PICK OF THE WEEK:

Alchemist Realty Ltd

BSE Code: 532114

Face Value: Rs.2

CMP: Rs.14.54

Market Cap: Rs.107.74 Cr

EPS: Re.0.11

Introduction: Formerly known as Pan Packaging Industries Ltd, the Company’s principal activity at present is to develop real estate property. Pan Packaging Industries Private Ltd. was originally incorporated as Private Limited company on 03 March 1983 to manufacture and supply Corrugated Boxes. The name and style of the company was changed as Pan Packaging Industries Limited on 25th April 1995. The company started its commercial production in 13-03-1984 which was its first phase of operations with an installed capacity of 900 TPA. Alchemist Realty is now widely recognized as one of the growing innovative real estate companies in India.

The Company now engages in the acquisition and development of real estate and infrastructure facilities in India. It real estate development projects include housing projects, cottages, recreation clubs, and other infrastructure projects. The company which was formerly known as Pan Packaging Industries Limited changed its name to Alchemist Realty Limited in 2006. Alchemist Realty Limited is based in Mumbai, India.

Shareholding Pattern: The promoters hold 42.3 % while the general public holds 57.70% according to the latest data available.

Shareholding belonging to the category "Public" and holding more than 1% of the Total No. of Shares
Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Endogram Leasing & Trading C	8,605,580	11.61
2	Basic Soft Solutions Pvt Ltd	4,878,500	6.58
3	Manbhavan Buildwell Pvt	2,442,285	3.30
4	Basics Soft Solutions Pvt Ltd	1,917,750	2.59
5	Amandeep	2,635,200	3.56
6	Archna Singh	1,560,000	2.11
7	Sunil Talwar	1,052,695	1.42
8	Varinder Pal Singh	912,730	1.23
9	HS FII Investments Ltd	7,115,000	9.60
10	CLSA Mauritius Ltd	7,112,000	9.60
11	Somerset Emerging Opport	1,143,944	1.54
	Total	39,375,684	53.14

Financials: In FY09, though the net sales of the company increased but the net profit declined due to higher investments in Land Plots & Constructed Properties. The net income of the company for FY09 came out to be Rs.101.55 Cr as against Rs.82.87 Cr in the same period previous year. The net profit of the company came out to be Rs.1.03 Cr in FY09 as against Rs.4.54 Cr in the same period previous year. In Q2FY10, the total income of the company came out to be Rs.28.071 Cr as against Rs.5.7 Cr in the same period previous year. The net profit of the company for Q2FY10 came out to be Rs.24.62 lakhs as against Rs.12.43 lakhs in the same period previous year. During the quarter ended September, 2009, the company declared a divided of 5%, i.e.Re.0.10 per equity share of Rs.2 each for the year FY09.

Triggers:

• During the year, the Company acquired lands at various locations all over the country and is in the process of launching many projects in Real Estate Development which includes housing projects, cottages, recreation clubs and other infrastructure projects. The Company has also finalized Joint Venture agreements with various Companies for launch of prestigious projects.
• In the last fiscal the Company issued 7040100 equity shares of the face value of Rs.10 each as bonus shares to the shareholders in the ratio of 1:1 i.e. One bonus share for every one scare held by the shareholders as on record date i.e. 7th February, 2008. This somewhat proves that it is in investor friendly.
• Alchemist Realty Limited is a real estate company, for which land is a key asset. The Company believes in acquiring lower cost land in suburban area and transforming them into modem and utilizes land. With this philosophy intact, the Company has continued to develop its land bank. This is quite evident in FY09 results, when the company invested more in assets as compared to the same value in previous year. Needless to say in FY08 and FY09, the Company acquired newer land parcels in various parts of North India.
• Alchemist Realty Limited is focused on developing itself as a premium brand that enjoys a strong sense of trust amongst its stakeholders. There has been a constant endeavor to focus on creating a brand that embodies all the Company’s strategic goals and corporate values. In the real estate space, the Alchemist Realty Limited stands for: (a) Ability to identify and procure land in strategic locations, (b) Experience in executing large projects, c) Superior design, construction and development.
• The company is exploring various opportunities in the real estate business and has also finalized Joint Venture agreements with various other players in the Real Estate for launch of prestigious projects. With the continuous trend of shifting population from rural areas to urban areas, increase in the size of population, the demand of both residential and commercial properties is showing an upward trend. Moreover, it is now widely believed that the US Fed will happily risk inflation in order to avoid deflation, Because the US Fed is far more worried about the possibility of deflation (systematically falling prices) caused by a double-dip recession. Japan in the 1990s suffered economic stagnation for a decade because of deflation, and the US is determined to avoid that path. So, it will keep interest rates at virtually zero for the foreseeable future. So this is expected to increases money supply by over a trillion dollars in the world and that too at virtually zero interest. The dollar is an international currency whose impact is felt across the world. Investors and speculators everywhere know that growth prospects are much better in emerging markets than in the West. So they are borrowing hundreds of billions of dollars at dirt-cheap rates to buy stocks, real estate and commodities in emerging markets. Hence, asset values are getting inflated not just in India but in all emerging markets. This is expected to push the investors to real estate stocks and pure real estates in future. The company stands to gain from this move as it has a sizable land bank.
• The last year there was news in a section of the media that Alchemist Realty Ltd will invest over Rs.5, 000 Cr in the next 7-10 years for developing a land bank of 10,600 acres. The company’s land bank in CY08, stood at 10,600 acres across the country, mainly in the northern states.
• Alchemist Realty proposes to open a chain of specialty restaurants in northern India under ‘Red Cap’ brand. At first, the company would open only 20 (twenty) restaurants by the end of FY11 in northern states. The size of the outlets would vary from 3,200 sq ft to 6,500 sq ft. The company would also develop over 1,000 high-end housing units by 2011. The company would construct luxury villas on nine acres of land in Shimla and an IT park at Chandigarh.

Conclusion: Considering all the factors mentioned above it will be prudent to invest in the shares of Alchemist Realty Ltd for medium to long term perspective, though some short term gains till Rs.21 cannot be ruled out.

From the weekly charts it is found that the stock has a strong support at Rs.13.5; the higher bottom being made at Rs.14.20. The fast Stochastic and Bollinger bands are in buy mode. One can buy the scrip at the CMP of Rs.14.54 for a target of Rs.21 in the short term. In the medium to long term, the scrip can rise to Rs.55-Rs.60. Hence buy this scrip in all declines.

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