BSE ID : 505400 NSE ID : TEXINFRA
RECOMMENDED PRICE 33.85
PEAK FROM RECO 78.80 132.79%
CURRENT PRICE 56.05 65.58%
Texmaco Infrastructure & Holdings Limited is presently concentrated in the businesses of Real Estate, Mini Hydel Power and Investments. We recommend this stock to BUY at Rs 33.85 with a target price of Rs 62.
Texmaco Infrastructure: 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.
The BIG BET:
Suresh Prabhu's rail budget is expected to be a good one, but market is already high on expectations and thus carving out a safe strategy from investment perspective.
Railway budget will focus on modernization rather than expansion, will focus more on safety and dedicated freight corridors thus it will benefit Texmaco Group, Titagarh wagons but if we analyze these stocks have not corrected in the carnage.
Thus, there can be two scenarios (A) Suresh Prabhu’s budget meets market expectations, (B) it meets above market expectations and a very small chance of it disappoints the market. Incase (A) there is a probability of profit booking on the stocks (sell on news). For scenario (B) there will be 8-10% or higher rally in railway stocks.
Interestingly Texmaco Infra 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, apart from this the company owns 100’s of acres of land across India that takes total value of land bank between 1000-1300 crores ,the company is almost debt free and also have a small rental income from Gurgaon's property.
Company owns 3 million shares of Zuari Global & mutual funds worth 58 crore as per latest balance sheet also few other investments
The Delhi land bank is said to be worth 600 crores on conservative side. The asset monetization will rerate the stock in the long term
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.
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 lower. 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.
Market Cap - 430
Land Bank Value - 700-1000 crs
Value of Investments - 750 crs
Mutual Fund - 58 crs
Technically company available at 25 percent to intrinsic value.
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 today is 25th Feb Rail budget make or break day for railway stocks) So ahead of railway budget manage risks.
(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 firstname.lastname@example.org. 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.