Prozone Intu Properties: Potential Multibagger TARGET 110/150+ IN 9-12 MONTHS (BIGGEST BENIFICARY OF REAL ESTATE & RETAIL BOOM AHEAD)

 

PROZONE INTU PROPERTIES formerly known as Prozone Capital Shopping Centres Limited (PCSC)  was demerged from Provogue on 10th Feb, 2012, and was listed on stock exchange on 12th Sept, 2012, is a joint venture between Provogue (India) and Intu Properties (UK), formerly known as Capital Shopping Centres (UK) in which Intu Properties holds 32.38% stake. Intu Properties invested Rs 202 crore for 25% stake (via FDI Account) in FY07.

 

Prozone INTU is a specialist retail and residential-led mixed-use real estate development company, harnessing Intu Properties plc experience as UK's largest retail real estate developer combined with Provogue (India) Ltd's in-depth knowledge of the Indian market.

Intu Properties plc is a FTSE-100 Company listed in UK and has an asset valuation of more than 9.9 billion pounds. Intu Properties plc owns 20 properties, including 9 of the top 25 shopping centers in UK with a dominant market share. Two senior officials of Intu Properties Plc sit on the board of Prozone Intu.

 They are set up to create, develop and manage regional shopping centres and associated mixed-use developments Pan-India. The company currently has shopping centres in operation and under construction, residential projects and commercial units for sale.

 

 

Business Strategy –
 To develop large scale Land Parcels for Mixed Use development.
 75% of the Land to be developed as Residential & Commercial – Build & Sell model
 25% of the Land to be developed as Retail – Build & Lease Model
 The Company follows this model so as the Cash Flows from Build & Sell portfolio facilitate the Build & lease model, Thus resulting into Debt Free Annuity Assets.
Residential Projects ‐ Strategy
 The Company invests and develops the entire Clubhouse and Site Infrastructure for the project upfront before the Launch of the Project.The Clubhouse features all the Modern amenities and is spread across 4‐5 acres of Land. It provides credibility to the business as all the Amenities are developed Upfront and also all the project permissions are in place, thus accelerates the sale of the project, resulting into better cash flows.
The company spends around Rs. 14 ‐15 cr on this upfront Infrastructure as it is cash rich and not levered. Also since it has economies of scale the cost is apportioned across large no of units resulting into cost effective way.  Due to this, the Company emerges as the strongest and the most credible player in the region. Eg, In Nagpur, Company has received an over whelming response is compared to the best players in the region such as Tata Realty, Mahindra & Godrej Properties.
STRONG LAND BANK
As per the company, it owns six land banks located in Aurangabad, Nagpur, Indore, Coimbatore, Jaipur and Mysore  comprising of a total of atleast 169.55 acres . As can be seen from the list of cities, these are mostly Tier-II and Tier-3 cities and the plans of the company is to develop regional shopping centres along with residential and commercial properties surrounding the retail properties.

  

  

 KEY INVESTMENT RATIONALS

Retail– Aurangabad Mall update - Build & Lease Model

New Stores opened in Q1 FY18 – Skechers, Kompanero, Y Casuals and Organic India

Upcoming stores: Good Traction seen in leasing activity as another three Brands are under fitouts stage with over 17,124 sq. ft including anchor brand Max. Also, another 40,163 sq ft of leasable area already signed up including anchor brand Big Bazaar

Retail – Nagpur: Retail design finalized and approvals have been applied for

Grand opening for Coimbatore mall with glitz and glamour, largest mall in the city of international standards with globally renowned brands and 85% leased out space • Coimbatore mall is received well by strong national and international brands, eight anchor brands occupying significant mall space • 9 screens multiplex from Inox, highlighting strengthening relationship with strong brands • Debt repayment at Coimbatore will accelerate further once mall stabilizes • Key brands occupying space at the mall:

Update - Build & Sell Model • Residential – Nagpur

• Project complied with RERA requirement, 336 units will be delivered under the project, revenue recognition continuing in a phased manner

• Registered with RERA; reforms expected to bring long term benefits for the sector • Focus on completion of project, tower wise handover to commence from Q4 FY 2017 – 18

BUY PLAYERS OF MARKET OWN BIG CHUNK IN THIS COMPANY  

OUR RECENT INVESTMENT PICKS GIVEN ON THIS BLOG GIVEN SOLID RETURN TO FOLLOWERS 

LIKE EON, ARCHIDPLY, ZUARI GLOBAL, SAWARIA AGRO AND MANY MORE

DIWALI TO DIWALI PICK ( CONSUPTION STOCK ) ........... JVL AGRO INDUSTRIES LIMITED

 

 

 

 

India is the world's
fastest-growing economy.

