Topic: Elpro International Posted: 31/Dec/2006 at 6:51pm
Elpro International is a power company. This company caters mainly to the power sector. This company has got two manufacturing plants. One plant is located in Pune and the second in Hyderabad. In a recent development, this company had decided to sell its Hyderabad plant to Siemens for a total consideration of about Rs 25 crore. This transpires Rs 75 per share.They have got another plant in Pune where again they have got about 30 acres of land. Their business operations require only about 12-15 acres of land. It has plans to develop the balance 15 acres of land in Pune. This land is located next to Telco’s plant at Chinch-wad. They plan to develop this land in a phased manner over a period of one to two years. It could fetch nothing Rs 100 crs. It has investments of about Rs 12.5 crore in Metlife India Insurance. Today the market price of the investment is estimated at Rs 250 crs if they were to sell their investments. It roughly could fetch 725 crs. Insurance being an annuity business, as soon as these companies break even or come into profit, their valuations can go up many times their par value. The management has recently passed a resolution for buying back 25% of the equity from the markets. The management passing a resolution to buyback equity at Rs 183 per share only confirms management's convention in the long term profitability of the company. This company has got an equity capital of Rs 3.5 crore. At the current price, the market cap is only Rs 76 crore whereas the sum of three aforesaid factors is mind boggling.
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