14mar2012181326_holding & investment companies - deeply in discount
TRANSCRIPT
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ANALYST:
PriteshBumb|+912240935008
SALES:
DevangShah
|+91
22
4093
6060/61
Sushil Financial Services
Private Limited
www.sus nance.com
For Private Circulation Only
Please refer to important disclosures at the end of the report
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Holding&InvestmentCompaniesDeeplyinDiscount
We have covered Holding & Investment companies in this report, which are trading at very high discount to their NAVs.
Selection of stocks are based on qualitative and quantitative factors as explained below:
QualitativeFactors
Promotershistoryandbackground&theirstakeinthecompany
Qualityofinvestments
Possibilityof
value
unlocking
Majorshareholdersotherthanpromoters
Sizeofthecompany&averagevolumes
CurrentdiscounttoNAV
Historicaldiscount
to
NAV
in
various
market
situations
Otherliabilitiesinthebalancesheet
so, ns orttome umterm, v en st eon y ncome nvestorgenerates,wecons ere v en y e asase ect oncr ter a.
OURVIEWWe believe holding company discount arises due to few factors which includes lack of controlling stake, long term nature of
investment, liquidation cost etc. Over a period of time the discount varies based on market & economic conditions and due to some
fundamental changes like group restructuring, promoter increasing stake, large investor getting interest etc. In this report, we haveselected a list of 12 companies which we believe are trading at a discount much higher than historical average. We expect the
discount to decrease as investors would flock towards buying these undervalued companies, keeping in mind the sharp recovery in
the stock market and improved sentiments.
Return for investors in these companies can be two fold driven by appreciation of its investments and decrease in discount. Hence,
We expect that most of these companies will turn out to be the safest bets in the current environment & would provide extremely
2March14,2012
goo re urns over e com ng wo years.
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Holding&InvestmentCompaniesDeeplyinDiscount
Why holding company trades at discount? Strategicstake: Sincemostoftheholdingcompanyinvestmentsarestrategicinnature,unlockingofvalueofinvestment
couldnotbeforeseeninnearfuture.Sotheunrealizedgainsareonlyinthebooksbutseldomrealized.Thus,whatan
investorofholdingcompanyearnsisnottheappreciationinthesharepriceoftheunderlyinginvestmentsbutthedividend
earne rom ese nves men s.
Lack of majority : If a holding company does not have a majority stake in its investments, then the financials of the
investments thus held, do not reflect in the holding companys financial statements. Hence, valuing financials of the holdingcompany may not give a fair picture of the value of overall investment held by it.
Liquidation Cost:High liquidation cost of the investment i.e. if it sells a large block of shares in open market, it might have to
do so at a rice below the market rice and the rice ma correct drasticall unless the investments are hi hl li uid stocks.
Triggers that can result in decrease in holding company discount:
1. Fundamental Change
Group /Business Restructuring:Generally group restructuring results in unlocking of value of investments and reduction indiscount.
.
easiest way for them is to increase their stake in holding company at a steeply discounted valuation (rather than that of
individual companies at market related prices). This results in reduction of discount for holding company.
Launch of holding company funds:Since large number of mutual funds/PE Funds are trying to focus in niche area of
operation, we may see holding company funds to get launched in India in next few years which would result in decrease in
the discount due to fresh buying interest.2. Technical Behavior/ Market sentiments
Our historical analysis points out that when markets are at top, holding company discount is lowest and when market
bottoms, it is at highest. We have observed a trend (within the universe we covered in this report) which shows that the
discount was least, when the market peaked in Jan08 and it was maximum when market bottomed in Mar09. Despite of a
sharp revival in the market recently, the discount currently are still at high. Hence, we expect discount to decrease
3March14,2012
substantially over the coming two years as the market condition remains upbeat and expect the investors to flock towardsbuying these undervalued holding companies.
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Holding&InvestmentCompaniesDeeplyinDiscount
NAV Calculation MethodologyA holding company typically does not have ongoing operations other than the management of investments and cash. The valuation
of these companies usually relies significantly upon the value of the underlying asset as normal valuation techniques dont apply to
these companies as there is no consistency in revenue generation i.e. Net profit will be extremely volatile based on liquidation of
shares. If the company sells its part of holding and book profit in a particular year, its Income and Net Profit for that year will look
extraordinarily high. Hence, we estimate business value based upon the market value of the underlying assets rather than income
producing capacity or peer valuation. We used Net Asset Value (NAV) based valuation methodology, which is market value of
company assets less liabilities and apply appropriate discount to it. Discount generally depends on nature of its assets and general
.
