Scripscan:Cable Corporation of India Ltd
cmp:20
Code:500077
Story:Cable Corporation of India is an interesting play. At one time, about five-six years back they use to be a blue chip company with a good market share of about 20% plus. They are only into the power cable and in fact they have the licensee of Siemens brand to market the power cable in India. The company earlier had their manufacturing facility at Borivali in Mumbai, apart from that they have manufacturing facility in Nasik and one in Sinnar, a suburb of Nasik.The company has moved all their manufacturing facility from Borivali to Nasik and Sinnar plant. The 22 acre of land which is now at Borivali is being developed by the company and the second phase has already been launched. The total saleable area which will be available to the company will be close to about three million square feet and that is likely to get developed in next five-seven years time.However, the part flows of the property income have started getting reflected in the financial results of the company. If we see FY11, they have booked property income of about Rs 55 crore and that has resulted into the PAT reported by the company. They also have been started getting good and lucrative orders from the state electricity boards. Hence, their power cable business is likely to get vastly turnaround.The debt of the company is not very high, the market cap of the company is close to about Rs 160 crore and the net present value of the property is close to about Rs 1,500 to Rs 1,800 crore and is likely to take place in five to six years time. Over the last 18 months, the company earlier issued optionally convertible preference shares, which were all converted into the equity of the company and hence, promoters are holding close to 75% stake and apart from that even the 25% float which is held by some of them are seen as associates or maybe, the strategic investor kind of people holding close to about 12-15% stock in the company. Therefore, there is a low float with a market cap of Rs 180 crore, if you have a float of even 8-10% that translates to a market cap of less than Rs 20 crore.Taking all this revival on the core business, apart from the huge cash flow likely to accrue to the company over next two-three years time makes the stock quite attractive and I won’t be surprised to see a price of Rs 40, in next 18 months time on the stock.
Source:SPT
