away, analysts have cut their forecasts for the current year. However, a strong deal pipeline will ensure better growth for the company in FY16. The company has indicated that it expects growth to pick up pace in FY16. Sharekhan says the company has  indicated that the topline would grow seven-eight per cent y-o-y in FY16, even as growth in FY15 would be impacted by vendor consolidation and client ramp downs.
(viii) Though the turnaround has been delayed, analysts believe that the growth in the coming years would be better than the last few years, as the company has strong capabilities in the telecom and healthcare vertical. Also, the company is looking at launching product platforms, which would improve revenue potential of the company. According to Sharekhan, which has a buy on the stock, the stock trades at a reasonable valuations.
(ix) In November, 2014, there were media reports which quoted, Mahantesh Sabarad, Deputy Head of Research at SBI Capital Securities who said, he is bullish on Firstsource Solutions. He said: "It  is a rare kind of IT stock which has debt on its book. We will see that increasingly as the business goes ahead and they have been signing good amounts of deal, for example this quarter gone by, they have signed deals worth USD 45 million, the quarter before it was somewhere around USD 31-33 million." "Increasing deal wins, good amount of cash flow coming in and deleveraging of balance sheet is the story on Firstsource and that is why we like the stock, Rs.55 is the price target in the stock," he said.
(x) The Hindu Business Line gave a buy on 8 September, 2014:

Firstsource Solutions (FSL) is a leading global provider of customised business process management (BPM) services to the healthcare, telecom and media and banking, financial services and insurance (BFSI). The company has over 100 global clients including 21 Fortune 500 and 9 FTSE 100 companies. After a difficult F10-12 period, the company has shown a resolute recovery over F13-F14 aided by a fresh lease of life from their new owners. We believe, the company can a) catapult itself to cover lost ground; b) set it on an elevated revenue growth path from 2HF15e onwards; c) flag down an improvement in margins; and d) recompense it with superior free cash flows (FCFs). All this while FSL would shrink its debt pile making a strong investment case in its favour.

Key risk: Impairment of goodwill from past acquisitions that exceeds networth, could impede valuation uptick.

Caution: The business process outsourcing (BPO) sector has been facing headwinds over recent years. The industry was faced with rising competitive intensity, on one hand, and pricing pressures on the other. Firstsource Solutions Ltd has been battling with these problems in the past couple of years and the ill-timed acquisition of Med Assist at $330 million in 2007. The company has been trying for a turnaround over the past two years, as revenues and margins fell to eight per cent and Ebit margin fell to four per cent in FY12. After the September quarter numbers, some analysts have cut the company's earnings estimates as the turnaround is expected to be delayed.
In the September quarter, Firstsource reported a sequential revenue growth of 2.4 per cent but a year-on-year decline of 2.1 per cent to Rs.774 crore. Analysts claim this is below estimates as a large client walked away. Along with disappointing revenue growth, EBIT margins too were below estimates at 10% and remained flat q-o-q sequentially. Emkay Global has cut its FY15/16 earnings per share estimates by eight to 10% to Rs.3.6/4.7, respectively, as the brokerage is factoring in lower revenue growth and operating margin assumptions for both years.
However, even at an EFY15, EPS of Rs.3.6-4.7 (worst case scenario), the share should be trading around Rs.40-45, against the CMP of Rs.29.35.

Conclusion: The shares of the company might have made a temporary bottom on the candle-stick chart. Q4 (March Quarter) is typically a high margin and a high revenue quarter for the BPO business and hence the investors are suggested to buy the scrip of Firstsource Solutions Ltd in Bulk and keep holding for sometime; to get one of the best returns. The short term target for the scrip is Rs.34, while the SL is Rs.27

Mangalore Refinery and Petrochemical Ltd: Buy

CMP: Rs.48.95

At the loading of MRPL’s first International solid cargo of Sulphur at Jetty #3 NMPT.