Disclaimer:For analysis, we have considered investments breakup based on last annual report. Since some of the investments may
have been sold, since then, at much lower price, our conclusion may be inappropriate to the extent of price rise after the sale of
shares.
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Holding&InvestmentCompaniesDeeplyinDiscount
COMPANIESCOVERED CMP(RS.) MCAP(MN) NAV(RS.) DISCOUNT(%) PAGENO.
Ba a Holdin s&InvestmentLtd. 805 89355 2230 64 6
TataInvestmentCorporationLtd. 459 22032 790 42 8
BombayBurmah &TradingCorporation 549 7686 1793 69 10
Na wa ons nvestments t . 7 5 7
MaharashtraScootersLtd. 307 3377 1688 82 14
Balmer Lawrie InvestmentsLtd. 150 3300 265 43 16
Bengal&AssamLtd. 204 1836 691 71 18
SILInvestmentsLtd. 73 803 354 80 20
UniphosEnterprises
Ltd.
26 650 106 75 22
MajesticAutoLtd. 59 614 194 70 24
WilliamsonMagor&CoLtd 46 506 212 78 26
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BajajHolding&InvestmentsLtd.
NAV
Calculation No
of
Share(mn) Stake(%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
BajajAuto 91.1 31.5 1,789 2,862 82,149
BajajFinserv 56.0 39.2 615 3,461 35,137
ICICIBank 12.2 1.1 930 4,460 16,061
BajajElectricals 16.7 2.0 190 1,118 1,854
OtherQuotedShares 5,987 6,654
Valueof
Quoted
Equity 17,888 218,585
Otherinvestmentincl.stake inBSE (cost) 27,847 27,847
ValueOfInvestment 45,735 246,432
Less:NetDebt DebtCash 1775
NAV 248,207
No. ofshares 111
NAVPerShare(Rs.) 2,230
CMP(Rs.) 805
Discount(%) 64
PriceHistory ValuationGapChart
7
Source: Company,SushilFinancialServicesEstimates
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TataInvestmentCorporationLtd.
NAV
Calculation NoofShare
(mn) Stake (%) CMP (Rs.)
(12Mar12)
Cost
(RsMn)
Value
(Rsmn)
TataChemicals 15.8 6.2 353 455 5,560
TitanIndustries 17.2 1.9 246 171 4,236
TataMotors 14.8 0.4 284 858 4,183
Tata Global Bevera es 27.5 4.5 117 74 3 215
Tata Steel 3.4 0.4 456 615 1,544
Voltas 9.5 2.9 127 36 1,198
IndianHotels 9.9 1.3 68 581 670
OtherQuotedShares 5,269 10,546
ValueofQuotedEquity 8,059 31,151
OtherInvestment(cost) 4,850 4,850
ValueOfInvestment 12,909 36,002
Less:NetDebt(DebtCash) (2,095)
Less:NetCurrentLiabilities
NAV 38,097
No. ofshares
(in
Mn) 48
NAVPerShare 790
PriceHistory ValuationGapChart
Discount(%) 42
9
Source: Company,SushilFinancialServicesEstimates
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BombayBurmah TradingCorpLtd.
NAV Calculation NoofShare
(mn) Stake(%) CMP (Rs.)
(12Mar12)
Cost
(RsMn)
Value
(Rsmn)
Bombay Dyeing 5.9 14.6 463 987 2,744
ValueofQuotedEquity 987 2,744
BritanniaIndustries* 60.9 51.0 570 34,719
Otherinvestment(cost) 81
ValueOfInvestment 37,544
Less:
Net
Debt (Debt
Cash) 12,419
Less:NetDeferred TaxLiability 89
NAV 25,035
No. ofshares inMn 14
NAVPerShare(Rs.) 1,793
CMP(Rs.) 549
Discount(%) 69
*BombayBurmah holds
indirect
stake
in
Britannia
Inds.
via
Leila
Lands
Senderian Berhad,
a
100%
Subsidiary.
