Multibagger at discount

Multibagger at discount

Gremach Infrastructure Equipments:
Investors can take this as Buy Call. We can see multifold returns in this counter. Gremach foray into oil rigs holds immense potential.

CMP: 81
Year High: 504
Year Low: 72
PE: 3.2 ;
EPS: 24.43 (March 08) ;
expected EPS: 30 (FY 09)
Sales: 102.36 Crores (June 08)
Equity MCAP: 127.76
Return on average equity: 35%
Debt/equity: 0.6
Net Operating Income per share: Rs 135 (March 07)… amazing

Some Key factors that are favoring gremach to become a money machine
Drilling rigs - Addition of four onshore drilling rigs with plans to add 36 more in three-four years.
Coal Mines & Equiment Rentals - Acquisition of controlling stake in coal mines in Mozambique and the booming market for equipment rentals suggest good earnings prospects. There is a global shortage and crisis of hard coking coal and this will add huge value to the profitability of the Company.
Demand-supply mismatch - A demand-supply mismatches resulting in rising oil rig rentals. Rising rentals and better utilization levels have shrunk the average payback period for oil rigs.
NEPL - The increasing number of onshore blocks in each and every phase of the New Exploration License Program (NEPL) points to strong demand prospects. Drilling costs account for 20-25 per cent of the cost of developing an oil well and are showing an increasing trend in the earnings of company.
Gremach has signed a MOU (memorandum of understanding) with Baoji Oilfield Machinery (BOMCO), subsidiary of China National Petroleum Corp for the delivery of 40 rigs, which includes 36 onshore and four offshore rigs.
The rental business of infra equipment has risen exponentially on the back of firm demand.
Entering into Coal Business - Gremach has taken a 75 per cent controlling stake in 11 coal mines in Mozambique. This business proposal is considered highly profitable, with projected IRR 35% in the light of huge market demand for on shore and off shore drilling rigs considering unprecedented rise in crude prices. Infact, rig rental day rates for Off-Shore Rigs have risen by 13%, averaging to around $ 3 to 5 lacs per day.

See its Client List…….. Very impressive
Larsen and Toubro Ltd., VRCL Infrastructure & Projects Ltd, Gammon, JMC Projects Ltd., Punj Lyod, ACC Ltd., Reliance Eng. Assoc. Pvt., Madhucon Projects, Nagarjuna Constructions Ltd, Hindustan Cons. Co. Ltd., Simplex Infrastructure Ltd., Grasim, UP State Bridge Corp. Ltd., IRCON International Ltd. (Govt.)

Shareholding pattern : Good
A. Promoters: 55.68%
B. FII/MF/Banks: 16.36%
C. Total Public (including B): 44.32%