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CMP - Rs.25 NSE Symbol - HBSTOCK BSE Code -532216
Deep Value ......
HB Stockholdings Ltd. is an Investment company belonging to the Delhi based HB Group & has huge value in investments in various quoted equities.
Investment Holdings
HB Stockholdings has an Equity Capital of Rs.25.44 crores. The company has zero debt. The company has investments of Rs.69.87 crores (Book Value), primarily in quoted and unquoted equities.
The company has investments of Rs.48.09 crores in Quoted Equities. The single largest investment of the company is Rs.12 crores for 30.37 Lakh shares of Jaiprakash Associates. The shares were acquired by the company a few years back at an average price of less than Rs.40 per share. The stock currently trades at Rs.725 which translates into Rs.220 crores as market value of its investment in Jaiprakash Associates. (Rs.86 per share).
Besides its investments in Jaiprakash Associates, the company has investments in many other listed companies - these include DCM Shriram Industries (Current Market Value Rs.5.50 crores), Chemplast Sanmar (Current Market Value Rs.1.9 crores), Greaves Cotton (Current Market Value Rs.1.62 crores). The total number of quoted equities comprise over 150 stocks, whose value at the current price is roughly Rs.250 crores.
Besides, the company has investments of around Rs.13 crores in unquoted equities. This includes investment in Credit Capital Asset Management Co. Ltd. which manages Taurus Mutual Fund.
Deep Discount to the Value of Investments
The stock of HB Stockholdings currently trades at Rs.25 and is available at a deep discount to the market value of its investments. Even considering its single largest investment in Jaiprakash Associates, the huge discount to the intrinsic value is not justified since HB Stockholding is not a holding company holding shares in group companies (where values rarely get unlocked).
Value Unlocking
The investment in Jaiprakash Associates made a few years back by the company is long term in nature and long term capital gains being exempt from tax will result in tax free profits for the company. This would result in a windfall whenever shares of Jaiprakash Associates are sold.
Risks & Concerns
Any effort on the part of management to dilute the value of the minority shareholder is the major risk we see with the investment in HB Stockholding.
Conclusion
HB Stockholding is a totally debt free company holding quoted equities whose market value at the current price is Rs.250 crores. The company has a market cap of just Rs. 65 crores. The stock thus trades at just 25% of the value of investments in quoted equities - not to mention its investments in unquoted equities where value unlocking may take place as and when these companies decide to plan listing; and the loans and advances of Rs.9.0 crores that the company has advanced to its group companies.
Consider an optimistic scenario - incase the stock price of Jaiprakash Associates moves up to Rs.1000 and the company decides to liquidate its investment, this will translate into Cash Flow of over Rs.300 crores and a profit of Rs.290 crores (all exempt from tax). This would mean an EPS of over Rs.100. The Cash of Rs.300 crores if put to good use can work wonders for the company and its shareholders.
Whether and when the management will sell shares of Jaiprakash Associates; whether the money realized will be used prudently by the management; are questions that we donot have the answers to at this point in time, only thing we can say is that the stock which has been lackluster till now will witness great action when the management sells its holding in Jaiprakash.
At the current price of Rs.25 and current market cap of Rs.65 crores, the downside however looks restricted. Long term investors can choose to accumulate the stock.
| Newsletter dated 31/12/2006 (10paisa.com) | ||||||||||||||||||||||||||||||||||||
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| Target rates are expected in three months frame of time, but we recommend you that whenever any scrip touches its target rate, you must dispose of all shares or in parts(If you have invested in that scrip),so that you may be able to invest those funds in other scrips recommended in further newsletters. |
| Newsletter dated 31/12/2006 (midcaps.in) | ||||||||||||||||||||||||||||||||||||||||||||||
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| Target rates are expected in three months frame of time, but we recommend you that whenever any scrip touches its target rate, you must dispose of all shares or in parts(If you have invested in that scrip),so that you may be able to invest those funds in other scrips recommended in further newsletters. 1. FORTHCOMING I.P.O.'s :-
Rating:- *** Very Good ** Good * Normal 2. SECTORS TO WATCH :-
23/12/2006 S.Kumars mulls to de-merge retailing business S.Kumars Nationwide's board will meet on 30 December 2006, to consider a de-merger of the retailing business and to hold EGM to consider allotment of equity shares / fully convertible debentures to promoters on private placement basis. 26/12/2006 Bank Of Maharashtra has informed the Exchange that 'we have decided to establish a joint venture for general insurance business in partnership with M/s. Shriram Financial Services holdings Pvt.Ltd. and M/s Sanlam Ltd, South Africa. We have decided to take an equity stake of 15% in the Proposed joint venture'. 26/12/2006 Kirloskar Ferrous Industries has executed an agreement on 22 December 2006 with Kirloskar Oil Engines (KOEL) for acquisition of its castings division at Shivashahi, Solapur as a going concern basis, effective from 1 January 2007 for a total consideration of Rs 21 crore.KOEL's unit at Shivashahi, Solapur will now become a Solapur plant of the company. 