PriceHistory ValuationGapChart
11
Source: Company,SushilFinancialServicesEstimates
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NalwaSonsInvestmentsLtd.March 14,2012 CMP:Rs.768 NAV:Rs3225 Discount :76%
Nalwa Sons Investments Ltd (NSIL), formerly known as Jindal Strips Ltd, is an O.P. Jindal Groupcompany. NSIL was incorporated in the year 1970 and converted to public limited company in the
year 1975.
NSIL is an investment company and continues to hold significant investments in
STOCKDATA
ReutersCode
BloombergCode
NALS.BO
NINV.IN
BSECode
NSE S mbol
532256
NSILJin a Saw 19.4 % Sta e s one o t e country s argest pro ucers o Saw p pes, w c s
widely used in the energy sector for the transportation of oil and gas.
JSW Holdings(10.24% stake) is an Investment Company of the JSW Promoters Group with itsinvestments mainly in Jindal Group of Companies.
JSW Steel(2% direct stake and 1.5% indirect holding via Jindal holdings, which is a subsidiary
Mkt.Cap. 3840mn
Shares
Outstanding
5mn
52WeeksH/L Rs.950/510
w t 87% sta e s In a s secon argest stee ma er w t 10 MT capac ty, w c cons sts o
the most modern, ecofriendly steel plants with the latest technologies for both upstream &
downstream processes.
NSIL also hold investments in Stainless investment, Brahmaputra Capital as its majorityholdings. The company has four unlisted subsidiaries namely Jindal Holdings Ltd, Jindal
Avg.DailyVol. (6m) 447Shares
PricePerformance(%)
1M 3M 6M
(8) 33 20
200 Da s EMA Rs.700 , ., .
Strong Background:Nalwa Sons is a part of O.P. Jindal Group which is amongst the Indias largest
corporate groups having business collaborations around the world. Group is involved in
Infrastructure, Hightech realms of deepocean oil drilling, Prospecting for oil, gas and petroleum
products and Exports
SHAREHOLDING(%)
Promoters 55.6
FII 4.2
FI/MF 0.6 , , .
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
BodyCorporates 2.1
Public&Others 37.5
12ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 237.0 158.1 (84.6) 30.8 3.2 24.4 1.2
FY11 311.9 259.1 63.9 50.4 7.5 14.9 1.1
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NalwaSonsInvestmentsLtd.
NAV
Calculation No
of
Share(mn) Stake (%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
JindalSaw 53.5 19.4 169 35 9,069
JSWSteel 4.6 2.0 764 199 3,477
JSWHoldings 1.1 2.5 769 118 875
t er uote ares 14 16
ValueofQuotedEquity 366 13,589
JindalHolding(87%Stake) 3.1 87.0 764 610 2,424
OtherInvestment
(cost) 775
775
ValueOfInvestment 1,751 16,789
Less:NetDebt(DebtCash) 215
NAV 16,574
No. ofshares(inMn) 5
NAVPerShare 3,225
CMP 768Discount(%) 76
PriceHistory ValuationGapChart
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Source: Company,SushilFinancialServicesEstimates
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MaharashtraScootersLtd.
NAV
Calculation No
of
Share(mn) Stake(%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
BajajAuto 6.8 2.3 1,789 183 12,119
BajajHoldings 3.4 3.0 806 467 2,728
BajajFinserv 3.4 2.3 615 177 2,083
BajajFinance 1.6 4.5 801 216 1,312
OtherQuotedShares 4 43
ValueofQuotedEquity 1,046 18,285
OtherInvestment(cost) 1094 1094
ValueOfInvestment 2,140 19,379
Less:NetDebt(DebtCash) (35)
Less:NetCurrentLia i ities 118
NAV 19,296
No. ofshares(inMn) 11
NAVPerShare 1,688
CMP 307
Discount(%) 82
PriceHistory ValuationGapChart
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Source: Company,SushilFinancialServicesEstimates
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BalmerLawrieInvestmentsLtd.March 14,2012 CMP:Rs.150 NAV:Rs.265 Discount :43%
Balmer Lawrie Investments Ltd (BLIL), incorporated in 2001, as a public Ltd company underthe administrative control of the Ministry of Petroleum & Natural Gas.
