Southern Ispat ( 531645 )

   Southern ISPAT - UnderValue & UnderPerforming Share Tgt :: 15 - 20 - 30

This is a case of sheer undervaluation of stock. Again this is no great analysis. I just managed to chance upon the stock. If one of you would have looked at the financials I think you too could have recommended this stock as an investment opportunity.


This was just one of the companies till the end of FY09. However, it is after FY09 when the management started taking a more aggressive strategy. And thus last year that is FY10 has been stellar.

Lets just give you pointers to what I saw.
a) Revenues have grown from Rs 39 odd crores in FY09 to 272 odd crores in FY10 (about 7 times)
b) Profit before interest and tax has grown from Rs 1.56 crores in FY09 to Rs 9.78 crores in FY10 ( about 6 times)
c) PAT has grown from Rs 0.73 crores in FY09 to Rs 7.33 crores in FY10 (10 times increase)
d) However during the same time the interest has gone up from Rs 52 lacs to Rs 62 lacs. The interest numbers not going up too much suggests that the growth is not burdened by debt.

If you look at the 1st quarter numbers they seem to vindicate that the company is clearly on a growth path.

(June 2010 results). Don't think these would need any further analyses.

So what next is in store for us. The following news flows could give some pointers to the future prospects of the company.

a) Meger of privately held Kerala Sponge with itself

b) Own power generation through waste heat recovery in the steel plant as well as coal based plants.

c) Purchase of company in Gujarat. (Management interview)

this mean -->

a) The company is integrating both backward and forward and this am sure will be reflected in the financial performance in future.

b) It is also alive to the opportunity that generation of power presents in current times.

c) The forward integration is infact even more interesting when the product portfolio of Newtech is looked at.

Did someone mention getting into auto parts manufacturing? Well if the entire company is being acquired then that is what is going to happen.

The company has just recently concluded a GDR issue of about 3.23 crore shares.

Now the interesting bit. On 27th of May 2010 1 crore warrants were issued to non promoters at Rs 32 per share (Rs 10 face value + Rs 22 premium).
    So Investing This Share .........

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