This growth is reflected in a nationwide increase in disposable incomes. This increase in incomes is transforming lifestyles faster than ever before. The most palpable manifestation of this transformation has been in the evolution in the dietary preferences of the average Indian.

JVL Agro is capitalising on this transformation by making timely investments and widening its product portfolio. Making it one of the fastest-growing edible oil processing companies in India today. Essentially because JVL Agro has focused singularly on choice and food hygiene. Product safety. Branded and packaged assurance. Widening product mix.Integrated food manufacturing infrastructure.

"JVL Agro Industries (JVL) formally known as Jhunjhunwala Vanaspati Limited, incorporated in the year 1989, manufactures hydrogenated vegetable oil (vanaspati ghee) and refined oils, at its manufacturing facility in Varanasi, Uttar Pradesh located in North India. JVL started as a modest unit, with a production capacity of 25 MT/day is today the single largest manufacturing Company of hydrogenated vegetable oil in India producing over 300 MT/day. The name of the Company was changed from Jhunjhunwala Vanaspati Limited to JVL Agro Industries Ltd in 2008.

JVLAIL's manufacturing facilities are strategically located at Varanasi (Uttar Pradesh), Dehri-on-Sone (Bihar), Alwar (Rajasthan) and Haldia  (West  Bengal.

SALES Rs.3857 Cr

EBITA Rs.72 Cr

PROFIT Rs.32

EPS Rs.2 PER SHARE

BOOK VALUE Rs.36 PER SHARE

JVL AGRO CAN GIVE YOU 50-60% RETURN IN SHORT TERM TGT 35/42+

POTENTIAL MIDCAP MANTRA 10X STOCK ............... GARNET CONSTRUCTIONS LIMITED TGT 200+ IN 2 YEARS

 

SCANSCRIP ----BUY "GARNET CONSTRUCTION"@ 23Rs -HIDDEN GEM

 BSE CODE: 526727,

Company Name: Garnet Construction

COMPANY SNAPSHOT: 
It gives us a great pride and satisfaction to welcome you to view few of our prestigious projects.

Garnet construction is a 20 years old professional real estate property developer organization having proven track record of property performance and client satisfaction. We design our projects to cater individual and institutional buyers.



Delivering projects on time and within established budget is key to company’s success. We believe in fulfilling our customer’s requirement at “one stop” by rendering all the services.

Our in-depth knowledge of Land developing has led to an opportunity to acquire / develop over a total of about 600 acres of land for diverse projects including industrial, commercial and residential projects.

Garnet Construction Ltd., was established primarily to develop, manage and lease Industrial Plots and sheds. We have since extended its services to offer clients a variety of real estate related services as well which includes Residential/Industrial/Commercial Open Plots / Bungalows at Khopoli & Lonavala.

Due to persistent, innovative and dynamic team efforts of all the directors, the group today stands poised as consistent and most trust worthy real estate group in Mumbai. Over the span, the group has grown from strength to strength having completed number of projects and gained complete faith in time honored concepts of Quality, Excellence Design and Construction.

Garnet Construction Ltd. is also making its presence in Mumbai through its ongoing project of a Commercial complex called “Garnet PALADIUM” in Goregaon (east) in Mumbai suburbs.

The Company is led by its Promoter Director Mr. Kishan Kumar Kedia with more than 35 years of experience in the field of Industrial plot and his two sons Mr. Arun Kumar Kedia and Mr Sanjay Kumar Kedia following in his footsteps are developing a residential township of 400 bungalows called “Magic Hills” in Khopoli (Ambivali Village, Taluka Khalapur) near Mumbai Pune Expressway.

