PTL Enterprises
BSE ID : 509220 NSE ID : PTL
RECOMMENDED PRICE 20.75
PEAK FROM RECO 88.63 327.13%
CURRENT PRICE 39.04 Resource id #17
PTL Enterprise is an Apollo Tyre associate company and is sitting on valuation of one forth to its derived fair value. Given the conservative approach of valuing the company at 0.6 times to fair value on conservative ground we arrive at target price of Rs 55.
PTL Enterprises
PTL Enterprise is an Apollo Tyre associate company and is sitting on valuation of one forth to its derived fair value. The risk gets mitigated with the fact it's a consistent dividend payer over the years and now the dividend is expected to rise substantially. The rental income of this company is 40 crores. The company entered into a contract with ATL for 8 years for lease agreement which is expected to get renewed in 2014, we expect 35-50% rise in rentals and approximately, 40 percent rise in PAT on standalone basis to 25 crore and dividend expected to increase anywhere between 1.5 to Rs 2. Thus, at current market price the stock is expected to give dividend yield of 7.5 percent. The company has leased out 32 acre land in Kalamassery Kerala approximate land bank value 15 crore per acre. Apart from the land bank lease rental the company owns Artemis Hospital whose valuation is more than the current market capitalization.
Hidden Gem: Artemis hospital existing capacity of appx 350 beds expected to increase over 550 beds by next year. They had expanded by 47 beds last year in Dwarka. The hospital chain clocked revenue of 219 crores vs. 192 crores last year and generated a cash profit of 9.76 crores. This has been a turnaround year for the hospital and now bottom line will add to PTL consolidated results.
The conservative valuation of the hospital is approximately 460 crores valuing at just 1.35 crore per bed and adjusting for the debt of 125 crores. The value for shareholders is approximately 335 crores. There has been talks in the past that company was offered 2 crore per bed capacity valuation by some leading players which are valued 4-5 crore per bed but the management refused the 600 crore valuation as per the market sources. Even if one ignores the buzz the most conservative valuation the subsidiary valuation is bigger than EV of the company.
The lease rental which the company generates is appx 40 crore per annum from next year the company will generate rental of 40-60 crores depending where the agreement will be reached. The debt of the company in last two years have reduced by 70 crores in 2011 it was 199 crores which will save a huge interest outflow and thus generate higher PAT in years to come. At this run rate we expect the company on consolidate basis to become debt free by 2016.
Considering a value play we feel adding subsidiary value to shareholders at 335 crores and value of land bank on rentals approximates at 288 crores. The fair value to equity is 630 crores against current market cap of 135-140 crore. Given the conservative approach of valuing the company at 0.6 times to fair value on conservative ground we arrive at target price of Rs 55.
PTL Enterprise | ||
Details | Particulars | Valuations |
Land bank value discounted | Conservative market value 32 acre total appx Rs 15 cr per acre |
288 crores |
Hospital Artemis & related diagnostic centre + Dwarka | 347 beds@1.3 |
468 crores |
Total Valuation |
756 crores | |
Less Debt |
125 crores | |
EV for Shareholders |
631 crores | |
Discount model @ 50% |
315 crores | |
Discount model @ 60% |
378 crores | |
Current Market Cap |
138 crores | |
Upside range ( Target Price) |
45-55 | |
Promoter holding |
74.92% |
Disclaimer: Aashish Tater is an equity analyst and investment consultant based in Kolkata, INDIA. At the time of writing this article, he, his firm and dependent family members have no position in the stocks mentioned above. The author invites readers to send him email and welcomes comments, feedback & queries at query@fortunewizard.com. This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information/ article. Safe to assume stock recommended to clients.