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Friday, July 2, 2010

Stock Report - Punj Lloyd - Large Cap Stock To Buy

Punj Lloyd Group is a diversified global conglomerate providing Engineering & Construction services in Oil & Gas, Infrastructure and Petrochemicals. Checkout the stock report to find out if this is a stock to buy.

Punj Lloyd also has interests in Defence, Aviation, Marine and Upstream sectors.

Recently I read a news publishing big plans of Punj Lloyd in power sector. They are doing BOP (Balance of Plant) equipment for 600 MW and 1,200 MW power projects. Currently Punj Lloyd is working on four power projects. The company supplied, erected the steel structures, civil work including power house, auxiliary buildings, cooling towers, drainage and road for the 1,000 MW coal-based thermal power project of Jindal Power Ltd.

The company has formed a joint venture with Singapore-based Delta Renewables. It is basically a renewable energy arm known as Punj Lloyd Delta Renewables. The company has already become the largest Indian engineering, procurement and construction (EPC) player in solar power, thanks to its first mover advantage. This new company has bagged about Rs 300 crore (Rs 3 billion) worth of orders in the field of Solar power generation, a majority of which are from the Bihar government. Checkout company announcement here. Punj Lloyd is also providing solar lighting for the Commonwealth Games Village in Delhi.

There are few issues with company. One of them is, company has high levels of Debt in it's balance sheet. Company had 2,937.85 Crores as debt in March 2009. This makes their debt to equity ratio 1.13 which is high. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

Market Cap 4431.69
* EPS (TTM) 11.06
* P/E 12.07
* P/C 8.86
* Book Value 89.80
* Price/Book 1.49
Div(%) 15.00%
* Div Yield(%) 0.22
Market Lot 1.00
Face Value 2.00
Industry P/E 17.24

A factor to consider is that Punj Lloyd has it's services mainly in oil and gas sector. Oil and gas prices would go up in next few quarters as the overall economic scenario improves. With that, the sentiments for this sector would come back and so this stock could benefit from that.

This stock has corrected from Rs 220 levels in Jan.2010 to current Rs 130 levels. The stock price correction has taken off the sheen of high expectations and valuations from over optimistic levels to attractive levels. At CMP of Rs 129, Punj Lloyd is trading at P/BV of 1.2X FY11E and 1.1X FY12E with book value of Rs 105/Share and Rs 118/Share respectively.

To conclude the stock report, company definitely have a positive outlook from future perspectives. If you are a mid term investor, this stock can go up to Rs 200 levels in next 6 months. This definitely is a long term stock to buy.

4 comments:

  1. Not too sure abt the management of the company..though they have big orders, they slip timelines.. no doubt that this is a gem for long term...but for short term, it looks weak

    ReplyDelete
  2. I HAVE VISITED THIS SITE SITE IS V VERY GOOD
    ILA SHAH

    ReplyDelete
  3. Dear Editor- Indian-Stocks-News

    Date: 05 December 2010

    Subject: PUNJ LLOYD

    Based on your following report in July 2010 the projection was that the share price of PUNJ LLOYD will go up from Rs 130 to Rs 200/-

    http://www.indianstocksnews.com/2010/07/stock-report-punj-lloyd-stock-to-buy.html

    Now the Punj Llloyd share has come down to Rs 98/-. This is 25% down from your recomendation.

    Hope you will have a follow on report and the rational for further investment at this level; if your recomendation is buy.

    Best regards,

    PHILIP JOHN

    Kochi, Kerala

    ReplyDelete
  4. Now go and buy at 60Rs levels! Its all really bullshit stock dude. Its not a buy on fundamaental basis. I dont think its worth more than 30Rs so I dont see anypoint in getting into it as valuations are too high especially there are so many good stocks are availble at this jucture.

    ReplyDelete

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