BLIL was formed under the scheme of demerger of IBP, where investment in Balmer Lawrie
was transferred to BLIL and other business was ke t with IBP. Government of India currentl
STOCKDATA
ReutersCode
BloombergCode
BLMI.BO
BALM.IN
BSECode 532485
holds about 60% stake in the company.
The Company does not carry any business except its investments in Balmer Lawrie. Hence
BLILs source of income is only dividend income.
Strong Background:BLIL is the holding company of Balmer Lawrie Co Ltd with 61.8% stake.
Mkt.Cap. 3300mn
Shares
Outstanding
22
mn
52WeeksH/L Rs.192/134
,
Logistics Management, Greases & Lubricants, Travels and Tours. Its Infrastructure business
includes three Container Freight Stations (CFSs) in Mumbai, Chennai and Kolkata. Balmer is
Indias largest manufacturer of MS drums used in packaging of lubricants, chemicals, paints,
etc and it holds the largest market share in India. It delivers BALMEROL brand of Industrial,Automotive & S ecialit ran e of lubricants.
vg. a y o . m , ares
PricePerformance(%)
1M 3M 6M
(5) 5 (7)
200 Da s EMA Rs.153
BLIL has been rewarding investors with good dividend consistently. It paid final dividend of Rs
8.5 per share during FY11 resulting in yield of 5.6%.
At the CMP, the stock is available at +43% discount to its NAV, which seems to be attractive.
SHAREHOLDING(%)
Promoters 59.7
FII 3.2
FI/MF 2.1
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
BodyCorporates 16.1
Public&Others 18.9
16ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 221.6 211.1 17.5 9.51 45.0 15.8 6.8 5.0FY11 253.0 242.2 14.7 10.91 46.9 13.8 6.1 5.6
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BalmerLawrieInvestmentsLtd.
NAV
Calculation Noof
Share
(mn) Stake (%) CMP (Rs.)
(12Mar12)Cost
(RsMn)Value
(Rsmn)
Balmer Lawrie 10.1 61.8 544 327 5,473
OtherQuotedShares
,
OtherInvestment(cost)
ValueOfInvestment 327 5,473
Less:NetDebt(DebtCash) (405)
Less:NetCurrentLiabilities
,
No. ofshares(inMn) 22
NAVPerShare 265
CMP 150
Discount(%) 43
PriceHistory ValuationGapChart
17
Source: Company,SushilFinancialServicesEstimates
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Bengal&AssamLtd.
NAV
Calculation No
of
Share(mn) Stake(%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
JKLakshmiCement 27.2 22.3 60 534 1,646
JK Paper 28.3 20.7 37 255 1,039
JK Tyres 8.4 20.9 74 494 628
JKAgriGenetics 1.4 38.6 333 131 450
Umang Dairies 10.0 45.1 41 5 404
Otherquoted Shares 97 166
ValueofQuotedEquity 1,558 4,332
Otherinvestment(cost) 1,514 3,903
, ,
Less:NetDebt (DebtCash) 2,151
NAV 5,994
No. ofshares(inMn) 9
NAVPer
Share
(Rs.) 691
CMP(Rs.) 204
PriceHistory ValuationGapChart
Discount(%) 71
19
Source: Company,SushilFinancialServicesEstimates
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SILInvestmentsLtd.
NAV
Calculation Noof
Share
(mn) Stake
(%) CMP (Rs.)
(12Mar12)Cost
(RsMn)Value
(Rsmn)
ChambalFertiliser 32.2 7.7 82 526 2,638
ZuariInds. 3.2 10.9 517 80 1,659
ValueofQuotedEquity 815 4,367
OtherInvestment(cost) 418 418
ValueOf
Investment 1,234
4,785
Less:NetDebt(DebtCash) 1,020
Less:NetCurrentLiabilities
NAV 3,761
No. ofshares(inMn) 11
NAVPerShare 354
CMP 73
Discount(%) 80
PriceHistory ValuationGapChart
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Source: Company,SushilFinancialServicesEstimates
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UniphosEnterprisesLtd.March 14,2012 CMP:Rs.26 NAV:Rs.106 Discount :75%
Uniphos Enterprises Ltd. (UEL) was incorporated in 1969 as a private company and wentpublic in the year 1986. UEL located at Gujarat was demerged from United Phosphorus Ltd
leaving it mainly with the business of trading.
