Joined: 02/Oct/2007
Location: India
Online Status: Offline
Posts: 2037
Posted: 13/Nov/2007 at 10:22pm
been reading up on holding companies, and I chanced upon Forbes Gokak. The company owns 100 per cent in Eureka Forbes.
According to a post in ISG only the divd of 9 cr rs is shown in forbes acs.
here are the details of its annual report (a year old, but still good ref. material)
year ended year ended 31st March, 31st March, 2006 2005 Rupees Rupees Rupees Rupees 1. INCOME: (a) GROSS SALES (Other than Lottery Tickets) ........... 1024,23,54,550 885,06,65,531 Less: Excise ..............................
..................................... 32,63,96,418 28,16,83,242 Net Sales ........................................................................ 991,59,58,132 856,89,82,289 Lottery Tickets .............................................................. 140,29,07,157 88,74,08,231 1131,88,65,289 945,63,90,520 (b) SERVICES AND OTHER INCOME: (i) Income from Services rendered ............................ 170,93,19,881 141,92,67,499 (ii) Interest on Investments - Current Investment ............................................ 7,39,274 7,38,900 - Long Term Investment ....................................... 3,243 2,955 (iii) Dividend on Long Term Investments: - Other than Trade ................................................ 3,19,82,203 5,21,35,238 (iv) Dividend on Current Investments - Other than Trade ................................................ 2,38,684 2,64,652 3,29,63,404 5,31,41,745 (v) Rent ...................................................................... 78,83,065 59,14,305 (vi) Miscellaneous Income .......................................... 19,51,97,642 22,96,48,916 (vii) Profit on Sale of Fixed Assets (net) ...................... 3,22,27,542 24,78,460 (viii) Bad Debts previously written off now recovered 49,61,165 48,00,071 (ix) Excess Provision written back .............................. 2,70,03,837 53,24,043 (x) Profit on sale of Long Term Investments (net) ..... 5,78,67,409 69,03,482 206,74,23,945 172,74,78,521 1338,62,89,234 1118,38,69,041 2. EXPENDITURE: Manufacturing, Trading and Other Expenses (Per Schedule 10) .................................................................... 1229,62,99,941 1027,14,37,758 Interest (See Note 7) ................................................................ 15,36,21,777 12,95,97,169 1244,99,21,718 1040,10,34,927 93,63,67,516 78,28,34,114 Voluntary Retirement Compensation amortised (Per Schedule 9) 1,07,99,094 46,90,819 92,55,68,422 77,81,43,295 DEPRECIATION (Per Schedule 5) ...................................... 45,44,34,178 36,67,41,033 IMPAIRMENT OF ASSETS (Per Schedule 5) .................... --- 87,56,692 PROVISION FOR DOUBTFUL LOANS & ADVANCES AND DIMINUTION IN THE VALUE OF INVESTMENTS Doubtful Loans & Advances ................................................... 3,60,056 3,41,140 Diminution in the value of Investments .................................. 6,13,263 5,01,443 Impairment of Goodwill on Consolidation ............................. -- 1,63,339 9,73,319 10,05,922 PROFIT BEFORE PRIOR PERIOD ITEMS ................... 47,01,60,925 40,16,39,648 PRIOR PERIOD ITEMS: Add : Depreciation .................................................................. -- 48,03,203 3. PROFIT BEFORE TAXATION ......................................... 47,01,60,925 40,64,42,851 Carried Forward ............................................................................... 47,01,60,925 40,64,42,851
*Standalone Result*
*Scrip Code :* 502865 *Company Name :* Forbes Gokak Ltd
*Type* *Audited* *Audited* *Audited* *Audited* *Date Begin* *01 Apr 06* *01 Apr 05* *01 Apr 04* *01 Apr 03* *Date End* *31 Mar 07* *31 Mar 06* *31 Mar 05* *31 Mar 04* Description Value(Rs. million) Net Sales 6147.3 5791.8 4515.55 4085.69 Other Income 439.84 352.85 395.24 271.87 Total Income 6587.14 6144.64 4910.79 4357.56 Expenditure -6011.12 -5521.84 -4332.43 - 3894.47 Operating Profit 576.02 622.8 578.36 463.09 Interest -173.36 -126.37 -102.35 -75.27 Gross Profit 402.66 496.43 476.01 387.82 Depreciation -271.01 -235.09 -210.18 -176.96 Profit before Tax 131.65 261.34 265.82 210.85 Tax - 37.52 -44.4 -14.55 -21.44 Provisions and Contingencies -3.88 -0.93 -1.82 - 18.76 Profit after Tax 90.25 216.01 249.46 170.64 Prior Period Items 0.94 - - -13.14 Net Profit 91.2 216.01 249.46 157.5 Equity Capital 128.99 124.53 124.53 124.53 Reserves 2755.14 2217.66 1905.32 1727.46 EPS 7.07 17.35 20.03 12.65 Nos. of Shares - Non Promoters 3436925 3297726 3272841 3422706 Percent of Shares - Non Promoters 26.65 26.48 26.28 27.48 Result Type A A A A * Notes* <#> *Notes* <#> *Notes* <#> *Notes* <#>
Joined: 02/Oct/2007
Location: India
Online Status: Offline
Posts: 2037
Posted: 13/Nov/2007 at 10:35pm
according to some analysts each share of JSW Holding has underlying value of minimum Rs 4,652.The BSE closing price as on November 13 was Rs 770.10. Will permission for FIIs to buy upto 49 per cent stake in this company amount to a sufficient enough catalyst to unlock value in this company?
