Stocks which makes you RICH. (Indsil Hydro Power and Manganese Ltd ( INDSIL)

Stock Name:

 Indsil Hydro Power and Manganese Ltd ( INDSIL) ( Listed in BSE)

Indsil, with business interests in alloys and power generation is a fast growing GROUP with well integrated manufacturing plants and a well diversified geographical base. The Group's revenues are currently around Rs.2500 million / annum

Indsil has basically 2 divisions:

1. Smelter unit: situated in Palakkad,engaged in the production of Low carbon Silicon manganese.
2. Power: Company has 21 MW Hydel power plant in Idduki district, which witnessed 2nd highest rain fall in india.

Financial performance

FINANCIAL SUMMARY (in cr)

 

Particulars	2005	2006	2007	2008	2009 (12 months)estimate
Net Sales	55.33	34.78	52.43	88.01	118
Net Profit	9.08	3.61	4.90	17.48	21.50
Capital	9.45	9.45	9.45	9.45	9.45
Book value	25.25	27.90	31.33	48.45	-
Secured loan	30.34	29.08	22.18	13.52	-
Eps (Rs)	9.28	3.79	5.18	18.87	22.70
Reserve	14.41	16.92	203.16	36.33	-

Company have paid dividend of Rs 1.5 (15%) last year

FUTURE OUTLOOK:

1. One consortium had rights to develop 20 MW Hyder power plant.  Company bought these rights from this consortium.  However, implementation of same delayed  due to water dispute between Karnataka and T.N. Govts. It is not certain when these plans will be implemented.

2.At present, company is selling power to its smelter division @ Rs 3.50/ unit.  Now, company is in talks with a State Electricity Board who is willing to buy power from Indsil @ Rs 8/unit during peak hours 6pm to 10pm. Company is confident of signing this deal. If it materializes, company will supply nearly 24 million units of power @ Rs 8/unit which can add minimum 10 cr profits in 08-09

3. Mining Foray: Company has entered into a JV with Goodearth group who own Manganese ore mines in Indonesia spread over massive 5000 acres with potential of 3 mn tones reserves. Indsil holds 25% stake in this JV. This JV will also do merchant sale ( from 09-10 onwards) of manganese ore which can add huge value to Indsil valuations

4. Mergers :Group has one unlisted company called Indsil Energy in Durgapur whose production capacity is twice as much of listed Indsil. This unlisted entity also has 12 MW power plant. Its topline is around 190 crs with decent profits. Production capacity of this unlisted entity is being enhanced by 40-50%. Indsil Energy is likely to be merged with Indsil Electro in next 1 year. Post-merger, listed entity will hold 50% stake in Indonesian mining JV as this unlisted co also holds 25% stake in mining JV.  This will straightaway triple topline of Indsil Electro and a bigger company will have much higher valuations,

5. Name of Indsil Electro  changed in 08-09 to signify its nature of business (hydel power). scrip will automatically catch attention of all markets in future

Valuations: 

JP Hydro and Energy Deveopment  are in hydro power whereas Indowind is in windmills.   These 3 companies have extremely high valuations(mainly driven by operators as promoters had some gameplan to raise big funds). Adani Power is likely to come out with IPO at Rs 150-175/ although power plants are yet to be commissioned. Comparatively, Indsil is going dirt dirt cheap.

Due to rising crude prices, entire world is looking for alternate sources of energy.  After initial investments, hydel power plants are most economical to run with least operating expenses and with passage of time, operating margins increase (due to lower depreciation, interest cost). In such a situation, Indsil appears THE CHEAPEST SCRIP IN POWER SECTOR (that too alternate energy).

Our target price  

CMP( Current Market Price) : 24 rs

1. Rs 100 - 12 months

2. Rs 175 - 18 months

3. Rs 250 -24 months

4  Rs 1000- 60 month