UELs main business comprise into trading of chemicals, import & export of engineering
STOCK
DATAReutersCode
BloombergCode
UNPH.BO
UPE@IN
BSECode
NSE S mbol
500429
UNIENTER goo s, agr cu ura pro uc s an var ous o er ems. s r u es er c es an ung c es
for agricultural applications and it offers other products like additives for the paper industries,
adhesive tape, cotton yarn, dyes intermediates, mosquito mats, and many more products.
Strong Background: UEL is an associate of United Phosphorus group and UEL holds strategic
stake of 5.4% in United Phosphorous. United Phosphorus Ltd (UPL) is the largest
Mkt.Cap. 650mn
Shares
Outstanding
25mn
52WeeksH/L Rs.36/21
products, intermediates, specialty chemicals and other industrial chemicals. UPL has its
presence across value added agriinputs ranging from seeds to crop protection and post
harvest activity. UPL holds 50% stake in Advanta India, its subsidiary engaged in producing
seed products. Through group activities, the company has 28 branches in India, also hasresence in the UK USA Denmark Sri Lanka Australia Mexico Vietnam Zambia Mauritius
Avg.DailyVol. (6m) 11,152Shares
PricePerformance(%)
1M 3M 6M
(4) 2 (12)
200 Da s EMA Rs.27
among other countries.
At the CMP, the stock is available at 75% discount to its NAV valuation, which seems to be
very attractive.
SHAREHOLDING(%)
Promoters 50.4
FII 18.9
FI/MF 3.8
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
BodyCorporates 4.1
Public&Others 22.8
22ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 313.2 (75.2) (2.5)
(16.1)
1.2
FY11 51.5 (18.3) 75.7 (1.4) 1.2
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UniphosEnterprisesLtd.
NAV
Calculation No
of
Share(mn) Stake (%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
UnitedPhosp. 25 5.4 136 761 3,395
ValueofQuotedEquity 761 3,395
OtherInvestment(cost) 14 14
ValueOfInvestment 775 3,409
Less:Net
Debt
(Debt
Cash
) 720
Less:NetCurrentLiabilities
NAV 2 689
No.ofshares(inMn) 25
NAVPerShare 106
CMP 26
Discount(%) 75
PriceHistory ValuationGapChart
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Source: Company,SushilFinancialServicesEstimates
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Majestic AutoLtd.March 14,2012 CMP:Rs.59 NAV: Rs.194 Discount :70%
Majestic Auto Ltd (MAL), established in 1973, is a part of Indias well
known Hero Group ofCompanies comprising 20 companies, each one having established its own respective production
line in India and in International Market.
MAL diversified in 1999 in the field of Fine Blanked Components by doing technical collaboration
STOCKDATA
ReutersCode
BloombergCode
MJST.BO
MATOIN
BSECode
NSESymbol
500267
MAJESAUTO .
companies of India like Maruti, Tata Motors, Mahindra & Mahindra, Ford, Toyota, General Motors,
Bosch India, Hero Motocorp, Fiat and Force Motors.
MAL has further established a modern unit to manufacture various types of silencers for HeroMotocorp, Stator & Rotor assembly for LG Electronics and Tecumseh.
MAL essentiall is a Holdin & Investment com an which currentl holds strate ic stake in Hero
Mkt.Cap. 614mn
Shares Outstanding 10.4mn
52WeeksH/L Rs.100/53
Motocorp Ltd (0.81% stake)which is a world's largest twowheeler manufacturing company. Hero
bikes currently spin out from its three globally benchmarked manufacturing units sited at in
Haryana and Uttarkhand. These plants collectively are proficient of producing out 6.1 million units
per year. Strong Management: MAL is a part of Hero Group which is amongst the Top 10 Indian Business
. . ,
PricePerformance(%)
1M 3M 6M
(8) (9) (25)
200DaysEMARs.72
Houses of India. It is a multiunit, multiproduct, geographically diversified Group with myriad
interests. Hero, known for its twowheelers business in India and the Group's other ventures
include product designing, IT enabled services, finance and insurance etc. The Group today
comprises of 20 companies, 300 ancillary suppliers, over 5,000 outlets, and has employee strength
of more than 23,000.
SHAREHOLDING(%)
Promoters 75.0
FII 1.4
FI/MF 0.8
, ,
attractive.
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
.
