Will Simbhaoli Sugars price double after Aug 02
Simbhaoli Sugars Ltd (BSE Code: 539742; Face Value: Rs 10) is trading consistently for the last two weeks or so. Further, the deliveries also have improved significantly in this period. May be in anticipation of the long awaited CDR related preferential issue to the promoters to be announced shortly. As their expectations, the company, on Friday 28 July 2017, has announced that the Board Meeting would be held on Aug 02, 2017. The Directors in that meeting consider the issue of equity shares/ warrants of convertible securities to specified promoters.
It is known that the company has a corporate debt restructuring (CDR) package approved by RBI/JLF (joint lenders forum) that is still pending for implementation. The reason for this is the pre-condition set by CDR Mechanism that promoters too should pump in fresh funds into the company, a usual condition for a revival package. Then only, the creditors would provide assistance in the form of interest waivers, rescheduling of existing loans and sanctioning fresh loans etc.
Investors have been waiting for this preferential issue to promoters which will pull down the curtains on the prolonged uncertainty concerning the real value of the share. The market price of the share will move accordingly to the price at which the promoters will subscribe to the issue.
Simbhaoli Sugars share is the least performed one in the peer group. In this sugar boom, all the scrips have been trading at a very high price without relevance to their fundamentals. Simbhaoli Sugars’ Book Value per share (Rs 10 FV) is Rs 68.37 as on March 31, 2017, whereas the Current Market Price is Rs 31.90 (BSE). It is less than half of the Book Value. The price to BV is just 0.47.
Though the debt equity ratio is higher at over four times, the outlook of the company is good as the modified CDR ready for implementation and various measures taken by the promoters. The company will announce the June 31, ended results on or before September 2017.
On technical side, the scrip is trading above the 20, 50, 100 Days Moving Averages. On Monday 31 July 2017, it is closed at Rs 31.90 in BSE. Moreover, the deliveries percentage has been consistently high for nearly two months. In June, the average is 70.61% while in July 57.31%. The last five-day average is at 64.1%. The price of the stock in the coming days will get influenced by the preferential issue price, which is expected to be above the Book Value that is around 70.
About the company
The UP based Simbhaoli Sugars Ltd was originally incorporated as Simbhaoli Spirits Limited in 2011. A scheme of arrangement was carried out where in erstwhile Simbhaoli Sugars Limited was amalgamated into Simbhaoli Spirits Limited (the amalgamated company) with all the immovable properties assets liabilities to the amalgamated company with effect from November 14, 2015. Subsequently the name of the company was changed in to Simbhaoli Sugars Ltd.