The Company is also developing another project of 9 Residential Buildings in the same vicinity called Magic Heaven.

The Promoters of the Company Mr. Arun Kedia & Mr. Sanjay Kedia have floated a new group Company known as J.S Realty Pvt Ltd. Under this, a new project called Sunshine Paradise has been launched which is a gated community with complete infrastructure & has all the modern amenities.

FINANCIALS :
Face Value: 10rs

Total Assets : 89cr

Total debit : 20cr

Blocks : 10crs

Book Value: 50

Price/ Book : 0.50
INVESTMENT RATIONAL:

This Stock is going to be Big Multibagger stock in coming day. It is market Hidden Gem.Indian Govt. Has Focus on Low Cost Housing and This company is offering houses at very reasonable price. Specially Company has Big Land bank in Mumbai with its subsidiary company. I will not be surprise if this stock will become at least 5 to 8 multiple in coming day. This company is trading at very very low valuation. It is hidden gem stock.

MEGA JACKPOT::::::::::::::: ARO GRANITE LIMITED " Benificiery Of Housing + Real Estate Boom "

Aro Granites

Benificiery Of  Housing + Real Estate Boom

(NSE CODE:  AROGRANITE, BSE Code: 513729) (CMP: Rs.78)

Company Description

Aro Granite is based at Hosur in Tamil Nadu, promoted by Mr. Sunil Arora for processing polished/ flamed granite tiles and slabs. The company also exports its products to North America, South America, Europe and Far East markets.

 

ARO Granite Industries started operations as a 100% Export Oriented Unit in 1991 for processing Polished / Flamed/modular Granite Tiles & Slabs. It is engaged in manufacturing of modular granite tiles and granite random slabs. It is a star export house; exporting to around 30 countries like North and South America, Europe (UK, Germany, the Netherlands, Italy), Africa, Greece, Portugal , Iran and the Far East. Their plants are strategically located and therefore, it gets direct access to quarries in South India, which are known for the finest and widest range of appealing granites. The company has installed the most sophisticated and environment-friendly granite processing machinery imported from Italy.

 

Positives Triggers

§  Diversified market globally, US being only 20% of the overall portfolio, which protects them from uncertainties in one market, supplying to almost 50 countries. Top 10 distributors contribute to only 17% of the sales, which makes the trade less risky.

§  Last year, Aro’s 11000 sq meters warehouse became operational which is a game changer according to the management. It has enabled them to display their products in a much better way and gives them a chance to stock granite and compete with the market. Before their customers used to spend almost 3 to 4 weeks to book 15 to 20 containers, but now with the warehouse adding value to its product, the same customers are able to book 15 to 20 containers in a day thereby improving the efficiency of their sales.

§  Aro granite set itself in a different league as it sells the most expensive granite in the industry, it’s mainly because of their costing’s and their high end customers do not mind spending.

§  Indian market is also having huge demand of Tiles and Granites because of push towards housing for all by 2022 and also Smart Cities are being built.

§  ARO Granite saw capacity utilization – 85% , Tile capacity utilization – 60%.

§  Topline growth can come due to Cut to Size & entry into new markets. The company can easily do more than 300 crores  turnover from existing capacity.

§  The company had to shift their entire model from produce on order to Stock & sell. The new warehouse can stock ENTIRE finished goods. Now clients can fly from abroad, stay in banglore for 2-3 days, finalize the order after seeing the material & availability. Due to warehouse, now sales cycle will be faster.

§  Since entire finished goods inventory can be stored in the warehouse, lot of free space available in the factory. Now there are 80 blocks in the que instead of 100 blocks for processing. Also, 12 gangsaw machines can do 90 sowing, instead of 75 due to free space. Due to these efficiency measures, peak capacity has gone up by 20%.

§  No capex for next 2 years.

§  No cross-currency risk, as their billing is in USD & Euro.

§  Sales Breakup

Competition From Domestic Un-organized Players

Being tax compliant there were not able to compete with the domestic competitors who tend to evade taxes & deal in ‘kaccha’. Local players selling price is equal to aro‘s acquisition price. Aro pays 22% duty, local guys pay nothing. Aro does everything in white, there is no cash transaction at all. “We pay highest taxes & our procurement cost is the highest. But then our selling price is higher than everyone.

