AnantRaj Industries-CMP Rs 693 Target 12 M: Rs 1000
Anant Raj Industries Ltd at a meeting of the Board of Directors of the Company held on March 31, 2006, is believed to have cleared the following proposals:
1. The allotment of fresh equity shares and warrants, on preferential basis, in accordance with SEBI (Disclosure and Investor Protection) Guidelines, 2000.
2. Amalgamation of companies, engaged in hospitality and real estate business, with the Company.
3. Investment in equity share capital of Company(ies) engaged in real estate business.
Current Market Value of Land Bank Rs 3500 crore Fully Diluted Equity Rs 37 crore (after conversion of warrants and fresh placement) Value of Land Bank per share: Rs 945 Current Market Price : Rs 693 Discount to Realisable Value of Assets: 27 per cent. Ignoring cash flows, the share has an upside of 30 per cent from here. Target Price: Rs 1000 per share New Proposals Commercial Real Estate for a Sichuanese Provincial Government-100,000 sft New Hotel near Delhi Soft Opening of a 250 bed Hotel in association with a Sri Lankan concern by June 2006. Total Area under development: 1.5 mn sq feet. Total Area to be taken up for Development additionally: 1.8 mn sft Anticipated profits for FY06: Rs 29 crore
Anticipated profits for FY07: Rs 80 to Rs 100 crore Anticipated profits for FY08: Rs 120-145 crore
What does the above imply?
AnantRaj intends to de-risk business model from a pure residential and commercial property developer to a bigger player in the Hotels/Hospitality arena. A new Hotel project, in addition to the one already being executed may be announced soon, as a natural extension of the above decisions. The Balance Sheet gets extremely strong The arrival of some more presitigious strategic investors into the AnantRaj Equity, through the Direct Investment route. Preferential Allotment to be made as per Sebi pricing formula. New shares to carry a one year lock-in on sale/transfer. Pricing to be above current market value of land bank with the company. Financial strength gets added to AnantRaj, as large scale Real Estate players give the supporting hand. No personal aggrandisement of Promoters takes place, as money flows into the company. More pressure on management to professionalise and stick to Return targets.
The current lot of investors is already very strong-read who owns the concern Promoters: 68.86 per cent Reliance Capital: 1.31 per cent FII's: 6.89 per cent These include Citigroup, Lloyd George, Bearn Stearns and Others PCB's: 6.88 per cent including the Anil Dhirubhai Ambani group owned Sonata Investments with 15 lakh shares. Public Holding: 10.86
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