When one compares ABG shipyard Vs. Bharati Shipyard, I’d say ABG Shipyard is a better prospect at Rs. 100+ per share even when its discount percentage is less to BV than Bharati. Why?
There are a few reasons:
- ABG’s net normalized operating margins, cash flows and ROCs are better than Bharati.
- Order book is double that of Bharati
- ABG has already done its bit of capex in the last two years
- It has relatively lower debt levels than Bharati
- Bharati has one helluva FCCB conversion issue, if those guys do not choose to convert their warrants into shares coming December, Bharati is in one helluva soup
- ABG is relatively better placed, has more capital to withstand the recessionary trends.
ABG's market price is still less than its book value.
So within undervalued stocks, due weightage needs to be given to companies with show better numbers than others.
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