Public&Others 18.4
24ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 1479 208.3 356.1 20.0 48.3 3.0 1.2
FY11 1611 66.2 (68.2) 6.8 11.6 8.8 1.0
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MajesticAutoLtd.
NAV
Calculation No
of
Share(mn) Stake (%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
HeroHondaMotor 1.6 0.8 1,928 1 3,133
ValueofQuotedEquity 1 3,133
OtherInvestment(cost) 38 38
ValueOfInvestment 39 3,171
Less:Net
Debt
(Debt
Cash
) 1,120
Less:NetDeferredTax Liability 38
NAV 2 013
No. ofshares(in Mn) 10.4
NAVPerShare 194
CMP 59
Discount(%) 70
PriceHistory ValuationGapChart
25
Source: Company,SushilFinancialServicesEstimates
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WilliamsonMagor&CompanyLtd.March 14,2012 CMP:Rs.46 NAV:Rs.212 Discount :78%
Williamson Magor & Company Ltd (WM&C) established in the year 1949, is primarily engaged in
the business of investing and lending funds and it operates in real estate through its subsidiaries
Woodside Park and Majerhat Estates & Developers.
WM&C Ltd holds major investments in associate companies
Mcleod Russel Ltd. 10.6% stake is the worlds lar est tea roducer with over 80 mn k s of
STOCK
DATAReutersCode
BloombergCode
WILM.BO
WMC.IN
BSECode
NSESymbol
519224
WILLAMAGOR
high quality tea p.a. from tea estates in Assam, West Bengal and Vietnam.
Eveready Industries Ltd. (23% stake) formerly known as Union Carbide India Ltd, has a
portfolio comprising of dry cell batteries, flashlights, CFLs and packet tea. Mcnally Bharat Engg Ltd.(10.2% stake) is engaged in providing turnkey solutions in the areas
of Power, Steel, Aluminium, Material Handling, Mineral Beneficiation, Pyroprocessing, coal
Mkt.Cap. 506mn
Shares
Outstanding
11
mn
52WeeksH/L Rs.79/32
washing, port cranes, civic and industrial water supply etc.
Williamson Financial Services Ltd.(6.9% stake) is into fundbased activities like leasing, hire
purchase and corporate financing. It also holds strategic stake in Mcleod Russel & Eveready
Industries. Kilburn Engineering Ltd.(32.6% stake) is the worlds only company manufacturing all types of
. . ,
PricePerformance(%)
1M 3M 6M
5 17 (15)
200DaysEMARs.46
ryers an o er ng comp ete ry ng so ut on or verse app cat ons.
Strong Background & Management: WM&C Ltd is a part of Williamson Magor group, which has
grown to become the world`s largest producer of tea having 28 tea estates. The group has
successfully launched three brands of packet tea Tez, Premium Gold and Jaago. The company has
experienced and renowned names on its board like BM Kaitan (Chairman), Deepak Kaitan (Vice
Chairman and Bharat Ba oria Director amon others.
SHAREHOLDING(%)
Promoters 61.9
FII 1.0
FI/MF 2.5
Stock is currently available at 78% discount to its NAV, which seems to be very attractive.
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
BodyCorporates 5.0
Public&Others 29.6
26ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 273.1 (6.9)
80.7 (0.4) 0.4
FY11 254.3 1.2 117.4 0.1 0.1 405.0 0.4
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WilliamsonMagor&CompanyLtd.
NAV
Calculation No
of
Share(mn) Stake (%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
Mcleod Russel 11.6 10.6 236 672 2,753
EvereadyInds. 16.8 23.0 26 936 432
McNallyBharat 1.9 10.2 101 170 190
KilburnEngg. 4.3 32.6 26 107 114
OtherQuotedShares 81 49
ValueofQuotedEquity 1,966 3,598
OtherInvestment(cost) 93 93
ValueOfInvestment 2,059 3,539
Less:NetDebt(DebtCash) 1,309
Less:NetCurrentLiabilities
NAV 2,323
No. ofshares(inMn) 11
NAVPerShare 212
CMP 46
Discount(%) 78
PriceHistory ValuationGapChart
27
Source: Company,SushilFinancialServicesEstimates
March14,2012 Holding&InvestmentCompanies
Willi Fi i l S i L d
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WilliamsonFinancialServicesLtd.March 14,2012 CMP:Rs.27 NAV:Rs.138 Discount :81%
Williamson Financial Services Ltd. (WFSL), earlier known as Makum Tea Company (India), wasrenamed in Dec'94. WFSLs principal area of business is fundbased activities like leasing, hire
purchase and corporate financing.
