| Author |
Message |
Equity Buff
Senior Member
Joined: 30/Aug/2006
Online Status: Offline
Posts: 223
|
   Topic: Consolidation & Multibaggers!
Posted: 04/Nov/2006 at 10:02am |
Stocks in Industries in which consolidation is happening and where it is likely to happen can give us multibaggers. Let us try and identify them. To get things rolling, a few ideas:
Gitanjali - Jewellery.
Pantaloon, Trent - Retail.
Ashai - Glass.
Mahindra Gesco - Real Estate/ Construction.
ACC & Gujarat Ambuja- Cement. But I personally dont have a high preference for cyclical/commodity industries for investment.
Other ideas ?
Rgds.
Edited by Equity Buff - 04/Nov/2006 at 10:07am
|
 IP Logged |
|
|
|
 |
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 04/Nov/2006 at 10:34am |
Here we need to buy the companies that are being talken over not the ones that is making the take over. For eg. after the ACC buy out Gujarat AMbuja was saddled withn investment in its books that yields only dividend as income but ACC which was in demand and also had a high RoE jumped up.
Generally unless it is a promoter company (United SPirits, Tv18) it would make sense to buy the company that is being taken over.
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
Equity Buff
Senior Member
Joined: 30/Aug/2006
Online Status: Offline
Posts: 223
|
Posted: 04/Nov/2006 at 10:50am |
Basantjee,
But in many cases the company which is taken over is not listed but going forward the earnings are reflected on the consolidated P/L of the company which has taken it over. In other cases a listed company can be taken over and merged with the company which has taken it over. So I think the above cases and also what you have mentioned all could work depending on how things are done. Ultimately as long as the earnings increase and ROE/ROCE increase is what will matter. These are my views and I stand to be corrected by the Expert (You).
Thanks & Rgds.
|
|
IP Logged |
|
|
|
kulman
Senior Member
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
|
Posted: 04/Nov/2006 at 10:56am |
Asahi Glass from the list above needs to be looked at closely. Basantjee, we had some basic discussions on the same few days ago on other thread. Could you carry out your analysis on the same?
Asahi is planning to start a unit in the Gulf/ME Asia.
|
|
Life can only be understood backwards—but it must be lived forwards
|
|
IP Logged |
|
|
|
basant
Admin Group
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
|
Posted: 04/Nov/2006 at 10:59am |
company which is taken over is not listed but going forward the earnings are reflected on the consolidated P/L of the company which has taken it over: I have found this creates value since idle cash/debt used for take over is lower then the return on operating assets of the company being taken over this adds to RoE and is EPS accreative.
In other cases a listed company can be taken over and merged with the company which has taken it over - Taking over a listed company is always costly unless it is a distress sale and that too affects RoE. Unlisted coimpanies do not have liquidity hence lower valuations.
Ultimately as long as the earnings increase and ROE/ROCE increase is what will matter: Absolutely. This is the end thing but we are just trying to discuss whether RoE will go up or not!
These are my views and I stand to be corrected by the Expert (You).:I hope that Expert has the same meaning in as is reflected in the Oxford disctionary and not on theequitydesk.com. 
Edited by basant - 04/Nov/2006 at 11:00am
|
|
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
|
|
IP Logged |
|
|
|
Equity Buff
Senior Member
Joined: 30/Aug/2006
Online Status: Offline
Posts: 223
|
Posted: 05/Nov/2006 at 7:03pm |
Originally posted by basant
A) In other cases a listed company can be taken over and merged with the company which has taken it over - Taking over a listed company is always costly unless it is a distress sale and that too affects RoE. Unlisted coimpanies do not have liquidity hence lower valuations.
B) These are my views and I stand to be corrected by the Expert (You).:I hope that Expert has the same meaning in as is reflected in the Oxford disctionary and not on theequitydesk.com.
|
Basantjee,
A) Yes, taking over a listed company is costly unless it is a distress sale. But I feel if it is a distress sale and the company can be turned around, nothing like it, this is a great situation. But even if it is not a distress sale and the company which is taken over is managed well and earnings increased and it is intergarted (merged) well into the company which has taken it over, due to synergies and economies of scale the earnings can be increased along with the ROE over a period of time. Also with consolidation in the industry it is very likey that the industry and the companies can be rerated with a higher P/E.
B) Expert, I meant it in the true meaning of the word, with respectful regards. 
Regards.
Edited by Equity Buff - 05/Nov/2006 at 7:05pm
|
|
IP Logged |
|
|
|
pinki_kotak
Groupie
Joined: 24/Aug/2008
Location: India
Online Status: Offline
Posts: 42
|
Posted: 20/Aug/2009 at 11:45pm |
|
AXIS ITNT.Last year was taken over by Rajeev Chandrasekhars(ex-BPLMobileChief) AXIS Aerospace and Technologies pvt ltd.Mr.Chandrasekhar is creating a complete mega AVIATION LIFE CYCLE services company.Axis Itnt becomes the Design services company of the group.They are also foraying into DEFENCE sector.The promoter group company has major tie ups with EADS and Thales.Infact EADS India Head Mr.RaviNarayan is also the the chairman of Axis Aerospace group and also Axis Itnt.its a multibagger
|
|
|
|
IP Logged |
|
|
|
Active Topics
Memberlist
Calendar
Search
Help
Register
Login
