*Intrinsic Value 1300cr:Mktcap 60cr* 

NTC INDUSTRIES LTD is engaged in manufacture and
exports of cigarattes. In fact, incorporated in 1931 and earlier known
as National Tobacco Industries Ltd, NTC had pioneered manufacture of
85mm Filter cigarettes in India and also 1st company to introduce
Mentholated cigarettes.  Main brands of NTC are;

Regent
COOL
No 10
National Gold Flake
Fine  Cut
MayPole
Jaipur
General

Its licensed capacity is 2250 million sticks per annum.

However, financial performance of NTC is small.  Cigaratte industry in
India and globally is dominated by Global Giants with ultra-strong
brand presence in all countries. In such a scenario, NTC did not and
does not have financial muscle to spend huge amounts to create brand
awareness of its brands. Therefore, company is utilizing miniscule
portion of its licensed capacity as company is able to sell its
cigarettes in North Eastern states and also do exports to Middle East
S America, Africa also (but here again margins are not good in these
markets).

FINANCIAL PERFORMANCE:

                            2016-17
                               Rs/Cr

Sales                         27

PAT                          3.30

Equity                    10.75

EPS Rs                    3.07

For FY17 , NTC's sales stood at 27crores and Rs 3 EPS

RATIONALE FOR RECOMMENDATION:

NTC is not being recommended for
investment from its current (or near future) financial performance.
But scrip is being recommended as it has HUGE HUGE INTRINSIC value
which has potential to be unlocked in future. It may be clarified that
unlocking of this intrinsic value may not take place in near future
and in fact, can take few years. But current market cap is MINISCULE
compared to potential of the company:

1. *NTC has 20 acres of land in Calcutta.* Its cigarette factory
occupies only small portion of this entire land.MARKET VALUE OF THIS
LAND SHOULD BE OVER *Rs 300 crores.* At present, NTC do not have plans
to sell the surplus portion of land. Instead, company is gradually
building/constructing (from internal accruals) offices/warehouses
which are being leased to ensure annuity type of income every
quarter/year. If NTC succeeds in building/constructing
warehouse/office complex on ENTIRE SURPLUS Land of its factory in next
4-5 years, NTC
MAY GET MORE THAN Rs 15 CRORE AS ANNUAL RENTAL INCOME. NTC is not
resorting to borrowings to expedite the construction on surplus land.
Company is following conservative path of internal accruals.

2. CIGARETTES DIVISION:  This division may literally prove to be
Goldmine for NTC. Investors may be aware that in India, issuance of
new license for cigarette manufacturing has been banned and even
capacity expansion to existing companies is banned. In nutshell, due
to pollution and health hazards when govt is trying to discourage
consumption of tobacco/based products, there CAN NOT be new players in
cigarette industry and there CAN NOT be new capacity additions.

Conservatively, CIGARETTE LICENSE/CAPACITY OF NTC IS VALUED AT OVER Rs
1000 CRORES.

Management still has not crystallized any plans whether
any branded foreign cigarette company can be roped in as JV partner
for producing/selling  cigarettes as NTC has inhouse manufacturing
facility and adequate capacity license. Or, will company be able to
find a buyer whom it can sell its Cigarette division.

Thus, market value of its Land in Calcutta and its cigarette
license/division can be over *Rs 1300 crores*. However, current market
cap of NTC is just Rs 60 crores.

Investors who have patience of 2-5 years can buy NTC in BIG quantity.
Investors looking for gains in short term may make nominal gains
as no possibility of value unlocking in near future. However, if
investors hold the scrip for 2-5 years, appreciation (depending on
when value unlocking takes place) can be anywhere between 300% to
500%.

Earlier, _all-time price of NTC was Rs 327_ when negotiations had started for
selling its cigarette license (which did not materialise). Current
market cap is just 5% of its estimated intrinsic value. Even if sale
of cigarette license is ignored and NTC develops entire surplus land
for Commercial/Industrial Park etc, lease rental alone, after few
years, can translate into PBT of more than 15 crores. Worst
scenario is that investors may LOSE upto 10-20% or GAIN from 300% to
500% in 3-5 years.

Promoter holding is 67.43% and finally, Debt-free