It plans to play an advisory role in foreign exchange dealing and corporate restructuring including
STOCKDATA
ReutersCode
BloombergCode
WILF.BO
MAKM.IN
BSECode 519214
mergers, es es merc ant an ng an a so s are ro ng. e company s reg stere as a
with RBI.
WFSL holds strategic investments in
Mcleod Russel(5.4% stake) is the worlds largest tea producer with over 80 mn kgs of high
quality tea a year from tea estates in Assam, West Bengal and Vietnam.
Mkt.Cap. 227mn
Shares Outstanding 8.4mn
52WeeksH/L Rs.41/18
Eveready industries(7.1% stake) formerly known as Union Carbide India Ltd, has a portfolio
comprising of dry cell batteries, flashlights, CFLs and packet tea.
Strong Background & Management:WM&C Ltd is a part of Williamson Magor group, which has
grown to become the world`s largest producer of tea having 28 tea estates. The group is on
course added value to its products and has successfully launched three brands of packet tea
. . ,
PricePerformance(%)
1M 3M 6M
10 23 (51)
200DaysEMARs.28
, .
like BM Kaitan (Chairman), Deepak Kaitan (Vice Chairman) and Bharat Bajoria (Director) among
others.
At the CMP, the stock is available at 81% discount to its NAV, which seems to be very attractive.
SHAREHOLDING(%)
Promoters 65.2
FII
FI/MF 1.2
Y/EMar. Revenues
(Rs.mn)
PAT
(Rs.mn)
PATGrowth
(%Ch.)
EPS
(Rs.)
ROE
(%)
PER
(x)
Price/BV
(x)
Dividend
Yield(%)
BodyCorporates 4.1
Public&Others 29.5
28ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.
FY10 39.3 14.6
1223.1 1.8 2.0 14.8 0.3
FY11 41.7 7.0 (52.1) 0.9 1.0 27.6 0.3
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WilliamsonFinancialServicesLtd.
NAV
Calculation No
of
Share(mn) Stake(%) CMP (Rs.)(12Mar12) Cost
(RsMn) Value
(Rsmn)
Mcleod Russel 5.9 5.4 236 589 1,394
EvereadyInds. 5.2 7.1 26 516 133
ValueofQuotedEquity 1,107 1,529
OtherInvestment(cost) 55 55
ValueOf
Investment 1,162
1,584
Less:NetDebt(DebtCash) 97
Less:NetCurrentLiabilities 330
NAV 1,157
No. ofshares(inMn) 8.4
NAVPerShare 138
CMP 27
Discount(%) 81
PriceHistory ValuationGapChart
29
Source: Company,SushilFinancialServicesEstimates
March14,2012 Holding&InvestmentCompanies
Holding & Investment Companies
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Holding&InvestmentCompaniesDeeplyinDiscount
Out of the discussed 12 holding & investment companies, we have further refined to 6 companies on the basis of following criteria:
(1) Number of Investments by the company should not be less than two. Imposing this criteria will remove names where investment is
highly concentrated and chances of value unlocking or business restructuring are remote, thereby eliminating companies Balmer
Lawrie Investments, Uniphos Enterprises and Majestic Auto.
(2) Investment Holding Discount should be above 50%, thereby eliminating Tata Investment Corporation, where discount is less than50%, i.e 42%.
On t e asis o a ove two criteria, we are now e t wit 8 companies. O t ese 8 companies, we ave urt er re ine to 6 companies
on the basis of(a) size of investments and (b) Nature of Investments i.e Cross Holding. The Whole idea behind applying these two
more filters is to see opportunities of value unlocking or business restructuring in the long run. Thereby, 2 more companies SIL
Investments and Williamson Financial Services get eliminated from the selection amidst their smaller size of investments and lack of
cross holding.
On the basis of all the above criteria we have arrived at the final list of 6 companies in which we could see higher probability of
triggers. The name of companies areBajaj Holdings & Investments, Bombay Burmah & Trading Corporation, Bengal & Assam, Nalwa
Sons & Investments, Maharashtra Scooters, Williamson Magor & Company.
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