Fundamentally analyzed Small and Mid Sized listed Companies on BSE and NSE. Please study or get an advise from your Certified Financial Planner or Advisor before investing into Equities.
(Investor can follow Hidden Gem Telegram Channel : t.me/hiddengemsmultibaggers )
Saturday, November 29, 2014
Stewarts & Lloyds of India Ltd (Recomended at 30)
Stock made high of 54 after recomendation STEWARTS & LLOYDS OF INDIA
LTD – BSE : 504960 (RS 30.00 FACE VALUE RS 10)
This company is Promoted by IOT
Infrastructure & Energy Services Ltd (100% Subsidiary of Indian Oil
Corporation Ltd) which holds 55.46% stake in it. The company has small
equity base of Rs 3 crore, with very low floating stock. The
company which is promoted by PSU Subsidiary Company, Listed on BSE, belongs to
turnaround sector, i.e. EPC & Project Maintenance is trading at a Ridiculously cheap, with market cap of only 9 crore.
Main business of the company is
to execute EPC, Maintenance, Engineering Services and Project Management orders
received from Indian Oil Corporation (IOC) and all its Subsidiaries through its
promoter company IOT Infra & Energy Services Ltd (IOCIESL).
Everything was going good with
this company till boom period of 2007-8 and before that. After that downhill
ride for the company started.
Main reason was Shortage of
Orders, Non availability of Bank Finance,
Non realization of old outstanding dues, Encashment of Bank Guarantees,
the company has to suffer a lot, as IOCL, from which it used to receive orders
was bleeding under subsidy burden, which made difficult for the company to allot
cash and undertake for new project and pass on the contract to Stewarts &
Lloyds through IOTIESL.
The performance of the company
has now hit the bottom and could not go down further.
In the past few months the UPA
and new NDA government has allowed to raise Diesel price by 50 Paise gradually,
the step which seems to be turning around the corners for the oil companies
including IOCL, now that the subsidy on Diesel is just under 1 rupee per litre,
as compared to Rs 15 couple of years back.
Now that OIL COMPANIES will again
start making profits, which will fill their chest with cash and help them to
execute new projects, which will benefit companies like Stewarts & Lloyds.
Even Stewarts & Lloyds have
proposed some steps to turn the company around , some of the Strategies adopted
by the company is as below :-
Regaining Customer’s Confidence
Initiatives to tie-up with various
Public / Private sectors
Strengthening the working
capacity with active business development drive
Synergies with group companies to
Upgradation of safety and quality
standard in order to meet up international standard
Restructuring its marketing group
to focus on company’s business for project related and maintenance job
Top build self-sustaining base
for manufacturing and fabrication unit
Measures taken for cost reduction
and cost control in all the activities
In a recently concluded AGM
the Chairman mentioned that
“The company is putting its best
efforts to come out of this impasse with the support of its parent company and
The parent company has come
forward with active involvement to resolve the stalement condition in the
The company is also having talks
with its associate companies for bagging some part of the Service / Erection
orders from them where involvement of Letter of Credit and Bank Guarantee is
The company is also concentrating
on procurement of maintenance orders from DSP, TATA STEEL and PARADIP where
requirement of supplyis very nominal.
The company is aiming for optimum
utilization of its available resources and hopes that with the visionary
outlook and effective planning of the NEW GOVERNMENT there will be BOOST up in
the Infrastructure and Engineering sectors and the company will be able to take
the opportunity to grab some of the business from the market and gradually come
out from such difficult situation.”
Conclusion : Looking at all the above reasons, Investors
can take small exposure in the company as high risk high gain bet with medium
term view of 12 months with target price of Rs 50. Which seems achievable if
company turns around and start making profits again.