” With GST coming in and government focusing on cashless trade there will be a time where ARO granite will be able to capture domestic market. Since they are the best in terms of quality, management is confident of being in a position to grab domestic market share.

 

Management View On Quartz & Porcelain

§  It is a very simple technology. You only require Quartz, which is available round the world. Then it requires pigment and epoxies. In the end, it is not big rocket science, anybody can make it.

§  The company did some preliminary study on Quartz project & ruled it out. The problem is China, the usual mass production which they do. In the next five years, as per their study, the production will be not 5x, may be 10x more than what they are doing today. So they are going to capture the whole market and it will be very difficult for us in India to compete with the chinese.

§  There are two technologies, one is Breton and other is the Chinese. The Breton plant costs almost 300 crores and the Chinese costs hardly 50 crores. But there is not much difference in the selling price, hardly 10%.

§  In the last one year the median prices have gone down from $60 a square meter to $40 a square meter. ( As on august / sept 2016 )

§  Porcelain slabs are in similar sizes to Quartz and the thickness they process is between 3 mm and 12 mm.

§  The advantage is that they are copying lot of marble products like the Popular Calcutta, etc. Marble is not acid resistant / stain resistant / scratch resistant and the same problem is with Quartz. Quartz is also not stain resistant, acid resistant or fire resistant. When you take Porcelain on the other hand, it overcomes all of these things. So it is definitely a superior product compared to quartz. The price range of Porcelain is much higher, currently it is almost double the price of Quartz but it is still cheaper than the higher range high-end marble.

§  As per management view- Natural Stone market will always be there. Artificial stone, which is essentially a man made ‘fake’ product, will not remain popular for so long.

Triggers For Granite Industry

§  Opening of mines which have been closed in many parts of the country especially TN and Karnataka.

§  Correction in drastic price differences created by currencies especially due to Brazilian currency devaluation. Brazilian granite has a currency advantage at this point of time & Indian players are not able to match their pricing. Any improvement in Brazilian economy is a good news for indian players too.

 

 

 

Our View

§  Margins may have bottomed out in last few years. Before 2007, the company consistently delivered 20%+ ROE & ROCE. Company got attacked from all sides over the last 10 years. US housing bust + underutilized capex + brazil currency devaluation + competition from engineered stones + quaries closing down in TN, Whatever could go wrong, has gone wrong for them.

§  Now demand growth is picking up from all sides Domestically and Internationally, US President TRUMP and Indian Prime Minister MODI both have the vision to make the infrastructure as their top priority.

Why To Buy

The Company has been very consistent with dividends and has also been rewarding shareholder with regular bonuses and is available at extremely compelling valuations of less than 9.45 times trailing PE whereas industry PE is 26.66. The company would keep bettering on the growth moving forward and would be a clear beneficiary of word economy picking up and smart cities project, Housing for all could be the icing on cake. The company would become debt free this year. With a lot of its raw materials being imported and most of the products exported, the company is naturally hedged against currency fluctuations. A point to note is that No other company in this sector has this level of natural hedge. It’s great because it saves finance costs. The company’s almost doubling its sales every four years and should better this moving forward. The company that’s consistently growing for last 10 yrs, regularly rewarding shareholders with bonus shares and dividends and is in one of the hottest sectors of the moment cannot keep on trading at these kinds of ridiculous valuations. The management quality is impeccable here. This is one stock that has not just survived but thrived in harsh business environment and with improving business environment, the company can graduate to a new level altogether.

Super Compelling Valuations

 With the current market cap of just 119cr whereas Enterprise value is 553 cr, Debt to equity is very low just 0.75, Book Value is 111.95, Price/ Book- 0.63, EPS of FY17 - Rs 8. This is a wonderful cash bargain. On top of it its being trading at a dirt cheap PE of just 9.45. Even doubling from these levels the stock would still be just 19 PE. Given that its peers are trading at anything between 20-80 PE and given the strong demand of its products, strong earning consistency and visibility the stock, backed by an ethical management should get strongly re-rated in near future.

 

 

MIDCAPS MANTRA 10x