Mudar Pathreya (known for his Dark Horse Picks)in Business Standard.
Sumeet Industries Bse Nse:No-brainer yarn spinning opportunity. A company that reported quarterly earnings before interest, taxes, depreciation and amoritsation (Ebitda) of Rs 27.58 crore is being valued for a market cap of around Rs 95 crore (which means on an annualised basis, the Ebitda could well be larger than the prevailing market cap, an investor trust deficit waiting to be corrected). Interest cover was a modest 2.55 times for a growing company in a capital-intensive sector; pre-tax profit was Rs 11.8 crore on an equity of Rs 58 crore (Rs 10 face value). The story gets more interesting when you consider a prospective expansion (manufacturing capacity and power plant) will increase revenues on the one hand and reduce costs on the other, the benefits of which one could start seeing from 2017-18 onwards. So, even as the company is quoted at a ridiculous discounting, this discount could deepen if it can maintain its current run rate and add expansion benefits. Could be quite a two-year story from this point.
Sumeet Industries Bse Nse:No-brainer yarn spinning opportunity. A company that reported quarterly earnings before interest, taxes, depreciation and amoritsation (Ebitda) of Rs 27.58 crore is being valued for a market cap of around Rs 95 crore (which means on an annualised basis, the Ebitda could well be larger than the prevailing market cap, an investor trust deficit waiting to be corrected). Interest cover was a modest 2.55 times for a growing company in a capital-intensive sector; pre-tax profit was Rs 11.8 crore on an equity of Rs 58 crore (Rs 10 face value). The story gets more interesting when you consider a prospective expansion (manufacturing capacity and power plant) will increase revenues on the one hand and reduce costs on the other, the benefits of which one could start seeing from 2017-18 onwards. So, even as the company is quoted at a ridiculous discounting, this discount could deepen if it can maintain its current run rate and add expansion benefits. Could be quite a two-year story from this point.
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