Empee Distallaries

Buy Empee Distallaries @161 target 250 ... it has isssued shares @400/- and got oversubscribed 28 times in december

Empee Distilleries is developing part of its 20.88 acres freehold property located at Sriperumbudur, Kanchipuram District, into 12.23 lakh sq. ft. of residential space and 3 lakh sq. ft. of basement. This project was approved by DTCP in March 2007 and hence eligible for deduction under Section 80-IB of the Income Tax Act. This would make the company eligible for 100% tax exemption on the profits to be earned from development of this property. The project has 840 flats and estimated selling price is around Rs.2,850 per sq. ft. in addition to realization of Rs.1,000 per sq. ft. for basement. Considering cost of construction and development of Rs.1,500 per sq.ft., this would translate into a profit of Rs.195 crores which would get realized in the next three years by September 2010.

The company hopes to have a topline of about Rs.1,100 crores with PAT of atleast Rs.48 crores. Of this PAT, realty division would give Rs.12 crores, IMFL Business Rs.32 crores and Power Rs.4 crores. This would result into an EPS of Rs.25 for FY 08, ending 30th September.

Empee distillaries had issued shares at Rs.400 per share, which is now ruling at Rs.162, discounting FY 08 earning by about 6 times and FY 09 earning by about 4 times. Due to strong visibility of earnings for the next couple of years, the share has huge upside potential.

Empee distillaries is now expanding capacity its Tamil Nadu Distillery from 20 KLPD to 70 KLPD with capacity to handle 5 lakh cases per month, from present 3.20 lakh cases per month. The company is also setting up 60 KLPD grain based Distillery with capacity of 8.40 lakh cases per annum at Nellore in A.P. and a distillery in Karnataka for 12 lakh cases per year. This would give presence to the company in all four Southern states.