[T.S.R:17564] JB Chemicals-BUY

We have made some rough calculations for JB chemicals based on the conf call transcript on the website

The downside appears limited (PFA our working excel and an ENAM report on the company - plz ignore the russia part)

 

Comments/suggestions invited.....

 

 

A

Valuation - As per CMP downside appears limited

B

Calculation Of net debt

Particulars

Amt

Debt as on Mar 2010

Rs cr

136

Cash in books

Rs per share

102.4

3 yr avg operating cash flow for 2010-11

Rs cr

80

40% discount ('coz investing in pharma business)

40%

Cash as on mar 2010

Rs cr

78

After cash

Rs per share

61.42854208

Net debt

Rs cr

-22

Total Business Revenues before deal

Rs crs

800

Remaining business revenues

Rs crs

615

EV (assuming a price/sales multiple of 1)

Rs crs

615

Net Debt

Rs crs

-22

Equity Value

Rs crs

637

No of shares

Crs

8.45

Per share value (assuming a price/sales multiple of 1)

Rs per share

75

Total Value in case of non payment of dividend

Rs per share

137

CMP

Rs per share

128

C

Remaining Business revenues as per mgt in concall

D

Cash in books

ROW

m$

28

Cash recd

Rs cr

1160

Russia Prescription

m$

22

Escrow acccount (payable 15 months later)

15%

174

j&J

m$

20

Balance receivable after 1 month

Rs cr

986

m$

70

Discounting with 12%

977

Exchange rate

Rs/$

45

Discounting of escrow money with 12%

147

Rs cr

315

Present Value of total money receivable

1124

Domestic

Rs cr

300

Tax Rate

23%

Total

Rs cr

615

Final Balance

Rs cr

865

Per share cash

Rs

102.4

E

Some +ve developments

1

Ashish Dhawan holding ~7% and buying additional 5.6 lakh shares @128 Rs after deal

JB Chemicals & Pharmaceuticals Ltd.

Industry

: Pharmaceuticals & Drugs

House

: Private

Trade Price(Rs.)

Value (Rs.in Lakhs)

Exchange

Deal Date

Client Name

Tran

Qty (000's)

128.02

72388397

Close Price(Rs.)

NSE

25-May-11

ASHISH DHAWAN

BUY

565446

127.95

2

Sale of Russia business seems like good riddance as it was not returning funds anyways

Mar 2010 consolidated P&L sales roughly ~ Rs740 cr ...almost    half of which is stuck as sundry debtors of Rs 340 cr, out of which    almost half is debtors more than 6 months i.e. Rs 172 cr....

F

Possible setbacks

1

Management going back on their words like GeeCee Ventures/ Gwalior Chemicals. Went back on their word of investing in pharma, went back on giving dividend, announced buyback and went ahead with NBFC

Probability of the above event appears to be low

2

The presence of a savvy investor Like Ashish Dhawan need not ensure that minority share holders interest is taken care of, as was seen in the case of Indo asian fusegear where Ashish holds 8%

G

Links:

1

Conf call transcript

2

Money control Vidoes

 

 

Thanks & Regards

Sunil Pal

Sales Manager-PCG

CD Equisearch Pvt Ltd
517-519,5th Floor,Antariksh Bhawan
22 K.G.Marg,New Delhi-110001
Ph.No 011-45059486

Mob. +91 9899787890

Email-sunil.pal@cdequi.com

--
For Anything related with Stock market be Online at
http://www.niftyviews.com/
 
Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234
 
FOR TRIAL STOCK/NIFTY/OPTION CALLS
 
 
You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group.
To post to this group, send an email to STOCKRESEARCHER@googlegroups.com
 
To unsubscribe email
Stockresearcher-unsubscribe@googlegroups.com
 
for more info visit
http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB
.
This is Not a Spam Mail.
Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture."