Can Binani Industries become a multibagger stock in 2018 after the settlement of the insolvency proceedings of Binani Cements?
It appears that if Binani Industries can successfully come of the bankruptcy proceedings it can give multibagger gains to investors.
Binani Industries Ltd is a debt-laden conglomerate having operations, through its subsidiaries, in the cement, fiberglass, EPC, energy, etc. segments. It has four major operational business segments. It runs its operations across various countries in Asia and Europe. The most attractive assets include the cement (India) and Fibreglass (Belgium & Norway).
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Why will Binani give multibagger returns?
There can be value unlocking of attractive cement manufacturing assets under IBC proceedings.
The fiberglass business is doing well at the operational levels.
The banks are likely to waive off some loans for settlement of loans to Cement subsidiary. This will lead to hefty value accretion.
The insolvency proceedings of subsidiary – Binani Cements is likely to be completed soon.
Binani has been overburdened with debts it had taken to finance its ambitious ventures in multiple industries. It has defaulted and is now under Corporate Insolvency Resolution Process (CIRP). The cement assets are being bid for by more than 15 interested parties on account of its attractive asset base.
There will be good value unlocking for the shareholders of Binani Industries which is the holding company of Binani Cement Ltd by sale of said business.
There is great demand for cement capacity from major cement companies.
Binani’s market value will see a lot of upside from the sale transaction.
There are two other subsidiaries which can be operated in a more efficient manner. The equity base is small at just 3.14 crore shares. So, the possibility of outsized returns is there.
Binani Industries has a target price of Rs.269.