Indiabulls power is one of the youngest power producing company in India. The company is currently developing thermal power projects with an aggregate capacity of 5400 MW. Both the current projects are in Maharashtra, Amravati and Nashik. For more info check, http://www.indiabulls.com/power/default.htm
Started in the year 2007, Indiabulls power belongs to the Indiabulls group which also run successful business in the areas of Housing finance, Real estate and Stock broking. This group is renowned for making regular and liberal dividend payouts which also indicates that all their business are operating profitably.
PRESENT DAY NUMBERS
CMP on Day04 May2014: Rs 7.90 Market cap: 2085 crores BV: 20.5 FV: 10
Revenue Q3FY14: 91 cr Revenue Q2FY14: 102 cr
Both projects being implemented by the company are greenfield projects (started from scratch). Since the inception of the company, there have been no revenues. The last 2 quarters (Q2 and Q3 FY2014) are the first time they are having operational revenues.
MULTIBAGGER POTENTIAL
1. Phase 1 (2700 MW) construction almost complete. Various units will go towards commission in both Amravati and Nashik over the next few quarters.
2. Land, water and coal clearances all in place for entire 5400 MW generation capacity
3. Annual run rate of around 40 billion units will be achieved by the completion of Phase 1
4. Tariff for 1200 MW tied up with long term PPA with Maharashtra SEB at rs 3.26 / unit
5. Full financial closure achieved for total capex for development of entire capacity of 5400 MW
6. Assuming 1 rupee per unit as margin, cash generation for average 25 billion units per year would be around 3600 crore.
INTERESTING INFO: Recent dividend payouts of Indiabulls group company's
1. Indiabulls HF (FV: 2 rs): 450% (Apr14), 350% (Jan14), 350% (Oct13), 300% (Jul13)
2. IB securities (FV: 2 rs): 50% (Apr14), 50% (Feb14), 50% (Oct13), 50% (Aug13), 50% (May13), 50% (Jan13)
3. IB Real estate (FV: 2 rs): 50% (Apr14), 50% (Oct13), 50% (Aug13), 100% (May13)
Looking at the track record of dividend payout of the various group companies, it is highly probable that even Indiabulls power could become a regular and rich dividend paying company. At the current CMP range of 7 - 9 rs; the future dividend payout could be very rewarding.
MY TAKE
India is one of the most power deficit countries in the world. Looking at the demography of India and the overall growth prospects of the country, the demand for power will be immense and will grow for at least the next one decade. Despite this reality, the power sector has been plagued by problems since last 2 - 4 years. Everything that could have gone wrong, has went wrong. Coal problems, discom problems, gas problems, governance issues, etc etc. The worst seems to be over. Speed in the sector reforms and decision making over the last few months will continue for the next 1 - 2 years.
Given this backdrop, Indiabulls power is well placed to grow its revenues and profitability over the next 4 - 8 quarters. The stock is available at a throwaway price. A 5400 MW power producer at around 2000 crores; a steal. The future can only be better. This is almost like a small plant which has the right prospects and environment to grow up to become a large tree.
A strong potential multibagger and future dividend story!!
Disclosure: I first bought Indiabulls Power around 14 months ago, and have been consistently adding to my holding since then.
Started in the year 2007, Indiabulls power belongs to the Indiabulls group which also run successful business in the areas of Housing finance, Real estate and Stock broking. This group is renowned for making regular and liberal dividend payouts which also indicates that all their business are operating profitably.
PRESENT DAY NUMBERS
CMP on Day04 May2014: Rs 7.90 Market cap: 2085 crores BV: 20.5 FV: 10
Revenue Q3FY14: 91 cr Revenue Q2FY14: 102 cr
Both projects being implemented by the company are greenfield projects (started from scratch). Since the inception of the company, there have been no revenues. The last 2 quarters (Q2 and Q3 FY2014) are the first time they are having operational revenues.
MULTIBAGGER POTENTIAL
1. Phase 1 (2700 MW) construction almost complete. Various units will go towards commission in both Amravati and Nashik over the next few quarters.