Introduction:

Please Click on the Photo to Expand

MRPL, a schedule ‘A’ CPSE and a subsidiary of ONGC is a State of Art Grassroot Refinery located in a beautiful hilly terrain, north of Mangalore city, in Dakshin Kannada region. The Refinery has got a versatile design with high flexibility to process Crudes of various API and with high degree of Automation.

MRPL has a design capacity to process 15 million metric tons per annum and have 2 Hydrocrackers producing Premium Diesel (High Cetane). It also has 2 CCRs producing Unleaded Petrol of High Octane.

Shareholding Pattern: 

The promoters hold 88.58%, while the general pubiic holds only 11.42%. Among the general catagory, the

institutions hold 3.64%, FIIs hold 0.67% and DIIs hold 2.97% of the shares of the company. In fact the FIIs' holding has increased marginally both on Q-o-Q basis and sequentially. The non-institutions  hold only 7.78% shares of the company leaving very little shares in the open market for trade.

Triggers: 

• In December, the Mangalore Refinery and Petrochemicals Ltd (MRPL) entered into a MoU with
  
  STC Mauritius and Indian Oil Corp (IOC) to set up a petroleum terminal at Mauritius. The JV terminal would be constructed at an investment of around $130 million to facilitate re-export of petroleum products from Mauritius to Indian Ocean Islands and mainland Africa.
• The company has fully commissioned all units of phase-III, other than polypropylene unit, which will be fully functional by the March quarter of FY15. With that the phase-III expansion will be completed. 
• The completion of phase-III expansion of the refinery, single-point mooring system near New Mangalore Port, and facilities at OMPL (ONGC Mangalore Petrochemicals Ltd) are some of the recent milestones achieved by the company. Moreover, the first dispatch of OMPL product has gone from the company to respective customers in Q3FY15. MRPL is also one of the stakeholders in the OMPL project.  All these milestones would help improve the refining margin of the company. This will help bring better returns for stakeholders. 
• The company initially had plans of setting up of retail outlets. Accordingly, its BOD had approved the proposal for the establishment 122 outlets a few years ago. However, the company is not implementing, at the present moment, because it needs to revalidate that decision within its own team. 
• The commissioning of single-point mooring system near New Mangalore Port last year has helped the company to bring crude oil in bigger vessels.
• MRPL reported not so encouraging GRMs both in Q1FY15 and Q2FY15. This may come to end in the coming quarters as the phase III expansion completes and the plant stabilizes. Historically, MRPL has reported higher and more stable GRMs than the other PSU refineries. Now with most issues easing away and most of the secondary units getting commissioned by FY15E, the GRMs of MRPL is likely to bounce back in the coming years. 
• MRPL's Phase III is in the final stage of completion and is expected to be fully commissioned soon, as mentioned above. This refinery expansion & upgradation project at Mangalore includes: - (1) capacity addition of 3 MMTPA and upgradation project (2) polypropylene unit and (3) single point mooring (SPM) facility. 
• During Q1FY15, the company commissioned the delayed coker unit (DCU), that will crack the residual fuel oil into gasoil and petcoke, coker hydro treater unit (removes sulphur impurities from diesel) & two out of three SRU units. The PFCC (converts vacuum gasoil to propylene) & one train of SRU are expected has already been commissioned last year (CY14). Higher complexity on commissioning of Phase III project will lead to an increase in distillate yield from 76.5% to 80.1%, better capability to handle heavier & sourer crude and production of higher margin value-added products. 
• This month, MRPL announced that it moved its very first international solid cargo of Sulphur aboard MV Dusita Naree from NMPT Jetty #3. The loading of the 16500MT of ‘solid Sulphur’ headed to ZHENJIANG Port in China, commenced on 2nd Jan 2015 and was completed by 6th January 2015. The customer, M/s Mitsui& Co had bid online for the 16500MT of ‘solid Sulphur’ generated from the Phase I, II &III Sulphur Recovery Units of MRPL. Solid Sulphur is the by-product of the process by which desulphurization of auto-fuels is carried out to make these fuels environment-friendly EURO grade products. MRPL today manufactures EURO IV grade of petrol/diesel and is equipped for commercial production of EURO V. At a time of increasing concern at the potential for oversupply in the sulphur industry, particularly because of the increases in China’s sulphur capacity, the MRPL shipment is positive news for the sector and shows that China is still a key customer for the mineral.
• Overall, MRPL has lower policy leverage and lowest gearing on the balance sheet amongst PSU refineries. Moreover, the fuel loss which was a drag during the last few quarter may come down in the immediate future due to commissioning of new projects. This will lead to better GRMs.

