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We scan through 100s of stocks in a year and analyze several of them to come up with few good stocks recommendations for our Alpha/Alpha + members.
Our focus is medium-long term wealth creation and the idea is to try identify opportunities with long runway for 20-25% CAGR possibility.
Recently, I was looking at NCL Industries.
What caught my eye is that the promoters have been regularly buying the stock from the open market in the price range of 160-190 (CMP – 187).
The company manufactures cement and other products and has a capacity of around 3 MTPA.
We did back of the envelope calculation and estimated the replacement cost at around Rs 2,750 crore against current Enterprise value of around 1,100 crore.
Below, we have shared basic details about the business and expansion plans of NCL Industries from CRISIL 4th Jul’23 report.
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NCL Industries – Notes from CRISIL 4th Jul’23 credit rating report
– About Company
- NCL, incorporated in 1979 by Late Sri K Ramachandra Raju, manufactures different varieties of cement, cement bonded particle boards, Ready-mix concrete and Doors
- Mr. K Gautam (Managing Director) currently overlooks the operations
- Installed clinker and cement capacities of 2.6 million tonnes per annum (MTPA) and 3 MTPA respectively
- Cement, Ready-mix concrete, cement bonded particle boards and doors are marketed under the brands “Nagarjuna Cement”, “Nagarjuna RMC”, “Bison Panels” and “NCL doors”
- Abundant availability of limestone in its captive mines
- Availability of captive power of 23.5 MW (Solar – 8 MW, Hydel – 7.5 MW and waste heat recovery – 8 MW) adequate to meet 30-35% of its requirement
– Expansion plans
- NCL acquired TDPL in fiscal 2021 and it intends to set-up a greenfield cement unit in the land owned by that company in Visakhapatnam, Andhra Pradesh
- On April 2023, company acquired Vishwamber Cements Ltd (VCL) for a total consideration of Rs 16.23 crores
- VCL was acquired with an objective to convert the limestone mines covering an area of 322 acres under its lease into captive mines of NCL for captive consumption of limestones
- The company is expected to undertake additional debt funded capital expenditure of over Rs 150 crore to increase its cement capacity by 0.7 MTPA which is expected to take about 18 months’ time after receiving the required approvals
(End)
Disclaimer: This is not a recommendation to buy/sell NCL Industries. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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