Changes in government policies always impacting industries and companies.Eastern gas is a stock we discussed last year almost at the current price level.Since the policy of government on LPG subsidy changed substantially and some positive developments already happened in the company ,looking into it once again.
Reduction in then number of subsidized cylinders giving more opportunity to private sector players in this sector .Eastern Gases ( BSE Code 590080) is one of the very few listed companies from this industry and it is an important point to note that this company increasing profits in past five consecutive years even in the previous unfavorable business environment.This Kolkata based company engaged in the distribution of commercial LPG in 17 and 33 kg cylinders.At present company supplying Cylinders in West Bengal, Bihar and Orrisa from its own bottling plant situated at Durgapur under the brand name ‘EASTGAS’ .Company also supplying bulk LPG for industries .Recently company started its first auto LPG dispensing station in West Bengal and planning to start a pan India network for the same.In the changed environment company also studying the viability of home cylinder distribution too not only in Eastern region but in south and Central India .For expanding their business they are now going to start few LPG bottling plants in this area .For the FY 2012 ,Company posted a turnover of Rs.135 Cr which is more than a 9 fold rise from FY 2008. The changed government policy is expected to bring a better level playing field for private sector players compared with the previous situation and in future we can’t rule out a chance for complete cost based price fixing policy as it happened in the case of Petrol few years back. At present subsidized home cylinders are illegally diverted for commercial purpose in a big way .As a next step government is expected to introduce a system for directly crediting the subsidy amount to the bank account of consumers .This method will put an end to the diversion from home to commercial use .In such a situation people will be forced to use home cylinder only for that purpose and commercial cylinder for commercial purpose .Such a situation will definitely help private players who already established infrastructure facilities for distributing commercial cylinders.
This is a stock for investors with enough patience at CMP of Rs.19
Link to company website HERE
Link to latest Annual Report HERE
Link to company website HERE
Link to latest Annual Report HERE
SHRI MATRE POWER & INFRASTRUCTURE LIMITED (FORMERLY -
SHRI SHAKTI LPG LTD ) BSE CODE - 531322
Another listed company from this sector is Shree Sakthi LPG which distributed LPG Cylinders under the brand name Shakti Gas earlier .They almost stopped the distribution activities due to the subsidy issue ,but still maintaining all infrastructure facilities .We can’t rule out re starting of their operations going forward.Recently they decided to write off all their losses by reducing the face value of the stock.An interesting point here is that this company is still a debt free one.This stock is currently trading around at a throw away price of below Rs.2 /-.I have not dig deep into this stock and mentioning it for your information purpose only ,hence ensure necessary due diligence before acting on.One more point - both stocks are illiquid.
Link to company website HERE
Link to latest Annual Report HERE
Link to company website HERE
Link to latest Annual Report HERE
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