SKIL Infra - Massive re-rating seen ahead

SKIL Infrastructure is the Promoter of Pipavav Defence, directly holding 26.69 crore shares, being 36.25% stake in the company, at a book value of Rs.275 crores. On expected deal of M&M, coming in as a promoter of Pipavav, SKIL may sell part stake at or above Rs.66 per share. In that case SKIL may sell about 14 crore share at Rs.66 per share and may realise Rs.925 crores. SKIL has LT debt of Rs.1,680 crores and ST debt of Rs.168 crores as at 31-03-2014. Hence, part of this realisation will be used to retire the debt of SKIL, which will make balance sheet of SKIL quite light.

Apart from this, SKIL has investment in the following infrastructure projects:-

1. Rs.67 crores in SKIL Himachal Infra.
2. Rs.120 crores in SKIL Shipyard Holdings.
3. Rs.384 crores in Gujarat Positra Port.
4. Rs.275 crores in Chiplun FTWZ.
5. Rs.1,064 crores in Urban Infra Holdings.
6. Rs.426 crores in Mumbai SEZ.

Project 5 and 6 are largely owned by Mukesh Ambani in his personal capacity, with minority interest held by Anand Jain, through Jain Group.

So, lot of value unlocking will be seen in SKIL Infra, as promoters will be making use of part monetization of Pipavav stake in retiring the debt and partly in taking forward its other infrastructure projects. It is also learnt that the promoters are also in talk to monetize its minority interest in project 5 and 6, which can give them hefty valuations, for which talks are going on with Mukesh Amabni, for last over 18 months and is stuck on valuation agreement. Hence, lot of value is seen in SKIL Infra, which has equity capital of Rs. 216.57 crores. Company has Capital Reserve created of Rs. 3,180 crores, as revaluation reserve, with debit balance in P&L account at Rs. 85 crores, as at 31-3-2014. So, won't be surprised to see share rising 4 to 5 times in next 2 – 3 years.