Ansal Buildwell

Ansal Buildwell recently came out with its financial numbers for the quarter ended March of 2010. In fact, sales have been marginally down to about Rs 31.5 crore, but the company has registered a profit after tax of about Rs 2.6 crore as against the loss of Rs 1 crore for the same period last year. This is a Delhi based company operating primarily in Gurgaon. In fact, Ansal Buildwell is responsible for development of a large part of Sushant Lok II and Sushant Lok III in Gurgaon.

The company is currently doing row houses in independent floors in Sushant Lok III. There was a decision by the Haryana government about two years back which allowed registration of independent floors in Gurgaon. That decision came as a big benefit for Ansal Buildwell since it was involved mainly in independent houses and independent floors in Gurgaon. So that has been a big business booster for this company. If you look at full year numbers for this company for FY10, sales are up by about 3% to Rs 125 crore. Profit after tax (PAT) is up by close to 50% to about Rs 10 crore, EPS is about Rs 13.25. So at the current price of Rs 80, the stock is traded at a price to earnings multiple of about Rs 6 and the good part about the company is that the company has got land which is available in the books at the historical rates.

The company has been a consistent dividend payer for the past five-six years. In fact, last year also, which was considered a difficult year for most real estate companies, the company managed to make a profit after tax of about Rs 6.5 crore and paid a dividend also last year. Given all these factors, the stock looks undervalued even though there maybe a few concerns. The major concern is with regard to information sharing and information decimation by the management.

That seems to be a larger concern as to transparency and information sharing with the shareholders is what I believe is lacking in this company. We have seen that in a number of smallcap and midcap companies, once management becomes forthcoming and they are willing to share the future plans with the shareholders in a transparent manner, many of these stocks undergo rerating. So once you go to Gurgaon and see the work which is happening there being done by Ansal Buildwell, it makes you happy. However, there is not complete information about the future plans of the company and other details with regard to land bank available with the shareholders. At the current market price, the negatives seems pretty much factored in the stock price.