Identifying Multibaggers: Which co.in the spinoff goes up further

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Which co.in the spinoff goes up further

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Identifying Multibaggers
Forum Discription: Discuss specific attributes that investors could look at while choosing multibaggers. Also point out certain factors that investors tend to overlook while finding multibaggers.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=299
Printed Date: 07/May/2025 at 1:36pm

Topic: Which co.in the spinoff goes up further

Posted By: basant
Subject: Which co.in the spinoff goes up further
Date Posted: 08/Sep/2006 at 10:04pm

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

As a continuation to the earlier discussion on http://www.theequitydesk.com/forum/forum_posts.asp?TID=261 - 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.

So after the value has been unlocked investors could make more gains by being with the company that has a higher growth rate. Most of the time it is the spin off company i.e the company that has been hived off from the parent

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'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

Replies:

Posted By: omshivaya
Date Posted: 08/Sep/2006 at 10:54pm

Wanted to know possible spinoff details of Pantaloon and TV18? When are theyr going for the spinoffs.

Thanks

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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

Posted By: basant
Date Posted: 08/Sep/2006 at 11:15pm

http://www.theequitydesk.com/forum/forum_posts.asp?TID=29 - - Pantaloon Retail -

Posted By: prosperity
Date Posted: 08/Sep/2006 at 11:22pm

i felt happy when i read ur this post...

coz i entered reliance at around 750-800 before the demerger....

and after demerger, i sold all shares except reliance industries and reliance communications...

and with that money bought some reliance communications..

and then put some of my money to buy more reliance communications...

but when it went to Rs. 188 - i had only Rs 4000, so i bought some shares then also - wish i had more cash with me then ... so my cost price wud have come down further ..

LMK how to straterzise after TV18 demerger .. i think i'll hold all shares .. coz i can't see the differential opportunity b/w CNBC and CNN-IBN and neither between CNBC and moneycontrol..

Posted By: basant
Date Posted: 08/Sep/2006 at 11:31pm

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.

On the other hand Network 18 through GBN can get into anything all the languahes entertainment channels etc almost anything in media and entertainment.

The catch is if you have Network 18 you already have 51% of Tv 18 so if the latter goes up so wil the former since profits will be consolidated and Raghav will personally hold only Network 18!!!

Would take a call once it gets listed and after looking at relative valuatins.

Posted By: basant
Date Posted: 18/Oct/2006 at 5:24pm

GE Shipping announced a spin off yesterday. Would make a very interesting case study. The porfits sem to be there on the table (screen) for the taking.

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'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

Posted By: RAKESH
Date Posted: 18/Oct/2006 at 7:03pm

is it worth a buy at this rate

wat i will get say if i have 50 shares of ge shipping

Posted By: basant
Date Posted: 18/Oct/2006 at 7:15pm

See I have not studied GE shipping specifically but the combined spin of value of both the entities should be more then the current price of the stock. This is one thing that I am sure about.

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'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

Posted By: vijinat
Date Posted: 19/Oct/2006 at 12:18pm

I read thatHinduja TMT is also in the process of demerging its associated businesses. When will it happen?

Posted By: basant
Date Posted: 19/Oct/2006 at 12:28pm

Sometime in January next year. That should create value for shreholders.

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'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

Posted By: gopinathpc
Date Posted: 15/Nov/2009 at 10:48am

Another multi bagger that really did extremely well for me
is Sterlite Industries. In 1988, I invested Rs 10,000 in this
company and now it's over Rs 10 lac as the company liberally
gave bonuses and splits. The annual dividend from this company I receive from this company is over Rs 7,000!

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