2. Land, water and coal clearances all in place for entire 5400 MW generation capacity
3. Annual run rate of around 40 billion units will be achieved by the completion of Phase 1
4. Tariff for 1200 MW tied up with long term PPA with Maharashtra SEB at rs 3.26 / unit
5. Full financial closure achieved for total capex for development of entire capacity of 5400 MW
6. Assuming 1 rupee per unit as margin, cash generation for average 25 billion units per year would be around 3600 crore.
INTERESTING INFO: Recent dividend payouts of Indiabulls group company's
1. Indiabulls HF (FV: 2 rs): 450% (Apr14), 350% (Jan14), 350% (Oct13), 300% (Jul13)
2. IB securities (FV: 2 rs): 50% (Apr14), 50% (Feb14), 50% (Oct13), 50% (Aug13), 50% (May13), 50% (Jan13)
3. IB Real estate (FV: 2 rs): 50% (Apr14), 50% (Oct13), 50% (Aug13), 100% (May13)
Looking at the track record of dividend payout of the various group companies, it is highly probable that even Indiabulls power could become a regular and rich dividend paying company. At the current CMP range of 7 - 9 rs; the future dividend payout could be very rewarding.
MY TAKE
India is one of the most power deficit countries in the world. Looking at the demography of India and the overall growth prospects of the country, the demand for power will be immense and will grow for at least the next one decade. Despite this reality, the power sector has been plagued by problems since last 2 - 4 years. Everything that could have gone wrong, has went wrong. Coal problems, discom problems, gas problems, governance issues, etc etc. The worst seems to be over. Speed in the sector reforms and decision making over the last few months will continue for the next 1 - 2 years.
Given this backdrop, Indiabulls power is well placed to grow its revenues and profitability over the next 4 - 8 quarters. The stock is available at a throwaway price. A 5400 MW power producer at around 2000 crores; a steal. The future can only be better. This is almost like a small plant which has the right prospects and environment to grow up to become a large tree.
A strong potential multibagger and future dividend story!!
Disclosure: I first bought Indiabulls Power around 14 months ago, and have been consistently adding to my holding since then.
This comment has been removed by the author.
ReplyDeleteGreat job!
ReplyDeletePlease check the capacities, as I believe it is 1350 MW (5x270 MW) each for Nashik & Amravati.
Mr SS, Good that you made a decision to buy Indiabulls power. You will make a lot of money out of this stock.
DeleteBoth the Amravati and Nashik power plants are similar in nature and also the capacity to be generates. Both projects are being implemented in 2 phases.
What you mention is Phase 1. That is 1350 MW each. In phase 2, the capacity will be doubled in both plants. So by the time both projects are fully complete and operational, it will be 5400 MW in total.
All the best!!
Mr SS,
DeleteHere is a strategy for you that will be good in the long run based on my understanding of your situation.
My understanding is, you have invested all your capital in Indiabulls power at probably around 9 rs.
From time to time (based on your assessment) take 10 - 20% of the PROFITS of the pool and invest it in these 3 stocks in the ratio of 50:30:20
1. Firstsource solutions
2. Electrosteel steels / or Udaipur cement works (which ever you like)
3. Prakash constrowell
While making a purchase always wait for dips to buy. Till then put the money in the bank and wait.
Best Regards!!
Sir, can you please provide the best entry level for both Electrosteel steels and Udaipur cement works
DeleteDeba,
DeleteAnything below 5.50 is good for ESL and below 8.50 is good for UCW (for accumulation).Investment time horizon needs to be 4 - 5 years for massive profits.
If your total capital is less than 10 lakhs; stick to 4 - 6 stocks; the ones you like best and are fully convinced about.
You need to build bigger holding by buying/accumulating in small chunks in order to get maximum benefit from multibagger stocks.
All the best!!
Dear ZY
ReplyDeleteWhat should be the best range to buy & accu. on dips for IB power.
Thanks & Regards
Dear san, Since last few weeks both the overall markets and IBP are at high levels. So very wrong time to buy now. Wait with patience and it is highly probable that you will get some market lows or a fall or downtrend.
DeleteIt would be a good idea to start accumulating from a price of 12 - 11 or below in a staggered manner to take advantage if it goes even further down. Alternate scenario is, markets will sustain over the next few weeks / months and in parallel IBP will do at least 2 good quarters financially. In that case, even 16 to 18 could be good accumulating levels.
You will be very well rewarded if you have a time frame of 3 - 5 years. If longer time horizons are possible, you can even consider to make this a dividend stock.
