Gujarat NRE Coke is a great story in making. Its Mar 09 results saw their EPS go down to 2.5 from 5. This resulted in hammering of the stock from highs of 56 to 36 in the current market fall.
They have acquired 3 coal mines which will provide the coking coal required for its various coke plants. Their current capacity is around 1 million tonnes and they are building another plan in nellore, AP which will have another 1 million tonnes capacity... The current EPS does not factor in the 3 coal mines it has acquired.
On conservative estimate in 2011, its capacity should be 2 million tonnes and with coke prices going up (hopefully) their EPS should easily reach 15. If we keep the PE of 16, the price should be around 130 Rs. Current market price is around 39 Rs, which makes this a gain of 300% + in less than 3 years.
I recommend buying Gujarat NRE at current price and keep buying/holding if there is a dip.
Disclaimer: Please do your own due diligence before buying any shares.
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