JBF Industries Ltd: Buy
CMP: Rs.20.70
Book Value: Rs.23.52
Sectoral P/E: 25.44
Market Cap: Rs.170 Cr
CEPS (TTM): Rs.4.15
Recommendation: Strong Buy
Quarterly Net Loss came at Rs.40.27 crore in September 2021 as against Rs.88.28 crore in September 2020.
EBITDA for Q2FY22 stood at Rs.48.76 crore in September 2021 up 1410.75% from Rs. 3.72 crore in September 2020.
💢 According to a report published in ET, on 30 July, 2021, the Ahmedabad - based CFM Asset Reconstruction Company was declared the preferred bidder for JBF Industries in an all-cash, Rs.825-crore out-of-court resolution plan to settle the Rs.2,000 crore debt of the stressed borrower, translating into a haircut of 59% for the lenders to the polyester maker.
This means the debt is now Rs.825 crore (and not ~Rs.2000 Cr), which the company has to compensate to the CFM ARC. Hence, the debt has come down substantially.
As a result CFM ARC has taken symbolic possession of the company assisting the old management who is still in control of the affairs. This arrangement might continue, till either the CFM is able to sell it to a large conglomerate or effect a turnaround or till the company becomes debt free.
Isn't it a superb information...😊😊
Therefore, though the current benefits from its operations are going to the AFM ARC, this is helping it in its efforts to become completely DEBT FREE, isn't it?
Hence, we can only expect positives from the company on the fundamental front in the days ahead, especially considering the robustness of the September, 2021 quarter results.
By the way, the polyester fabric market is doing fine post easing of the lockdown restrictions, imposed due to Covid-19 Pandemic.
Since the lenders are set to give a 59% hair cut on the loans of around Rs.2000 crore, the deal has become a copy book case of Suzlon Energy Ltd (Rs.10.20), which is hitting Buyer Freezes, since some time. You must have seen that I have done substantial ground work for Suzlon Energy Ltd, at a time when most analysts were giving sell call on it....
Moreover, the plants are currently operating at 70% of the Peak Capacity. So, there's likely to be substantial revenue increase when the company goes for an additional 30% (plant) loading.
We therefore, don't need a Mukhesh Ambani, story to paddle the price of the scrip forward. Buy, the share in market dips for targets above Rs.100 (one hundred), as I'm expecting a vertical recovery from here.
1 comment:
Does CFM ARC buying out debt from the banks at discount reduce debt in the company's books? Isn't this a secondary market transaction between banks and the ARC? As per my limited understanding the company's liability doesn't reduce in this case. ARC has already taken symbolic possession of all assets and has issued a notice to the Co under sarfaesi act suggesting Co will eventually have the right to dispose off the assets / collaterals to recover their dues from the Co.
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