Best Regards!!
Sir,
ReplyDeleteI recently came across this blog and found it informative for me. I have few queries from my side
1. Pl give your views on Birla Cotsyn, GreenFire Agri Commodities, Singer India and KEC int.
2. I have fresh capital of Rs.1.25 lakh. Out of the stocks given by you, pl suggest 3 stocks and the time for buying. I am a long term investor.
Regards
Dr.A.K.Shrivastava
Doctor Shrivastava, Good to see your message and queries. Let me respond in 2 parts which will make it quite clear for you.
DeleteSince last few months, the Indian stocks are in a roaring bull market. This is the worst time to buy. Rather this is a time to sell if your stocks have made adequate profits.
For now put your 1.25 lakhs in the bank and wait patiently. In the next few months, there will be a market correction OR sell off. Till then you have to wait. Then you will get stocks are a good time for entry.
As you are a medical doctor and long term investor (I am assuming minimum of 3 - 5 years); here is the strategy for you (in next part)
Response to Dr Shrivastava, Part 2:
DeleteDivide your capital in the ratio 4:3:2 and invest in order:
Firstsource solutions, Indiabulls power. The 3rd is a choice between Udaipur cement and Electrosteel steels (you can make the choice as to which one makes better sense for you; always good that you do some homework)
After you have made allocation to these stocks, try and increase your ownership in them as and when possible (when ever you get additional capital). Try to have atleast 1 lakh of ownership in each stock over time. How ever, always BUY ON DIPS. It takes time and immense patience. How ever if you want to create huge wealth in stock markets, BUY LOW and SELL HIGH is the only option. And to Buy Low, you have to buy on dips.
Sometimes such as the current ones, it appears as if the market will never go down or will never offer corrections and dips. That is an illusion. It never happens that way. Time and patience will offer dips and low prices for sure. When, no body can tell. These are the skills an investor needs to develop.
All the best and Kind regards!!
Cont-
DeleteAbout Singer and KEC I have absolutely no idea.
Green Fire Agri; it was on my radar few months ago. I could smell an opportunity there. How ever it is one of those companies about which there is very little (or almost no) info about its operations.
Such stocks could still provide miraculous profits (so almost like a lottery).
But I did not buy the stock.
Perhaps will include in my radar and watch it.
If something comes up, I will share with you.
Best Regards!!
Dear Sir,
ReplyDeleteThank you very much for your detailed response. Buy the way, I am not a medical doctor, I hold a Ph.D in Electronics Engg and I am in academics.
I would request you to have a look on my 1st question also ( Birla Cotsyn etc.).
Although nobody can time the market, there are speculations of Nifty going near 7900-8000 range and then consolidating after Union budget forming a bottom at 6800. I would like to have your views on it.
Regards
Dr.A.K.Shrivastava
Doctor saab,
Delete"You cannot time the market" OR "nobody can time the market"
This is one of the biggest myth(and that is the reason why most people do not make money). This is a propaganda propagated by people who are not able to do it.
The all time fundamental principle of stock market is BUY LOW SELL HIGH. What does that mean? By definition, that means you need to time the market.
I time the market all the time (since last 2 years); And successful every single time. My ownership prices of the stocks I own; some examples; Trigyn tech (27 rs); Onmobile (29 rs); IndiabullsPower (9 rs); Prakash Constro (1 rupee); Marksans (18 rs); GVK (8 rs). Not a single stock, I think I have paid more. Always buy low. First necessary step.
It is just a matter of focus, discipline, conviction, independent thinking and decision making. 100 percent possible.
Best Regards!!
Dr Shrivastava,
DeleteAbout Birla Cotsyn, I did a high level bird's eye view study.
Their debts are at around 200 CR. Since last 8 quarters, the quarterly revenues have fallen (continuously and consistently) from 300+ cr to 30 cr per quarter. Fall in every single quarter.
This stock needs more detailed study and research (if one needs to consider this as an investment). Study about what their products are, where their markets are, financials (if they reflect the truth), promoter integrity, reason for decline, future prospects, etc etc
How ever if one wants to consider this as a sort of lottery (high risk high reward); at a price of 10 - 20 ps; it seems to be the rock bottom.
As of now, that is my view. Hope this helps.
