Bhagyanagar India Limited - a buy back candidate

The last time I purchased this scrip, it was a 4-bagger. (last reco was in Jan '06). Though it would be wonderful to have similar results, there is enough merit in the stock to purport a second buy. Here's why -

1. There is a strong margin of safety in the stock. The NCAV of the scrip is Rs 22.40 per share. At a CMP of Rs. 43, this is a pretty good number

2. Interestingly the company's chief promoter, the Surana Group has been busy in March '07 buying shares in the company. Maybe they too feel, the company is undervalued at the current levels. Also Bearn Stern has a 5% stake in the company.

3. The last quarter results were fantastic. The company made a PAT of Rs. 48 crores .. a quarter EPS of 6.57 rupees per share. A good reason for these numbers, is the company's diversification into wind energy, estate and infrastructure. Copper products and jelly filled cables are still the primary revenue line for the company

4. Rising sales and now, rising profits.

5. The company has investments of 12.16 crores. Most of this money is in mutual funds, which adds further margin of safety to the investment. (around 2.8 rupees per share)

6. Although some of the current numbers are not comparitive because of changes in business .. i suspect the P/E of the company is around the 5-7 mark (which is quite comfortable)

Karvy has also placed a buy on Bhagyanagar India at a target price of Rs. 65. I agree to the buy decision but feel there more than sixty-five to this stock. A well diversified business, growing businesses, more sales & profits, under-valued, excellent NCAV .. a definite buy.