Public and Investor relations is very important when it comes to creating value for the shareholders. The larger companies like Reliance, HDFC etc are always being covered up by media, but smaller companies do not garner attention and thus it becomes all the more important for them to come out with public announcements and make investors aware of the recent happenings, future plans, order book, performance etc. However, when the company makes too many announcements, it becomes important for the discerning investors to actually go into the depth and see if the details being furnished by the company will actually have any positive implications or not.
The company that is the talk of the town in Penny stock circle these days is Asahi Infrastructure and Projects. The reason behind it being talked about is the fact that in the last 10 months or so, the company has come out with almost 15-20 announcements and majority of them pertaining to receipt of order from either State government or Central government for construction of low cost houses. So, first lets get some insight into the kind of work done by Asahi and then take a call on it.
Asahi Infrastructure and Projects was originally incorporated as a Private Limited Company with the name “Ramdeobaba Builders and Housing Finance Private Limited” on 7 June 1988, and since inception is into housing specially low cost and economically affordable housing. They have been working in and around Akola city and nearby areas. As per the management they have made a decent progress in real estate development (although, I do not think so) and have completed a number of Low Cost Affordable Housing Colonies, costing unit cost between Rs. 28,000/- to 2,00,000/- (Read important) only, as per the need and requirements of the local beneficiaries.
The segment of people company focuses on is “Low Income Group i.e. Economically Weaker Section (EWS), Low Income Group (LIG) and partly Middle Income Group (MIG). The family income ranging from Rs.3, 000/- to Rs.8, 000/- per month.
The figures mentioned above like family income range or the cost of housing unit are important, because they are reflective of the section of society they are catering to and the margins involved in the construction of such housing units. It is a rather good sight when Low income group or economically weaker section gets access to all the amenities in an organized township, but that does not necessarily make the company a good investment buy. Although the company has been making a series of announcements with respect to receipt of order, but if you add up all, it only sums up to Rs 94 crore. Now, that isn't a big figure considering that the company has already been recording revenue in excess of Rs 50 crore, and all Rs 94 crore projects are not going to be completed in a single financial year itself.
I mentioned earlier that the construction work being carried out by the company is relatively a very low margin one and the results of the company speak vehemently for the same. I say so, because out of a total turnover of Rs 51.4 crore for FY 2008-09, the expenditure on purchase of traded goods accounted for Rs 50 crore. The results definitely are not reflective of the company into construction, rather resemble to that of a company involved in trading activities.
The other important aspect of the company is its shareholding pattern. The promoters hold less than 1% stake in the company (Ok, that is partly because they had a Rs 30 crore GDR issue), but even then more than 99% of their holding is under pledge.
I think that I do not need to say more to caution you against investing in this company.
The company that is the talk of the town in Penny stock circle these days is Asahi Infrastructure and Projects. The reason behind it being talked about is the fact that in the last 10 months or so, the company has come out with almost 15-20 announcements and majority of them pertaining to receipt of order from either State government or Central government for construction of low cost houses. So, first lets get some insight into the kind of work done by Asahi and then take a call on it.
Asahi Infrastructure and Projects was originally incorporated as a Private Limited Company with the name “Ramdeobaba Builders and Housing Finance Private Limited” on 7 June 1988, and since inception is into housing specially low cost and economically affordable housing. They have been working in and around Akola city and nearby areas. As per the management they have made a decent progress in real estate development (although, I do not think so) and have completed a number of Low Cost Affordable Housing Colonies, costing unit cost between Rs. 28,000/- to 2,00,000/- (Read important) only, as per the need and requirements of the local beneficiaries.
The segment of people company focuses on is “Low Income Group i.e. Economically Weaker Section (EWS), Low Income Group (LIG) and partly Middle Income Group (MIG). The family income ranging from Rs.3, 000/- to Rs.8, 000/- per month.
The figures mentioned above like family income range or the cost of housing unit are important, because they are reflective of the section of society they are catering to and the margins involved in the construction of such housing units. It is a rather good sight when Low income group or economically weaker section gets access to all the amenities in an organized township, but that does not necessarily make the company a good investment buy. Although the company has been making a series of announcements with respect to receipt of order, but if you add up all, it only sums up to Rs 94 crore. Now, that isn't a big figure considering that the company has already been recording revenue in excess of Rs 50 crore, and all Rs 94 crore projects are not going to be completed in a single financial year itself.
I mentioned earlier that the construction work being carried out by the company is relatively a very low margin one and the results of the company speak vehemently for the same. I say so, because out of a total turnover of Rs 51.4 crore for FY 2008-09, the expenditure on purchase of traded goods accounted for Rs 50 crore. The results definitely are not reflective of the company into construction, rather resemble to that of a company involved in trading activities.
The other important aspect of the company is its shareholding pattern. The promoters hold less than 1% stake in the company (Ok, that is partly because they had a Rs 30 crore GDR issue), but even then more than 99% of their holding is under pledge.
I think that I do not need to say more to caution you against investing in this company.
Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.
To contact the Lead Associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com
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