Regards!!
Dr Shrivastava,
DeleteI further spent some time investigating Birla Cotsyn (as I did not want to miss out on a potential opportunity)
How ever, I could not find a single positive aspect which could motivate me to invest in this stock. If you find anything positive / hopeful at all please share with me.
With my current level of knowledge and info about this stock, I would never buy it.
Kind Regards!!
Dear ZY, thanks for you detailed analysis on IBP, i have started picking it up in small quantities at current level. I wanted to have you view on this solar energy company called "swelect enery". I invested a little amount a year ago and then never really followed up. They seem to be a cash rich, near debt free ( in terms of cash) and good dividend paying company. Would be great to have your view on it, if you've already studied this company or can spend some time. rgds, -Pratyush
ReplyDeleteDear ZY, Can one enter at CMP in Firstsource, Prakash, Electrosteel, Ybrant, IndiaBullPower, JK Udaipur in such overvalued market? If not, at what price one should enter woth out being left out? Javed
ReplyDeleteDear Javed, You have asked a very good question. In fact, this is something that will be bothering a lot of people in the investment world.
DeleteLet me answer in general terms here. Then on each stock page; I will provide with specific views.
A correction is long over due for the market. When it will happen? No body can tell. The investment world (global) is awash with cheap liquidity. As long as that continues; stock markets will keep making new highs.
Specific to our country; if the new BJP govt. is able to give a decent budget (which in all probability it will); there will be no stopping the market.
So a real meaningful correction (at this point in time); appears to be far away. Despite saying that; keeping money in the bank and waiting for dips/corrections/market falls; is an essential trait that an investor needs to develop. Some time it takes weeks; some times even months.
There is another challenge of not being left out.
The only option is to take a stock specific approach.
If you buy a good quality company at reasonable(or cheap) valuations; and have an investment time horizon of 2 - 4 years; you cannot go wrong. 8 out of 10 times, you will win!!
Hope this answers your question comprehensively.
Best regards!!
Now I will give a stock specific answer under each page. Cheers!!
Stock: Indiabulls power
ReplyDeleteSpecific response to query by JM;
With a time horizon of 2 - 5 years; let us visualize Indiabulls power will reach a price of approx 90 (or 120)
Caution: This is only for illustration (as I never give targets)
So it does not really matter that much if you buy at 15 or 10 or 20 (from a profitability perspective)
How ever it is wiser to buy in multiple chunks with few weeks gap (as you can benefit from corrections; if any)
Best Regards!!
This comment has been removed by the author.
DeleteSir,
ReplyDeleteYou can have a look at TAKE Solutions. The promoters have been increasing their stake. I would like to have your views, regarding TAKE Sol Vs FirstSource Sol.
Regards
Dear Abhi, I will respond to this question of the page of Firstsource solutions.
DeletePlease refer that page for the response. Regards!!
Sir,can we enter IB power at this point when some rearrangement of control is being exercised amongst the MDs.Will it in any way affect the share price and profitability?will it continue to remain investor friendly as the other segments of this group company?To be precise , can we enter now between Rs12-13now.Please reply.I do not have a very good idea as you have.Thanking you in advance
ReplyDeleteDear Ramakrishnan,
DeleteYou have asked a very relevant question on Indiabulls power. There is no easy answer to this. How ever I will explain my view in 2 parts.
As an absolute investment case, IBP is still deeply undervalued. The company also faces certain challenges and obstacles. Over a time frame of 3 - 5 years; most of these could be resolved.
From an absolute profit perspective; this investment could still yield good profits. How it needs loads of patience. Best Regards!!
From a business fundamentals perspective; the recent promoter re-structuring is a serious aspect to the business.
DeleteWe need to try and analyze and assess as to why this re-organization was done and what could be the long term impact to the future prospects of the company.
Apart from that; the company has not been able to meet any of its guidelines, targets and forecasts in the last 1 - 2 years. That means; obviously there have been problems and challenges. To make the matters worse; the top management have not been frank and forthright. Their level of disclosure is poor.
As an individual investor; at this point in time I would be cautious. And continue to observe the progress of the company. Given an option I would consider other prospective investments over this.
Best regards!!
Hi zorba
ReplyDeleteDo u think thus is the right time to get into thus stock indiabulls power...?
