Nagpur based Noble Explochem Ltd is in business of explosives. However, at present, production not going on. Production is shut since last 4 years. Co had fallen into losses. Co has submitted to BIFR rehabilitation package seeking some debt relief/restructuring.
Current market cap of co is 18 crores. At present, explosive industry enjoys huge valuations in equity market (see price of Solar Industries, Premier Explosives etc). Once, rehabilitation package of Noble is approved, co can resume production and it is estimates that co will start making profit from day one.
Although scrip has already risen sharply in recent days (just come out of call auction system), still investors can buy at current price.
If its rehabilitation package is not approved (although it is very very unlikely as co already declared sick by BIFR) and production starts, stock can give MULTIPLE returns. Depends on how fast co ramps/increases production which , in turn, will depend on availability of working capital. If Noble can operate at 100% capacity, its share price can be Rs 200 in 3 years.
Worst scenario: Co fails to start production, share price can dip by
20-30% from current levels. Its debt is not high. Despite stoppage of
production, current losses are quite reasonable and not huge.
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