Stock Review: Binani Industries

There is an interesting accumulation going on in this stock. It was expected that post delisting move of Binani Cement, Binani Industries is bound to see these kind of movement. They have successfully acquired now 95% stake of Binani Cement and Binani Cement is getting delisted. Yesterday, the stock Binani Industries has been moved by about Rs 30, infact there has been strong accumulation going on.

If you see the rationale behind delisting of Binani Cement, it is to eventually give the control or hive off or sell the cement division to the ultimate buyer. This company has a present capacity of nine million tonne, which is going to get increased to about 15 million tonne in next 12 months time. They have presence in India, China, Mauritius. There is a lot of appetite for the larger cement play. Suppose if a company has a capacity of ten million tonne, and that too with the newly created capacity, all those companies can easily fetch a price of USD 160 per tonne. And this company falls in that category. As I said that eventually they will be having 50 million tonne.

If I go by the present cement companies in India, there are only three companies having capacity of ten million tonne i.e. Shree Cement, India Cement and Binani Industries. So, I am taking a call that ultimately the promoters are going to sell this company. The cement division can fetch them about Rs 8,000-8,500 crore.

If I go by the present marketcap of the company, it is less than maybe about Rs 650 crore. Even if I add that debt of about Rs 2,400-2,500 crore in the books of the company, total EV of the company is at about Rs 3,200 to 3,500 crore. So, I am expecting a big corporate move likely to happen in this company, which can take the share price to about Rs 350.

If you see the track record of the promoters, they have been very conservative. If they have initiated a move, first of delisting the Binani Cement at a higher price, there is bound to be some game-plan going on in the minds of the promoter. So, I am quite optimistic purely on the expected sale of the cement division and that can result share moving to about Rs 350 maybe in next eight-ten months time.