The Raring Bull is said to be accumulating shares of BK Birla group company Mangalam Cement. The stock is trading at a trailing price to earnings ratio of 6 and is considered to be among the relatively cheaper stocks in the sector.
The shrewd investor seems to be betting that the market will rerate the stock sooner than later. The company has already announced that it is about to commission a captive power plant worth Rs 80 crore and analysts expect this to add Rs 35-40 crore to its FY08 net profit.
Like other companies in the Birla stable, Mangalam is using the current commodities boom and cash flows to prepare the ground for future growth. Analysts are also betting that as part of the Birla group consolidation, the company will move from the BK Birla group to the AV Birla group in future.