In its recently completed FCCB issue, Prajay Engineers Syndicate raised $60m, convertible within five years at Rs 208, a 22% premium to the base price of Rs 171 considered for the issue.In rupee terms, this works out to Rs 2.78 bn. The FCCB issue will help PESL to partly fund real estate projects of 18m sq ft till FY10E.In the next three to four years Prajay would generate revenues in excess of Rs 40bn and net profits in excess of Rs 12bn. They expect it to register a net sales 193 per cent CAGR from FY06, to Rs 6.31bn in FY08, and a PAT CAGR of 152 per cent, to Rs 1.48bn.This translates into an EPS of Rs 55 before the FCCB conversion. Post-conversion, the equity would stand at Rs 402m and the EPS at Rs 37.They believe that Prajay Engineers would develop 2m sq.ft. in FY07 and 4.5m in FY08. This would be a mix of retail and commercial property.At the CMP of Rs 155, the stock trades at a P/E of 6.0x FY07 estimates (Rs 17.3) and 2.8x those of FY08 (Rs 55.4). On an EV/E basis, it trades at 8.5x FY07 and 3.6x FY08 estimates (On the fully diluted equity, it trades at a P/E of 9.0x FY07 and 4.2x FY08 estimates).
