Nagarjuna Fertilisers & Chemicals Ltd. NFCL is getting reorganised into two strong businesses , Fertilisers ( Kakinada Fertilisers Ltd, KFL ) and Oil Refining ( Nagarjuna Oil Refinery Limited, NORL ). Under the SCHEME of Arrangements and Amalgamation iKisan Ltd ( Micro irrigation and Agri Informatics and Information Technology and agri Education company ), is getting merged into KFL.NORL is getting demerged from NFCL and residual NFCL is getting merged into KFL…If one buys 10 shares of NFCL @ CMP of Rs. 26 , one would be entitled to get 11 shares of KFL, and 10 shares of NORL after the scheme is implemented ( wef 1st April 2011).
Present Market capitalisation of NFCL is Rs. 1150 crores ( CMP of Rs. 26) , while the replacement costs of Fertliser and Oil Refinery at a very conservative basis will be close to Rs. 7000 crores. Equity capital of KFL after amalgamation will be Rs. 59.8 crores with same number of Re. 1 paid shares. Equity capital of NORL will be Rs. 42.8 crores with same number of Re. 1 paid shares. Its estimated that the fair value of KFL and NORL shares should be atleast Rs. 25 each , thus doubling the investment in less than a year.
Buy is recommended with one year HOLD ..
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