BDH Industries is Porinju Veliyath's latest stock buy

[Ravi]

Porinju V Veliyath holds 58,000 shares of BDH Industries as of 31.12.2016. Santosh Kumar Saraogi holds 62,217 shares.

BDH Industries is in the Pharmaceuticals sector. The current market capitalisation stands at Rs 40.62 crore.

The company management includes Jayashree Nair - Chairperson & Managing Director, S C Kachhara - Executive Director & CFO, Karthika Nair - Non Executive Director, A V Menon - Independent Director, Dinesh Variar - Independent Director, Bhagirath Singh Sihag - Independent Director.

The stock is quoting at Rs. 106. The stock has lost 33% in one year but gained 52% in 2 years.

Why has Porinju bought this stock? Anyone knows?

[valuepicker]

It's around 73. Good value buy?

[Ravi]

The metrics are not very impressive. The market cap is only Rs. 41 crore. The daily volume is only 3,000 shares. The ROCE is about 13%.

BDH stands out for Bombay Drug House. Company’s plant is located on 2.7 lac sq ft at Kandivali east adjoining to Big Bazaar in the prime location of Kandivali. The FSI there is 2 which give saleable area of 5.4 lac sq ft on which 30% loading is permissible and feasible. Thus total saleable area works out to 7 lac sq ft and the existing market rate is Rs 5000 per sq ft. BDH has a manufacturing are spread over 42,500 square feet though the entire space is 270,000 sq ft.Co owns land and development cost is estimated at Rs 2000 per sq ft which leaves post tax profit ( 30% assumed) of Rs 2100 per sq ft.The clear tax free profit could be Rs 147 Crore on equity of Rs 6 Crores offering earnings of Rs 240 per share.Shifting cost is not in excess of Rs 15 Crore which hardly matters. Rumuors are that one of the leading Mumbai Builders has approached the co with a outright sell of the said land for Rs 125 Crore which was refused by the co.Since the property is adjacent to Big Bazzar, chances of Pantaloon or RIL stepping in is not ruled out.So if it vindicates all these then BDH is all set to make history in the bourses. Again the same has been there for eternity now and yet nothing has happened.It may so happen that nothing happens in the next decade too.