Thursday, November 4, 2010

Gujarat Alkalies and Chemicals Limited - Extremely Undervalued

GACL - is one of the navratna companies of Gujarat Governement.  It is currenlty trading at 3.7x  Cash flow. The M.Cap is 900 Cr. , Debt is 300 Cr. and has Investments in listed companies which are worth 140 Cr. (at cost).  If we calculate the worth of the  investments in the balance sheet at market value, they are worth 600Cr, hence the company valuation is even much more cheaper than what it appears. The EV/EBITDA should be just 2 if we consider investments as good as cash.

The valuation are lagging despite a consistent profitability and dividend paying track record and an aggressive expansion plan under implementation