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Saturday, September 19, 2009

Veer Energy and Infrastructure - Small Cap Stock Analysis

One of my readers, Mr. Mayank Asthana, asked for my opinion on Veer energy infrastructures ltd. This stock is in discussions due to it's plans for Rs. 200 crores investments in a project for setting up a windfarm, in renewable energy sector.

If you go by fundamentals, this stock does not have any great fundamentals to cheer for. The current buzz you might be hearing is all about their plan of Rs. 200 Cr. investments in a 1200 Cr. project. Their annual profit is hardly Rs. 2 crores so it remains a big question how they are going to arrange for Rs. 200 Crores investments. They speak about phasewise project execution and target sept. 2010 as the time period for this. So effectively Rs. 200 Crores investment in an years time. For their size of a company it seems highly difficult task to achieve. Only time will be able to tell if they succeed in their QIP plans to raise funds etc.

As far as a to make a decision for buying stocks is concerned, I would like to go back to fundamentals of the company. It has P/E of 25 in present markets, with EPS of 0.88. Company's growth has been good so far considering it's size (a small cap company).

Company is operating in the field of renewable energy infrastructure development. It develops infrastructure for wind farms and sells it to investors. It is a small player in this space. There are rumours about ADAG (Anil Dhirubhai Ambani Group) buying this company but they seem to be only rumours.

One may buy stocks of this counter in small quantity to get benefitted if they succeed in their plans. I will not advice to invest more than 5% of anyone's portfolio in this stock.

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