Hi Sandeep, Around one year back I was extremely bullish about Indiabulls power. It appeared as if it was just a matter of time for all pieces to fall in place. I cannot say the same now. There are too many inconsistencies and unknowns.
DeleteFirstly about the company, the way in which the ownership was re-structured was extremely arbitrary, non-transparent and unfair. That single one reason does not make this stock attractive to me any more.
Secondly, Over the last one year, the management has consistently failed to achieve all their targets. Both operationally and financially the company is in a deep mess. There are far more things (about challenges and obstacles) that are hidden from a small/retail investor, than the ones that are shared.
Thirdly, it will take at least 2 - 3 years (optimistic view) for all the mess, hurdles and challenges of the power sectors, namely, fuel (coal/gas) linkages and regular / consistent supply, the financial problems with the SEB's, interests on huge debts most of these companies are sitting on.
Keeping in mind all these factors, and as there are at least 20 - 30 companies in the market which have potential to give far greater returns, at this point in time, it would not be wise to buy Indiabulls power.
Best Regards!!
This comment has been removed by the author.
ReplyDeleteDear Sir,
ReplyDeleteI have bought 5000 shares of IBP at Rs.12. Can I average it now below Rs.9.
In my earlier query you have advised to buy IBP and FirstSource Sol. Can First Source be bought now.
Also please suggest just 2 more stocks out of the many for which you have given detailed analysis.
Regards
Dr.Abhishek
Dr Abhishek,
DeleteAveraging is not a good idea. I would never do it. It is a wasteful exercise.
About IBP, if you wait (few weeks or months); u could get back your price of 12 or somewhere near by which could be a good exit.
About Firstsource, you can surely accumulate with a time horizon of 1 - 2 years.
Few stocks that are Top in my basket are: Datamatics, Themis medicare and Texmo pipes.
All are potential multibaggers. All u need to do is buy and wait patiently. Time horizon 2 - 3 years.
All the best!!
Sir,i have bought 2000 IBP @ 14.70.Should i hold it or exit ????
ReplyDeleteDear Aniket,
DeleteIf you sell IBP now u will almost make a loss of 50%. Loosing money is never a good idea.
You have 2 options:
1. Wait patiently (few months or quarters); when ever there is a rally in the stock you can exit at much higher levels
2. Sell now, book your loss and invest in some other stock with good potential.
Based on ur needs and assessment, you need to make that decision.
Good luck!!
Hi
ReplyDeleteGive me your views on Bilcare, Honda seil, arvind remedies and himatsingha.
Regards
Gaurav Singla
Motila oswal ramdev recomondation buy target 75 to 125 long term please your opinion today. Long term bullis ho gaya hai ???
ReplyDeleteZorba yogi friend
ReplyDeleteI have menglor chemical buy price 15 & 30 stock quentity 3000 today price 73 sell all so rupees 2 lacks then buy indiabull power price 13.50 quntity 15000 & texmo pipe 18.80 buy quitity 5000 .. Thank you for your information for fundamental analysis .. --LALIT SORIA JAMNAGAR MOBILE NO 8758684563 & 9974705629
Today many blook deal price up high volume so non stop target short term 20 then 30
ReplyDeleteToday many block deal hua. So next short term target 20 then 30 hoga.buy buy kuchh news good aayege
ReplyDeleteSir is it right time to buy India bulls power ? And also kindly suggest few more stocks to buy.
ReplyDeleteThank you :)
Dear Neel,
DeleteTo solve all the problems in the power sector of India even to some extent, will take a few years.
There are at least 100 companies better than Indiabulls power.
So which ones would be better to buy??
Think about it!!
Friend indiabull power new managing director M.D. mr.jayant & new news bse me A group me treading ho gaya
ReplyDeleteLalit saab,
DeleteBringing a new MD is just one step. What about other steps?
It is quite obvious that IB power has been facing several problems since last one year. The quarterly financials reflect that.
Has the management come out and told the investors frankly, as to what are the problems??? When an investor even does not know what are the problems the company is facing, how do you expect to know the solutions??
Just because Motilal Oswal likes a stock, does not mean that I have to buy it. I should always use my own brains and make my own decisions.
Best Regards!!
Thank you friends for good opinion
DeleteThank you for your opinion sir :)
ReplyDelete