Multi Bagger Recommendation : Sah Petroleums Recommended Price Rs 14.40

Sah Petroleums Limited: Company Profile:

Sah Petroleums Limited is a manufacturer of industrial lubricants in India and manufacturing wide range of industrial and automotive lubricants, specialties and process oils etc., under the brand name of "IPOL". The company started in 1973 as a private limited company and became listed in 2004. The company has its plants located at Vasai near Mumbai and at Daman. The plants at Vasai and Daman are equipped with High-Tech blending facilities, quality control labs and automatic filling and packing stations. The company also has one of the largest in-house storage farms in the private sector in India for storing oil sourced from all over the world.Besides, the company has an all India sales and service network with offices / depots / CFAs located in Mumbai, Pune, Vadodara, Indore, Jabalpur, Jaipur, Delhi, Ghaziabad, Faridabad, Kaithal, Chandigarh, Patiala, Kolkata, Jamshedpur, Hyderabad, Bangalore and Chennai.

Financial Position:

The latest financials of the company are given as under:-

Particulars	Quarter Ended	Quarter Ended	Quarter Ended	Year Ended	Year Ended	Year Ended
	(Jun 08)	(Jun 07)	(% Var)	(Mar 08)(12)	(Mar 07) (12)	(%Var)
Sales	60.31	44.14	36.6	205.51	179.67	14.4
Other Income	0.76	0.51	49	6.7	3.96	69.2
PBIDT	5.43	4.01	35.4	22.67	15.38	47.4
Interest	0.66	0.48	37.5	2.72	2.93	-7.2
PBDT	4.77	3.53	35.1	19.95	12.45	60.2
Depreciation	0.29	0.21	38.1	1.01	0.74	36.5
PBT	4.48	3.32	34.9	18.94	11.71	61.7
Tax	0.83	0.32	159.4	0.28	1.45	-80.7
Deferred Tax	0	0	-	0.22	0.18	22.2
PAT	3.65	3	21.7	18.44	10.08	82.9

(Rs Crore)

Latest Data As On 20/10/2008
Latest Equity(Subscribed)–Rs. Cr	16
Latest Reserve –Rs. Cr.	67.58
Latest Bookvalue -Unit Curr.(Rs.)	26.12
Latest EPS -Unit Curr.(Rs.)	6.83
Latest Market Price -Unit Curr.(Rs.)	14.4
Latest P/E Ratio	2.11
52 Week High -Unit Curr.(Rs.)	29.3
52 Week High-Date	1/3/2008
52 Week Low -Unit Curr.(Rs.)	8
52 Week Low-Date	10/10/2008
Market Capitalisation (Rs.cr.)	46.08
Stock Exchange	BSE
Dividend Yield -%	1.74

Conclusion: Sah Petroleums has a current Equity Capital of Rs.16 crores comprising of 3.2 crore Equity Shares of Rs.5 each. The current promoters of the company hold 1.74 crore shares comprising 54.47% of the equity while the Non-Promoter shareholding is 45.53%.

The Board of Sah Petroleums in their Board Meeting on October 17, 2008 has resolved to issue 1.2 Crore Equity Shares of the company to NAF India Holdings Pvt. Ltd. at a price of Rs 26.65 per equity share on preferential basis, which comprises. This is roughly 27.27% of the diluted equity of the company. Since this investment constitutes acquisition of more than 15% Equity of the company, the transaction will necessitate a public announcement in compliance with the takeover regulations of SEBI. The acquirers alongwith persons acting in concert have made a Public Announcement for acquiring 88 Lakh shares, comprising 20% of the diluted equity at a price of Rs 48.50 per share. In all probability, the current promoters of the company would not be allowed to participate in the open offer. The current public shareholding is roughly 1.46 crore shares. Assuming all non promoter shareholders opt for the open offer and tender their shares, the acceptance ratio would be 60%, which means any shareholder tendering 100 shares in the open offer, will have 60 shares accepted by the acquirer at a price of Rs.48.50 per share. In reality, the acceptance ratio can be higher.

The stock of Sah Petroleums offer an attractive arbitrage with significant upside from the current levels, in these uncertain times.The caution here is that the time schedule for the open offer (December 4, 2008 as date of opening of offer) may get delayed, as has been seen in numerous other cases of open offer, due to delays in approvals & compliances.