Conclusion: Looking at the daily candle stick chart we find that the the stock has given a clear break-out above Rs.48.7. The scrip even closed above its 21D, SMA and EMA. 

This stock therefore, becomes a must buy for the investors at the current price of Rs.48.95. We can look forward for a target of Rs.55-62, in the coming days. The short term traders can keep a SL of Rs.45.

Anant Raj Ltd: Buy

CMP: Rs.47.55
Short Term Target: Rs.56.

Technology Park, Manesar, Haryana

Introduction: Anant Raj Limited, formerly Anant Raj Industries Limited (Anant Raj), is a construction and infrastructure developers in North India. The Company has built five million square feet of commercial space at Delhi. The Company has two information technology (IT) parks, one IT special economic zone (SEZ), three commercial complexes, two Shopping Malls and five Hotel projects. In January 2012, the Company launched Anant Raj Estates-an integrated township spread over 100 acres at Sector 63A in Gurgaon, Haryana. During the fiscal year ended March 31, 2012 (fiscal 2012), the Company acquired approximately 225 Acres of land in Gurgaon, Manesar, Sonepat in Haryana, Delhi, and Neemrana, Rajasthan. The Company also has land in Gurgaon, Manesar, Sonepat and Neemrana. During 2012, it launched residential projects, which included Anant Raj Aashray, Anant Raj Estates, Plotted Development, Independent Floors and Villas.

Shareholding Pattern: The promoters hold a whooping 63.44% of the shares of the company while the

general public holds 36.38%. Among the general public FIIs hold 14.70% while the DIIs hold 2.12% of the shares of the company. The non-institutions hold only 19.56% of the shares of the company. Among the public the Government of Singapore holds 4.20 percent while the BIG BULL Rakesh Radheshyam Jhunjhunwala holds  2.54 percent stake in the company.

Financials: The company came out with good set of numbers for the September, 2015 quarter. On a standalone baisi, the total income of the company zoomed to Rs.189.75 Cr, in Q2FY15 as against Rs.95.84 Cr in the same period previous year. The PBT of the company shot up to Rs.128.16 Cr in the September, 2015 quarter as against Rs.33.13 Cr in th same period previous year. The net profit of the company in the September 2014 quarter came out to be Rs.101.02 Cr as against Rs.25.24 Cr in Q2FY14.
On a consolidated basis, the total income of the company for Q2FY15 came out to be Rs.194.72 Cr (Rs.100.2 Cr) and net profit of the company for Q2FY15 came out to be Rs.102.64 Cr.(Rs.29.42 Cr).

Triggers:

• The company today owns almost 6 million sq.ft of ready commercial space of which 32% is leased 

  

