Which company in the spin off will go up further and quicker?

 

As a continuation to the earlier discussion on Making multibaggers from spin offs I noticed that a spin off does not make a multibagger by itself. Post spin off stock prices go up 50% - 75% immediately then the next bout of surge takes it up and away.

Another aspect I have been working on is to see what happens after one year once the businesses gets de merged. For instance if Reliance was de-merged on a particular date we all know how the consolidated prices for the whole group went up. Now once a year passes by this de merged companies would no longer be cheap since they are now all fairly valued. In case of Reliance industries the next trigger could be retail and that is where the re-rating could come in

 

On the other hand investors would have to see which is the faster growing spin off company That would give us some sense as to where the money needs to be shifted.

 

While UltraTech went up L&T the faster growing company (L&T) went up further and quicker.

 

While Aptech (education training arm) could not do any magic the software division Hexaware went up some ten times after the de-merger.

 

In the case of Reliance, Retail triggered Reliance while reliance communication went up because it is growing very fast.

 

Many times the promoter’s shareholding gets adjusted and they are offered more shares in one company compared to the other one. In that case shareholders should see which company the promoter is being issued more shares of. That indicates the promoters willingness to bet more in one company compared to the other and when insiders are looking in one direction outsiders need not look elsewhere.

Edited by basant - 09/Sep/2006 at 10:42am

TV 18 spin off will be completed at most in 60 days. pantaloon things are fluid right now they will make Central a subsidiary company but shareholders wil make money only if they get the shares of that subsidiary and it is listed that could take some time as nothing at all is decided now. Pantaloon Retail (Central, Home Town etc) is a potenmtial spin off not a sure shot one.

Yes neither I can. they have structured it very well. TV 18 will have 85% of the internet business and that will grow.... on the other hand the business channels cannot grow from two to four. They could plan for a gujarati channel but later - saw the BSE site in gujarati that means there is  amarket for a gujarati moneycontrol and a gujarati cnbc.

Edited by basant - 09/Sep/2006 at 10:45am

is it worth a buy at this rate