A Construction stock highly undervalued

Arihant Foundation and Housing , reputed Group of Chennai
(BSE 531381), S group,


(Visit website arihantfoundations for more information)


Fundamentals are far better than Prajay Engrs.(Hyderabad) and Ansal Housing (Delhi)


Last FY05/9 ( Rapid Growth since 2003)

Sales 125 Cr / 296 Cr
Net profit 7.51 Cr
EPS 12.52
FV 10.00
BV 75.00
OPM 18%
H/L 374.00 / 32.00
Div. 15%

Promo% 40.28
Fin Inst % 2.58
FII % 1.44
Pub % 34
Pvt Corp% 21.32
NRI% 0.17

(Note. There is some error in Annual Sales figures on BSE site. If added all four quarters sales separately then it comes 296.00 Cr. Pl check further)


Current Year Q1 (05/12)

Sales 87.41Cr
Net profit 3.42 Cr
EPS (Q1) 5.70

Annualized
EPS by Sept 06 Rs 22.00 Min

Industry P.E. 30(Construction and realty scrip)

CMP Rs 343.00 or so
at forward PE of 15.6

Likely to appreciate 100% by Sept 06.

Explore further.

Boss, Unsal Housing has is much stronger then you expect..I'm sure you're well aware of their developments in Kundli-Sonepat,Meerut,Noida,Gurgaon (Bahadurgarh)...the only problem came with this group when the "Uphaar" cinema caught fire..the group was in problem due to it...but that is long back issue now...anyway, I never mean Arihant is weak...but just have a deeper look and you may just find that there are far more factors to be looked into really than they appear to be...

Cement prices go up during these periods of year...but this year they have roared high...builders are feeling problems as the price of construction is high..they have, on the otherhand to give the projects complete in the promised price and promised time frame...
Such problems have been faced by the Vipul Limited (most of their projects on Sohna road and malls in Gurgaon are 50% over and investors have already invested), Unitech,TDI,Raheja etc...But Vipul,Unitech and Ansals proved to be smart..They bought in huge chunks of lands (more than 500 acres) in U.P. and near Delhi region....Vipul, Ansal etc started bookings at roughly 8000 per square yards and now the same is selling at 19000 per square yard...They have thus made the revenues to finish the projects...I mean these big builders amassed wealth this year by selling lands......Most of the builders could not do it..there are much more things to be looked into which can be discussed later...Arihant on the other hand, has done nothing as of now...there are a lot of liabilities for these companies which do not come on balance sheet (I hope you are smart inuff to understand that more than 40 % investments are black...the builders have to repay back the investors in black....)Vipul, Ansal etc are now holding huge acres of lands on the outskirts of delhi where the prices are too high (recent boom in real estate)....they will encash it at later stages..
Anyway, these have already made profits this year by selling lands...Arihant could not do it....
Arihant may look strong now, but in reality we are missing the black component that it has to pay back the investors......

We'll have to sit back and watch how it performs in the next six months....

Const. companies like punj lloyd on the otherhand have got many projects which will strenthen the company...I'm sure you're well aware of the flyover contracts and the medicity contract to Punj Lloyd..


Seniors comments solicited.......

All the best !!!!!

ganeshhity

Mcdermott

Wow .. truly great fundamentals and outlook !

But with a 52 week low of <40, the scrip has already gained nine fold. So the upside could be limited .

If on the other hand, it does double by 9/06, it will become a near 20 bagger in less than 2 years .

Just curious Mcdermott... but at what price did YOU get into this ? Maybe u shd have tipped us earlier

AGILENT

Dear AGILENT,

This stock is in the process of catching fancy due to property/construction boom. Secondly FIIs were to identify first its potential. I was trying to enter
when it was priced at 280.00 but due to lack of funds(when it was available)
and many times it was in upper ckts. But I could get it at Rs 350.00.

But I see that on the basis of fancy and realty boom it will touch 600.00 by Sept06.The company is still to do better. Full story is yet to unfold in Chennai and in the stock market.

It does not matter when it started rising till fundamentals are there to support.

Some of us may trace it at Rs. 500.00 and still would like to invest.

I think till now silent accumulation was going on.

I hope you get the answer,

Thanks.

Mcdermott
better late than never ... seems to be your story in this scrip ... hope u make good money

By the way, quarterly financials (on ICICI Dir .. Research) reveal a relatively stupendous performance 04/05 and therafter. See chart which I have attached to depict that surge in profitability.

(Perhaps u cd use such Excel based formats for a more impressive presentation ... a small tip from yours truly, an ex-trainer in corp finance)

Rgds
AGILENT

Attached Files

arifou financials.pdf (2.3 KB, 17 views)

Dear Agilent,

Pl recall our discussion on Arihant Foundation.

A great journey by this scrip since then. Today Rs 455.00

How far it can go?

Your opinion ?