Bhuruka Gas - Rs.43.00

Bhuruka Gas Ltd (BGL), was originally incorporated as Karnataka Oxygen Ltd. in 1974 by Shri S.N. Agarwal through Transport Corporation of India Ltd.and Karnataka State Industrial Investment & Development Corporation Ltd. Since then, it has become one of the largest manufacturers of high quality industrial gases in South India producing a wide range of industrial gases like Oxygen & Nitrogen in liquid and gaseous form, Argon, Hydrogen, Dissolved Acetylene, Mixture Gases and Calibration Gases. In fact, BGL is the largest independent producer of argon in India. Due to the growing Indian economy and the strong uptrend in industrial growth, BGL’s products are in huge demand. With no new capacities coming up in the near future, BGL is expected to perform much better in coming quarters.

BGL’s plant is located at Bangalore and is equipped with imported machinery from Germany. This plant is capable of producing 19,00,000 cubic metres per month each of liquid oxygen and liquid nitrogen and 65,000 cubic metres per month of argon. Importantly, BGL supplies the complete range of industrial gases and has established good rapport with its customers for the quality of its products and services. Apart from the gas supply, it undertakes turnkey projects for high pressure gas pipelines with cylinder handling manifolds. It also undertakes up cryogenic pressure vessel installations, liquid bottling pumps supply and maintenance. Of late, company has been laying more emphasis on the manufacture of value added products like high purity, speciality and calibration gases.

Earlier till FY03, the company was not performing well and had huge carry forward losses and was declared sick. However, after various restructuring initiatives and BIFR orders it turned around in FY05. According to the terms of the BIFR order, the paid-up equity share capital of BGL has been reduced from Rs.8.72 cr. to Rs.2.18 cr. by reduction in the face value of its equity shares of Rs.10 each to Rs.2.50 per equity share. Today, it is no longer a sick unit and the BIFR has deregistered it from the purview of The Sick Companies Act. For FY05, BGL reported a topline of Rs.43 cr. and a bottomline of Rs.7.70 cr. including extraordinary items. Since industrial gas is consumed across the industry and most industrial sectors are undergoing expansion, BGL can post a topline of Rs.50~55 cr. and bottomline of around Rs.8~9 cr. and thereby post an EPS of Rs.9~10 for FY06. Investors are strongly recommended to buy the share at current levels expecting 50% return in 9~12 months.