Godawari Power & Ispat Limited (GPIL) is a strong player in the business of sponge iron, steel and other associated products. The sponge iron prices are firm and expected to go up in the near future. The sponge iron capacity of the company stands doubled effective April 1, 2007. The power generation, steel manufacturing and cord drawing facilities are also coming on stream.
The stock is currently quoting 7 times its trailing twelve months earnings. HDFC mutual fund is holding a significant holding in the company. The stock is expected to deliver handsome returns over a period of next two years.
Some marketmen are talking about the company’s inorganic growth. There are some moves in the offing over next three months. Funds are to be raised in next few weeks. The preferential allotment to a strategic investor is in the offing at a price of Rs. 250, against the current market price of Rs 150, offering a trigger in the short run.
This is a fundamentally good counter we believe in GPIL with a long term in mind.
disclosure: No positions in the stock as on the date of this post
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