Amulya Leasing & Finance(ALFL) has recently dropped its NBFC status and acquired 50.96% stake in Apollo Pipes Ltd. ALFL has been hiking its stake in the Apollo pipes since July 2014 when it acquired 16.47% stake in the company. Then in October, it acquired an additional 13.62% stake, taking its holding to 30.09%. In November 2014, it acquired an additional 20.87% stake taking its overall stake in 50.96% in Apollo Pipes. From Q3 FY15 Apollo pipes Pvt has been fully consolidated into ALFL (the whole acquisition will be a share swipe deal involving swapping of treasury shares of ALFL). Post acquisition ALFL will be renamed as Apollo Irrigation Systems Ltd (AISL).
Reasons for investment in Amulya :
1) AMULYA LEASING [Apollo Irrigation Systems Ltd (AISL)] a key beneficiary after recent budget announcements such as Rs.53 bn allocation for irrigation projects including Rs.18 bn for micro irrigation and Rs.25bn for Pradhan Mantri Krishi Sinchai Yojana. Big big benefit......for company...
2) Now Amulya became irrigation sector company after merger with Apollo pipes which has strong presence in irrigation sector with solid n healthy business growth now and in coming years also as in budget there is mammoth announcements for sector related to companies products.
3) Apollo Pipes,a 51 % subsidiary of BSE listed Anulya Leasing & Finance,has sold 3 lak shared of steel pipe maker Apl Apollo Tubes at Rs. 350 each to HDFC Mutual Fund netting Rs.10.5 cr.Amulya Leasing has informed BSE its intention to drop the NBFC status and take over the PVC Pipes manufacturing business of Apollo Pipes.
4) Amulya leasing & finance - 51 % subsidiary Apollo pipes has sold 3 lak shared of steel pipe maker Apl Apollo Tubes at Rs. 350 each to HDFC Murual Fund netting Rs.10.5 cr. other income will improve by Rs 4.5 cr on consolidated basis as compared to fy14 profit of Rs.1.8 cr. which will be a big positive for company.
5) Board Approves merger of Apollo Pipes Ltd. (a 50.96% subsidiary Company) with the Company or any other investment alternatives for business expansion /diversification....Co acquired 51% stake in promoter group company making PVC pipes for Rs 16 crore through its subsidiary . The company plans to change its name to Apollo Pipes, and plans to raise its stake in the manufacturing business to 100% over the next few months. The company remains a dominant player in the north for PVC pipes. Investors in the company include Integrated Master Securities and Madhukar Sheth, one of the wellknown HNI investors.
6) A well known Institutional Research company BP Wealth & their Research team had given Buy report on Amulya (531761) & given their views like this.
Valuation & Outlook :
Apollo Pipes Pvt Ltd is a leading manufacturer of irrigation Systems, CPVC (Chlorinated polyvinyl chloride), HDPE (High-density polyethylene), uPVC (unplasticized polyvinyl chloride), fittings for irrigation, plumbing and water transportation systems. and has been acquired by Amulya leasing in Q3 FY15. Amulya leasing will become Apollo irrigation. Apollo pipes is having a robust business and is a strong player in this particular space and implementation of GST will be favorable for the company as it will eliminate small unorganized players who manipulate tax and increase competition due to lower pricing. Based on the interaction with the management, the company has good growth prospect and value unlocking going ahead. We believe the acquisition will be positive for the company and will result in value unlocking of Apollo pipes Pvt Ltd.
We(BP Wealth) are positive on the company going forward and expect the company to perform well in medium to long term. The stock currently trades at a P/E of 23.0x and 16.6X FY15E and FY16E earnings which we believe is cheaply valued considering its peers (Industry average P/E of 19.8x).
7) Recent positive reports of Amulya on Moneycontrol,in Epaper of Times Of India & in Economic Times....which shows that after merger when valuation of company unlock....then....U can imagine....Sky is limit....
8) H.O.S. : Solid hand people,Big Operators,HNIs,Mutual Funds are accumulating this stock at current market price.....As after merger Amulya [Apollo Irrigation Systems Ltd (AISL)] will became a big player and solid name in Irrigation Sector (As mentioned in point no.3,4,5)....
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