Prajay Engineers

Prajay Engineers is another poignant story. A story which exemplifies the extent to which our markets can go either way when there is a swing.

We witnessed the stock scaling a peak in the four hundreds and also touching the abyss of Rs. 18.

The stock is currently trading at a steep discount to its liquidating value. Its enterprise value is a meagre Rs.210 crores (includes a debt of 107 crores).

The company has sales figures which stands at Rs.64 crores for the half year ended on Sep. 30. Even discounting the stimulation package from the govt for the real estate sector, I would assume the company can sell at least another Rs.60 Crores property in the next six months.

The Operating profit disclosed by the company for the first half of 2008-9 is Rs.22 crores. Assume the company can sustain the same in the next six months, we are likely to see Rs.44 crores. An operating return of Rs.44 crores for an investment of Rs.100 crores along with interest commitment of about Rs.10 crores is not a bad outlook at all for the investors in these times, provided people can wait.

I do not want to go by the last year results which I understand is unattainable for the next few years. But even providing for that, I think Prajay is easily one such share where current market price is way below its intrinsic value after factoring in a margin of safety.