The South Indian Construction Jewel:

Vijay Shanti Builders Ltd (BSE Code-->523724)

Why is Vijay Shanti Builders looking attractive??

U will get surprised to know the Order Book Position and Land Bank at hand:

This message was already sent to the Paid Groups

(Excerpts from that and Updated at 10.41 a.m.):

Crest Animation Studios Ltd hits another Buyer Freeze:

Vijay Shanti Builders Ltd is a class company and should be accumulated on any dips---this is the standard prescription. The company is a major real estate player in the south with lot of projects in hand and ever increasing number of projects.

Though there is some softness in the Real Estate sector but it not be viewed in such a way that a scrip which was around Rs.220 a year back should stoop to so low as Rs.50. Have you heard the price of apartments in South correcting by 200%?? This is not the case.........and if there is at all a correction it could be around 20%---30% at the most and hence the conclusion.

Now let us dig a little further and find out what is so special about this company and why it should be bought at the current price even though the net profit and total income took a hit: 1. It is being continuously recommended by Mathew Easaw like I continuously recommend Kamanwala Housing and Construction Ltd.

2. Though the net profit took a hit in the June, 2008 quarter, but if you go deep you will find the results manipulated, suddenly expenditure cannot drop to Rs.1.95 Cr from Rs.3.41 Cr in the same period previous year. Another point which needs to be stressed that in the last few quarters the expenditure is constant around Rs.3 Cr and suddenly in a quarter it cannot fall unless there is some major cost cutting measures, which does not seem likely as the price of commodities have increased over this period and to take a general view, the expenditure should increase.

3. Also take a look at the interest rate picture: it also suddenly drops to only 2.8 lakhs from a whooping Rs.1.1 Cr in the same period previous year. This figure cannot change suddenly to such levels. Moreover, the Operating Profit margins and Net Profit margins cannot correct to 5.26% and 4.84% respectively from 17.27% and 12.48%----just manipulation, nothing more than that to corner the scrip from the open market by the vested interest groups.

4. There has not been any major buying in plant and machinery from the depreciation figures of June, 2008.

5. Now coming to the net profit, in construction companies profits are not in tune with the quarters. A company may be doing projects but the profits may fall suddenly in a certain quarter--this is the specialty of construction or u can say the specialty of the real estate companies across the world. If you remember, that I have spoken a lot about this factor in 2004--2005 when Ganesh Housing and Construction Ltd did the same thing in one of the quarters only to show inflated figures in the following quarters and then subsequently coming up with a bonus issue, pushing the stock from Rs.60 something to around Rs.500 in matter of few months. I think the same thing will be repeated in Vijay Shanti Builders Ltd. Hence if you see a drop in net profit in a growing real estate company like Vijay Shanti Builders, then it is assumed the company will show profits in the next quarter when the markets will be in a buoyant stage.

6. If you go through the result sheet of the last 6 quarters you will find the same pattern, except September, 2006 quarter and March, 2007 quarter when the total income was almost the same as June, 2008 quarter and when expenditure suddenly dropped. Further analysing the results of these two similar quarters we find that in the following quarters the company posted good results, especially if we consider March, 2007 quarter and June, 2007 quarter. Hence I think the company will show the income and net profit in the next quarter in a more optimistic way. But by that time the stock would rise to dizzy levels and beyond ur reach.

The catch point of my research on this stock, which I also recommended a number of times, is after knowing a wide array of present projects the company is doing. If you remember, I was the first person who said Kamanwala Housing and Construction will come up with bonus issue and the same thing happened.

Now another interesting point is that during the month September 2007, the company has made allotment of 45, 00,000 warrants convertible into equity shares at a price of Rs.95 each (including a premium of Rs.85 per share on a preferential basis to promoter group). Allottees have paid an upfront payment of Rs 4, 27, 50,000 and the same has been utilized for its current construction projects.

If the company is doing so bad then why would the promoters buy the share at almost double the current market price. So the bad results are just a manipulation to corner stocks from the open market like, Ennore Coke Ltd did in the last quarter to increase the unofficial holdings of the promoters which according to my close sources is around 80%. I think the same will be repeated in Vijay Shanti Builders in the next 2 to 3 months before the company up with spectacular results.

Moreover, Vijay Shanthi Builders Ltd informed that the Register of Members & Share Transfer Books of the Company will remain closed from August 18, 2008 to August 22, 2008 (both days inclusive) for the purpose of payment of dividend & Annual General Meeting (AGM) of the Company. Any AGM is a very important event where new issues are discussed, so could give positive triggers to the stock.

A crossover could take the stock to above Rs.62.5 and upon crossing Rs.65 the stock could move up in the anticipation of better results in the next quarter. The Bolllinger bands, MACD and Stochastic are in Buy Mode.

Hence, buy Vijay Shanti Builders Ltd at the CMP of Rs.55 for a target of over Rs.100 in the next few months time frame. The stock is expected to break Rs.87, in the next couple of months and cross Rs.100. There is no need of putting a stop loss because we are already near the 52-week low price.The Last quarter results generally do not have any bearing on the future of the company's fundamentals.

It is near its rock bottom price of Rs.48.85 made on 4th August, 2008. Just wait for a Bounce to happen on the charts. When the interest rates are expected to fall due to falling of Crude Oil prices, there cannot be a better bet than Construction/ Real Estate Companies.