Sunday, April 7, 2013

Kirloskar Industries Ltd

I had written on Kirloskar Industries  nearly 2 years back. Since then . the stock has performed poorly and  had gone down all the way  to Rs.226 in Dec 2011.

There have been some changes in equity holdings over the last 2 years. An update on Kirloskar Industries ....

Equity holdings

42.65 lakh shares – 2.94% of  kirloskar oil engines

189.88 lakh shares -23.93 %  of kirloskar brothers

666.40 lakhs shares of 48.53% of kirloskar ferrous 

5.88 lakhs shares– 4.58% of kirloskar pneumatic

21.6 lakhs shares  - 17.39% of swaraj engines

Balance Sheet :

Paid up equity capital : Rs.9.71 cr

Debt : Nil

Cash : 68.5 cr

Income stream:

Annual Dividend receipts in 2011-12:  Rs.15.61 cr

Property licensing fee in 2011-12: Rs. 22.1 cr

Windpower unit sale: Rs.6 cr

FD interest: Rs.7 cr

Land assets:

276937 Sq Metres – khadki, Pune  ( 68.4 acres)-leased out  to Kirloskar Oil Engines Ltd

44081 sq metres- kothrud, Pune  ( 10.89 acres) – prime location in Pune. Apartment rates here are in the region of Rs.12,000-14,000 psf

6070 sq metres – bhare , mulshi, pune ( 1.5 acres)

Other assets:
5.6 mw Windmill

Possible Catalysts:

1)      Divesture of Swaraj Engines stake to M&M. This should fetch them a minimum of Rs.100 cr.
2)      Development / sale / co-development of Kothrud, Pune land. Though I’m not privy to land usage restrictions etc prevalent here, this is one of the most prime areas in Pune on Karve road and minimum valuations should be Rs.300 cr.
3)     Long term sustainable earnings ( from rent + dividend) are about Rs.40-45 per share.Last year the company paid only Rs.4 per share as dividend on an EPS ( including extraordinary income ) of Rs.69. Most Kirloskar group companies have a minimum payout ratio of about 25%. Any move by the management to bring the dividend payout ratio in line with group companies should see dividend per share moving up to Rs.10-12.
      Management quality - at best, sub par.
  Stock can languish for a long time in absence of triggers. 
 From today, the stock trades under the ‘illiquid’ category.

At  the cmp of Rs.350 and market cap of about 340 cr, the stock trades at about 10 times sustainable annual PAT of about 35 cr. 

At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments. 


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