Seeking the advise of TEDdies on this. On the face of it, the stock is available for about one-sixth of the underlying value.
Joined: 06/Sep/2006
Location: India
Online Status: Offline
Posts: 5966
Posted: 14/Nov/2007 at 1:34am
Thanks for that article Shiv jee.
The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it
Joined: 01/Jan/2006
Location: India
Online Status: Offline
Posts: 18403
Posted: 14/Nov/2007 at 7:06am
All broking firms that have brought out reports on embedded value use the SOTP method for companies whose subsidiaries will take a long time to show any business.
In October 2007, another broking house released a report on Reliance Industries where the E&P business was valued at Rs 745 and the retail business at Rs 182. Surprisingly, the retail business had a consensus value of Rs 80 in August 2007, which jumped to Rs 182 in a span of only three months, without any material change in business prospects Read embedded value.
While I cannot agree disagree on this we should lok at the management's opinion on these subsidiaries.Now every management will say that their subsidiaries are valuable and what not not but the managemnt that actually goes out to list the subsidiary either through IPO or demerger is sending a message that he is BULLISH on this company in the long term.
WWIL,NW18 and DISH were not voluntary spin offs because they were done to comply with regulatory guidelines so what we need to know is the extent to which the management would go to list that subsidiary.
But this merely is a stement of intent because managements can also go wrong in their judgement. My simple theory is 20/10 or at most 20 times PE by 2010 everything else is risky!The extent varies.
'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
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
Posted: 18/Dec/2007 at 9:15am
Investors hitch a ride with high-flying holding cos
... as long as there are enthusiastic investors, analysts will never complain about lack of new investment ideas.
Holding companies are the latest fad on Dalal Street, with stocks of these companies trading near their record highs. These stocks have risen around 50% over the past one month, with their cheerleaders claiming that the market price is at a significant discount to their net asset values.
There are many companies that hold sizeable stakes in well-performing group companies, either directly or indirectly. Investors have suddenly woken up to the value of these holding companies.
There are reasons why holding companies typically quote at a discount to their intrinsic value. The key reason being that holding companies rarely divest their stakes in group companies. Secondly, while the group companies may be doing well, the income for the holding company will depend on the dividends the group firms pay out.
.... valuations would also depend on the prospects of companies where the holding company has investments.
To determine a safe price target, the discount usually stands at around 50%.
One also needs to look at other aspects like debt on the holding company.
........market talk is that a domestic mutual fund is planning to come out with a fund that will exclusively invest in holding companies*.
There are some goofups in the article, cant believe that ET can write something without researching it properly first.
The article says "
For instance, McDowell
Holdings, which currently quotes at Rs 363, has investments in UB holdings,
which has quoted investments in group companies and unquoted investments like
Kingfisher Airlines. The IPO of the airline company can be a major trigger for
the McDowell Holdings whenever it is announced.
"
Mcdowell holdings does not hold any stake directly in KF Airlines. Only UB holdings and Vijay Mallya hold direct stake in KF Airlines.
Originally posted by kulman
Investors hitch a ride with high-flying holding cos
... as long as there are enthusiastic investors, analysts will never complain about lack of new investment ideas.
