*Balasore Alloy Ltd*

BAL is 2nd largest producer of Ferro Chrome in India. Co has its _own captive Ore mines_. Hence cost of production of Ferro Chrome per ton is largely fixed.

Balasore alloy had produced 1.22 lac tonnes in FY16.

Production in FY17 was1.31 lac tonnes

_Co is in position to produce 1.40 lac ton in FY18 as installed capacity is 1.46 lac ton_

Financials:

                FY17

Sales.      1012

NP.               90

Equity.     44.4

EPS Rs.   10(diluted)

Balasore made NP of 43.52 cr in 9 month of current year on 39.44 cr Equity. No *NP OF Q4 ALONE IS 46 CR*

a) BAL is lowest cost producer of Ferro Chrome with cost of Rs60000 per ton.

b). One-third of contracts are booked on yearly basis. It means co  got benefit of high price in H1 as well
c) 50% contracts are quarterly basis. So impact of higher price would have  added to profits in Q1

d) one-third contracts are booked on spot basis.

Co has already started work for underground mining of Ore

As per our analysis, considering orders under execution,  *Balasore can post NP of 30+ cr for Q1*.

*For FY18 Balasore can achieve NP of MINIMUM 105cr*

_EPS for FY18 can be 11.70_. Stock is trading at *just 5.10xFY18Eeps*

BAL appears underpriced and there is scope for decent appreciation.

We expect stock can be 85 in 3 months and 110  9 months

An excellent Buy