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Aashish Tater

Aashish Tater

5.30 AM Jan 1st 1970

Texmaco Infra

BSE ID : 505400     NSE ID : TEXINFRA

RECOMMENDED PRICE 44.55

PEAK FROM RECO 91.90 106.29%

CURRENT PRICE 95.95 Resource id #18

Texmaco Infrastructure & Holdings Limited is presently concentrated in the businesses of Real Estate, Mini Hydel Power and Investments. We recommend this stock at Rs 44.55 with a target price of Rs 62-78.

Texmaco Infrastructure & Holdings

A holding company with huge land bank value in prime area of Delhi. One proxy bet to consider ahead of railway budget as Texmaco Rail is already up from 100 to 145.

The BIG BET:

Historically Texinfra runs 30-40 percent ahead of railway budget. Thus taking this into consideration the first target on the stock is 62.

Interestingly the stock is expected to have positive development as it owns prime land in Delhi which is worth more than the current market cap. The land-bank itself is said to be worth 600 crores.

The stock comes in limelight just few weeks before the Rail Budget. This time Texmaco rail is up from 100 to 145 before the budget period meaning additional rally can be expected in the holding company too. Texinfra owns 5.46 crore shares of Texmaco Rail thus in the long term the holding company texinfra will also benefit. This will be the first rail budget from the Modi Government, thus investors will go with lots of expectation

Strategy is to book 50-65% just during the Rail budget where we expect stock to test 62 odd mark and rest hold for 78 in the long run. All the group stocks are performing well thus texinfra as a holding is likely to get significantly rerated from current price.

Company owns 3 million shares of Zuari Global & mutual funds worth 44 crore as per latest balance sheet also few other investments.

The Delhi land bank is said to be worth 500-600 crores on conservative side. The asset monetization will rerate the stock in the long term.

About TexInfra:

Texmaco Infrastructure & Holdings Limited, founded in 1939, has demerged its Heavy Engineering and Steel Foundry businesses, constituting the major part of its operations, into a separate company called Texmaco Rail & Engineering Limited.

Texmaco Infrastructure & Holdings Limited, post-demerger of Heavy Engineering and Steel Foundry businesses, is presently concentrated in the businesses of Real Estate, Mini Hydel Power and Investments. The demerger of the company was with the prime objective of each constituent company being able to focus in the core areas of its respective business segments.

Key Triggers:

Railway Budget: If one critically analyze recent trends not many players are in the sector and railway stocks float has got squeezed post BJP coming to centre as main focus has been on Railways network and expansion. Our expectation the growth in railways will be above par the last 10 years average and lot of commitment in form of FDI is expected in the sector. The rail budget will set benchmark for quality companies. Kalindee Rail being merged with Texmaco Rail, makes it a one stop shop and other key players not interested in selling their stake clearly focuses on a scarcity premium for major players if so even the holding companies will get rerated significantly as they trade at significant discount to intrinsic value.

Similar story we focused on was BBTC and Britannia, eventually wealth creation in Britannia led to wealth creation in BBTC (BBTC is up 5x and Britannia also up 5x). Thus it is always not true to assign holding value discount of 30% to actual value the discount can be higher. Take a scenario where further float of railways goes to stronger hands willing to hold as we expect if Railway budget can see 20-30% y-o-y growth for main company than investors will take a safer switch from Texrail to Texinfra as it always have a cushion on downside + the land bank and other investments.

Word of Caution:  Railway budget will see lot of expectation being built, railway stocks rally very fast and tend to give gains post budget. Past analysis also suggest railway stocks loose sheen post budget  once the stock nears the first target of 62 (do remember 26th Feb budget make or break day for railway stocks).

Disclosure (SEBI Registration Number for Aashish Tater :  INA300001206)  
Stock Ownership No
Stock traded in Last 30 days ( No trading or investment activities done) No
Stock Recommended to Clients Yes
Remuneration/Benefits received from company in 12 months No
Merchant Banking Market Making activities / projects No
Any arrangement with co. to affect the report write up No

Disclaimer: Aashish Tater is an investment adviser 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.

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