Holding companies are the latest fad on Dalal Street, with stocks of these companies trading near their record highs. These stocks have risen around 50% over the past one month, with their cheerleaders claiming that the market price is at a significant discount to their net asset values.
There are many companies that hold sizeable stakes in well-performing group companies, either directly or indirectly. Investors have suddenly woken up to the value of these holding companies.
There are reasons why holding companies typically quote at a discount to their intrinsic value. The key reason being that holding companies rarely divest their stakes in group companies. Secondly, while the group companies may be doing well, the income for the holding company will depend on the dividends the group firms pay out.
.... valuations would also depend on the prospects of companies where the holding company has investments.
To determine a safe price target, the discount usually stands at around 50%.
One also needs to look at other aspects like debt on the holding company.
........market talk is that a domestic mutual fund is planning to come out with a fund that will exclusively invest in holding companies*.
The market is a place where people with money meet people with experience.
The people with experience get the money while people with money get experience!
Joined: 02/Sep/2006
Location: India
Online Status: Offline
Posts: 9319
Posted: 10/Mar/2008 at 11:06pm
What comes to your mind when you think of Mahindra & Mahindra (M&M), Aditya Birla Nuvo, Max India, Godrej Industries and Zuari Industries? For most investors, these companies are market leaders owned by leading business houses.
ETIG’s research revealed 12 large holding companies, which are trading at a huge discount to their fair net asset values.
We began our search by looking at the consolidated financials of all listed companies and compared them with their standalone results. Then, we eliminated all those holding companies whose standalone revenues were less than 50% of their consolidated revenues.
Next, we calculated their consolidated price-earnings (P/E) multiples and dropped those with high P/Es. Further, companies with smaller-sized revenues (less than Rs 200 crore) were not considered.
The fair asset value of each company in the final list was arrived at by aggregating the estimated value of the company’s standalone business, the market value of the parent company’s investment and the estimated value of its holding in unlisted subsidiaries and associates.
Let’s consider the example of EID Parry. It holds 69% stake in Coromandel Fertilisers, a listed company with m-cap of Rs 1,515.6 crore. Hence, the market value of EID Parry’s stake in Coromandel stands at Rs 1,046.5 crore. This, together with the fair value of EID’s standalone business, is estimated at Rs 1,200 crore, taking the fair asset value of EID Parry to Rs 2,246.5 crore.
The value of unlisted subsidiaries was estimated by using the relative valuation of their listed peers as benchmark. For instance, the value of Max Healthcare, at Rs 763.5 crore, a subsidiary of Max India, was calculated on the basis of the corresponding value commanded by Apollo Hospitals and Fortis Healthcare, respectively, with reference to their sizes.
Topping our list is Helios & Matheson, a mid-sized IT company. Its current m-cap is around a quarter of its fair value. Giving it close company is GHCL (formerly Gujarat Heavy Chemicals), one of India’s leading manufacturers of soda ash. Over the past few years, the company has opted for a series of overseas acquisitions to emerge as one of the world’s leading producers of soda ash. That, however, is yet to be reflected in its m-cap and GHCL’s stock is trading at a 70% discount to its estimated fair value.
Similar is the case with Binani Industries, which is a pure holding company with no business operations of its own.
Take the case of Zuari Industries. Reading the fine print of the company’s annual report reveals that Zuari (along with its subsidiaries and associates) is India’s largest fertiliser group in the private sector and is the flagship company of the KK Birla group with investments in a host of other businesses.
Not surprisingly, investors generally discount the market value of a holding company’s stake in subsidiaries and associates.
However, things may change now. The tax anomaly, which discriminated against dividend payment by subsidiaries, has been set right in the 2008-09 Budget.
Holding companies will now be allowed to set off the DDT paid to them by their subsidiaries against the total DDT paid by the parent company. The new provision is likely to encourage subsidiaries to declare even higher dividends to their parents, which will consequently percolate down to the latter’s shareholders. This will, in turn, improve their valuations.
The new provisions will also encourage companies to improve the visibility of their subsidiaries. As the process sets in, the market is expected to enhance the valuations of parent companies.
Life can only be understood backwards—but it must be lived forwards
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot delete your posts in this forum You cannot edit your posts in this forum You cannot create polls in this forum You cannot vote in polls in this forum
Active Topics
Memberlist
Calendar
Search
Help
Register
Login
IP Logged
