GMDC zooms to top gainer

Call it the effect of our Editor , Mr.SP Tulsian, recommending GMDC on CNBC TV18 or the current fancy for natural resource companies, Gujarat Mineral Development Corporation (GMDC) is today the top gainer on the BSE. From yesterday’s close of Rs.107.80, the stock today surged to Rs.113.50, so very close to its 52-week high of Rs.119.30.

Yesterday, Mr.Tulsian said that GMDC was an excellent buy. He said, “ People feel that this is the only natural resources company but they have lignite mining, bauxite and maybe manganese. If you see, lignite is a coal substitute. It is lighter kind of energy which is 30 percent cheaper coal and they have their own mining. Apart from that, they have the power generation capacity of 250 megawatt thermal power and 200 megawatt of wind energy. And if you see, on the balance sheet front, the market cap is Rs 3,200 crore. The company is totally debt free. And of that, about Rs 1,600 crore are lying in the cash and cash equivalent. That means, you are getting the company for Rs 1,600 crore.”

He went on to add, “The EPS for the current year is expected to be at about Rs 12 because they have already posted an EPS of Rs 6 for H1. Government of Gujarat is holding about 75 percent stake in the company. You have a natural resource as mining that is lignite, manganese and bauxite and apart from that, the power generation which is a profit making company. So, I do not think that there can be any other company having such a good combination and amongst the power generation company which is having a debt free balance sheet and even if you take this 700 megawatt or maybe 600 megawatt power project, that alone gives you the net present value of closer to about Rs 2,000 crore. The stock has the potential to maybe to move to a level of Rs 135-140 maybe in the next couple of months and it is an excellent stock looking for the portfolio.”