We had mentioned that the company has been acquiring coal blocks since last few years and getting backward integrated. The latest annual report gives a strong confirmation on the same:
Excerpt from the FY 2010 annual report:
“During the year under review, the total coal production at Belgaon Coal Block is 140,147 MT as against of 51,234.41 MT in the previous year, which is about 174% higher than the previous year.”
If one analyses the Fixed Asset schedule and the investment section, the company has been stepping up the investments for captive coal blocks after the success from the Belgaon coal mine. For eg: The co has invested 10 Cr+ in subsidiary – Khappa Coal Mine which is JV between Sunflag Iron (63.27%) & Dalmia Cement (36.73%).
Future expansions as per the annual report:
Compelling Valuations at CMP of 34:
- FY 2011 Expected turnover is 1650 Cr+, with expected NP of 110 Cr+
- Stock is trading at less than 5 PE on expected FY 2011 earnings
- Stock is trading at 1.25 times BV of 25.50
- Debt Equity ratio has improved to 0.80 : 1
Promoters have been regularly buying from open market and have increased their stake from about 40% in September 2008 to about 51% as of now.