  Please Click on the Photo/s to Expand

  yielding a rental income of Rs.77 Cr annually. India is still amongst the lowest rental markets globally for commercial space. However, with sentiments improving and the expected upturn in the real-estate space, the Company is poised to lease out as much as 60-80 per cent of the commercial space in the next 4-5 years, with a rental income potential of Rs.250-300 crores at present rental rates. The higher rental income will also help Company reduce its debt further and faster. 
• The economy is looking optimistic, the new government is positive and the real estate sector is rebounding. From low-cost homes (affordable housing) to super luxury villas, from residential townships to SEZs, from IT Parks to Hotel properties, its expansion plan for the next five spans the width and depth of the real estate space. 
• Its renewed focus on the residential over the last three-four years has seen us acquire land, a majority of which is in the high-end residential pocket of Gurgaon. Its show-case project – Anant Raj Estate at Sector 63A in South Gurgaon is spread over 160 acres with a total developable area of approximately 6 million sq. ft. The Anant Raj Estate project alone is expected to add Rs.5,000 crores to the Company’s total revenues over the next five years. Booking for Anant Raj Estate have already crossed Rs.700 crores and the management is confident that this project will emerge as one of its most successful residential developments.
• The company has also received a group housing license for another 26 acres of land at Sector 63A for residential group housing development. The development potential of this project is approximately 2 million sq.ft.
• In addition to these projects, the management is confident of completing its on-going residential projects – Maceo and Madelia within FY 2016. These two projects will add a further 2.7 million sq.ft. to our total residential properties. In total, its expansion in the residential projects space alone is over 10million sq. ft. within the next five years!
• The Company has proven its prowess in undertaking a lowcost (affordable) housing project - Anant Raj Aashray at Neemrama in Rajasthan. This 2,580 units project comprises of eco-friendly, recycled and energy efficient low cost homes developed in partnership with the Government of Rajasthan. Aimed at first-time buyers around the Rajasthan-Haryana border area in the RIDCO, these flats were attractive priced at Rs.8.2 lacs. The project was completed in record time, and flats are being handed over to the delight of both buyers as well as the Government of Rajasthan.
• With the new land ceiling laws, private industrial township projects have opened up a new strategic expansion area for Anant Raj. Private Industrial Township projects are also a priority area for the new government as a part of its larger thrust on infrastructure development. The company is planning to built further on this success by undertaking larger projects of Industrial Townships. At these Industrial Townships, it hopes to leverage its comprehensive expertise and experience and provide all infrastructure and logistics support. In addition, it also plans to develop low-cost projects within these Industrial Townships. Plans are underway to commence its Industrial Township project at Manesar in Haryana. Spread over a land area of 75 acres. This project will consists of industrial,commercial and residential zones. 
• With the recent increase in Floor Area Ratio (FAR), the hospitality sector is witnessing a renewed interest from international hotel chains. The company has a substantial land bank of ready-to-develop hotels with all approvals in place. At Dhumaspur in Gurgaon, the company is to develop its 10 acre land parcel with a resort project. This project would have a constructed area of 0.65 million sq. ft. with approximately 400 rooms. The company has four hotel properties under operation generating revenue and two more properties are ready to be leased out. In addition, it still has eight more properties with approvals in place.
• The Company has completed Phase 1 of IT Park at Panchkula in Haryana and many offices have already started functioning.
• The board of Anant Raj Industries, one of the leading in construction and infrastructure developers in North India, very recently approved the sale of 100% equity stake in its wholly owned subsidiary Greatway Estates. The sale of subsidiary is for a consideration of Rs 3.04 billion (Rs.304 Cr). The consideration received shall be utilised partly for repayment of debt and partly for development of the projects of the company. Anant Raj, which had a debt of Rs.1,400 crore as on March 31, 2014, is looking to sell its hotel properties across Delhi and land parcels to pare debt. It posted a net profit of Rs.100.38 crore on net revenue of Rs.483 crore for the financial year 2013-14. In its latest annual report, Ashok Sarin, chairman, Anant Raj, said, “...the company is determined to reduce the debt further in the next couple of years and is considering sale of one or two of its hotel properties and/or hospitality land parcels.” Like many other real estate developers, Anant Raj Ltd has also taken the route of selling non-core assets and land parcels to bring down debt level.

Conclusion:  The book value of the shares of the company is Rs.132.85 against the CMP of Rs.47.55. Moreover, it has a P/E of 8.89 against the industry P/E of 27.72. Therefore, a decent P/E re-ratating can take the scrip to above Rs.70, in the short term. The scrip is also looking attractive on the candle stick chart too. At the CMP of Rs.47.55, it is  a must buy scrip for every investor.