GMDC Limited: Making Tonnes Of Money
BSE 532181; CMP Rs 488
GMDC Limited has set itself a target to achieve Rs 10,000 crore in enterprise value and a colossal increase in Revenues over the next 5 years, most of which will be generated through Power and Mining.
It intends to put in the following projects:
-A 16 per cent stake in the 480 MW BECL lignite based power plant in Bhavnagar, and as a JV with Gokul Refoils for setting up a 125 MW lignite based power plant at Tadkeshwar.
-Two Coal blocks allotted in the State of Orissa and Chattisgarh will be sufficient for generation of 5000 MW of power. The corporate has entered into a Fuel supply agreement for power projects involving a capacity of 1750 MW in the States of Maharashtra and Chattisgarh as a JV with KSK Energy Ventures.
-That apart GMDC is likely to get a nod from the GOI for the setting up of a 1000 MW coal based power plant in Chattisgarh.
-GMDC has applied for 8 additional blocks on which greenfield power plants will be set up as integrated operations, and another 15 blocks for coal mining rights in the States of Orissa, Chattisgarh and Jharkhand.
-GMDC has also formed a JV with Aluchem, USA for setting up an alumina plant with a capacity of 1 mln tonnes and for setting up another alumina plant with a capacity of 1 mn tonnes with Ashapura Minechem.
-GMDC has also entered into a 49:51 JV with RIL for Coal/Lignite gasification projects. This JV will set up atleast 3 commercial gasification projects utilising-450 mn tonnes of Coal/Lignite.
-GMDC has entered into a JV with the Jaypee group for the setting up of a 2.4 mn tpa Cement plant, complete with a port, capitve jetty and SEZ for mineral based industries..
-On forecast FY08 earnings per share of Rs 17, the stock fetches a PE of 28 and on FY09 estimated EPS of Rs 29, it fetches a PE of 19.
-With more and more clarity on the upcoming projects, the earnings visibility will improve further leading to earning upgrades.
-The stock may be considered with a 3 year holding horizon.
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