VBC Industries-Another multibagger in making

VBC Industries-Another multibagger in making I am not supposed to put all clients note here but due to numerous request of you people i am putting the report of VBC industries which was recomended to clients at 13rs some months back.Scripscan-VBC Industries LtdCode-524310 CMP:13Target:30Equity-17.48 crs.Duartion=6-9 monthsStory-Belonging to VBC Ferro Group, VBC Inds. has at present investment activities. Its Equity is 17.48 crs. Book Value is Rs. 18.90. Company has following investments:1) Orissa Power Corporation: OPC is implementing 100 MW Hydel Power Plant in Orissa. VBC is holding 1.40 cr. shares in OPC which is nearly 45% of OPC's total Equity. 20 MW of OPC is scheduled to start in Dec. '07. To implement balance 80 MW, OPC may, after 6 months place Equity with some FII at Rs. 40-45 per share. Thus, value of VBC's investment in OPC will stand multiplied 4 times to nearly Rs. 60 crs. These days, scrips of Power Sector (particularly Alternate Energy) have highest fancy in the market. For Example, Energy Development has P.E. Ratio of 21, quoting at Rs. 85/-.In fact, when OPC comes out with IPO after 1 year, IPO may be at Rs. 80-100. It means, Equity Holding of VBC in OPC can be worth Rs. 140 crs. after 1 year or so.2) Konaseema: VBC Ind. is holding 1.4 cr. shares in Konaseema.Profile of KonaseemaKGPL is gas based power project which has, in Phase-I, already implemented 445 MW Power Plant. Plant for the same has been supplied by Siemens. EPC is by L&T and O&M is by NTPC. Other share holders of KGPL are:Name Equity---------- -----------L&T 5.06ILFS 6.75LIC 4.82GIC 4.82IDBI 8.43International Power Vision 2.01TIFOI 8.89Project cost of Phase-I was 1383 crs. Phase-I is ready to become operational but gas supplies did not start yet. As a result, project cost stands increased to around 1700 crs. Now, KGPL has embarked on Phase-II which involves setting up of 820 MW Plant at a cost of Rs. 2782 crs. which works out to Rs. 3.39 cr. per M.W.. D.E. Ratio will be 4:1.Phase-II is likely to be implemented by April 2010. Phase-II is being erected at the existing site to avail of ready infrastructure.L&T is providing 66 cr. deferred payment credit. It is reliably learnt that for Phase-II, KGPL may make pre-IPO placement of Equity at Rs. 40-45 per share. Once KGPL gets gas supply and power generation starts in June-08, company may come out with IPO at Rs. 100/- per share. Considering that Reliance Power may price its IPO of Rs. 2/- at Rs. 80/- per share (Rs. 400/- for Rs. 10/- F.V.) although, its Power Plant will be commissioned in 2012, KGPL IPO at Rs. 100/- should be a big success.Thus, again value of VBC Ind. investment in KGPL can easily be Rs. 150 crs.COMBINED VALUE OF ABOVE 2 INVESTMENTS OF VBC IND. SHOULD BE NEARLY RS. 300 CRS.New Trigger: Unlisted Group Company of VBC Group is likely to be merged with VBC Ind. This unlisted company holds 3 cr. shares of Konaseema. Market Value of these 3 cr. shares will be nearly Rs. 300 crs.Post Merger, Equity of VBC Ind. will rise to Rs. 30 crs. which means, around 3 cr. shares. And, its investments post merger will be:1) 4.40 cr. shares of Konaseema, market value of which can be Rs. 450 crs.2) 1.4 cr. shares of Orissa Power, market value of which can be Rs. 140-150 crs.Conclusion-Thus,combined value (post merger of VBC Ind. investments can be Rs. 600 crs. or even more. It gives market value of Rs. 200/- per share. Even if we give it a 85% discount to NAV, its share prices should be Rs. 30/-. Once the market gets the full story,Its share price can double in 6-9 months.As and when IPO of KGPL and OPC hit the market, share prices can go much higher.At 13-14rs it looks gem of a buy.Go for it guys.