26/12/2006 Ray Ban Indian Holdings and Luxottica Group S.p.A. will make a public announcement of an open offer to the shareholders of RayBan Sun Optics India.The referral date for calculation of open offer price is 28 April 1999. The Supreme Court has directed Luxottica Group S.p.A. to pay the offer price with interest at the rate of 10% per annum, effective from 27 August 1999 till the date of payment to all those who were shareholders on 27 August 1999 and continue to be shareholders of RayBan Sun Optics India on the closure date of the public offer. 27/12/2006 The High Court of Gujarat, Ahmedabad by its Order dated 12 December 2006 has sanctioned the scheme of arrangement of Arvind Mills for de-merger of garment business division of Arvind Brands and amalgamation of Arvind Fashions.Accordingl 27/12/2006 GV Films' board at the meeting held on 23 December 2006, has considered for the acquisition of multiplex theatre in Singapore.Meanwhile 27/12/2006 27/12/2006 Mysore Petro Chemicals' Phthalic Anhydride (PA) plant at Raichur, Karnataka will remain closed from 27 December 2006 for change of catalyst. It is expected to re-open at around 16-17 January 2007. 27/12/2006 NCL Industries Ltd has proposed to opt for a preferential issue of equity shares to First Carlyle Ventures Mauritius or, at its sole discretion, any one of its nominees and/or affiliates.Simultan 27/12/2006 Steel Authority of India (SAIL) has clarified that it has been exploring several opportunities for acquisition of ownership interest in coalmines abroad for establishing long-term security in supplies of coking coal. With reference to the news item appearing in a leading financial daily titled, SAIL set to buy 30% in Canadian Coal Company.The Western Canadian Coal Corporation (WCCC) opportunity is one amongst many under examination. As of date, nothing concrete has emerged either in the WCCC opportunity or in the other opportunities under exploration / examination for their suitability. 27/12/2006 On 27 December 2006, Sanguine Media has launched Samrat - India's first custom designed vehicle for mobile product marketing and brand promotion initiatives especially aimed at facilitating penetration in the rural markets.Samrat will also tap melas that are big cluster points for rural consumers. 3 village markets can be covered in a day reaching out to about 12,000 people each day. As per Sanguine estimates, a fleet strength of 800 vehicles is required for covering every village each quarter in South India alone. 27/12/2006 SREI Infrastructure Finance has raised its Benchmark Rate (SBR) by 50 basis points to 11.5%. The change will be effective from January 01, 2007.The board met last week and after reviewing the likely increase in the borrowing costs, decided to increase the benchmark lending rate in line with the present trend of upward moving interest rates in the financial market. 28/12/2006 Accentia Technologies Ltd has announced the commercial launch of 'ITES products for Automation of End to End workflow processes for BPO/KPO companies'. As a part of commercial launch, two products have been introduced into the North American and UK Markets for integrating Individual Work Stations with an Organizational Hub through which the onward transmission of data flow takes place to the end-client. Product 1, branded as FALCON Ver 6.1 caters to the Hospital Back Office Automation, Integrating Individual work stations. Product-2, branded as IMTAS QC Suite 2006 designed for quality control and analysis of Hospital Back Office Work from NHS in United Kingdom. Commenting on the launches, Director & CEO of the Company, Mr Pradeep Suseela Viswambharan has stated that for further spread of the product reach, we are looking at strategic marketing alliances with US and UK based technology vendors. The above two products will help enhancing the company's revenues to the tune of USD 1M in the current financial year 2006-07. 28/12/2006 Gtl Infrastructure Limited has informed the Exchange that the Committee of Board at its meeting held on December 27, 2006, has considered and approved the allotment of 6,955,074 Equity Shares of Rs.10/- each for cash at par, in terms of the Offer Document of GTL Limited and Scheme of Arrangement & Reconstruction approved by the Hon'ble High Court of Judicature at Bombay, consequent upon the exercise of right to convert FCCBs worth Swiss Francs (SFr.) 1,865, 041.27. 28/12/2006 Sangam India's board will meet on 29 December 2006 to discuss and decide on further issue of securities in form of FCCBs or equity shares by way of a public float, private placement, a rights issue, preferential issue, convertible warrants, debentures. 28/12/2006 TTK Healthcare Ltd has disposed of its gloves manufacturing undertaking, which was under the biomed division, according to information provided by the company to the stock exchange. Company officials said that the unit at Chikalthana, Aurangabad, with a capacity to make over 30 million pairs of latex gloves a year has been sold to a `private party.' The unit had not been remunerative and production had been stopped for over a year. 28/12/2006 Varun Shipping Company has entered into a memorandum of agreement (MoA) for a very large gas carrier (VLGC) having a cargo carrying capacity of approximately 76,644 cbm. It will be the first Indian shipping company to acquire a VLGC.This VLGC is scheduled to be delivered in June / July 2007 and will be the largest gas carrier to be registered under the Indian flag.Further, the aframax crude tanker, for which the company has entered into an MoA, is scheduled to be delivered by 15 January 2007.On acquisition of these vessels, the company will complete an investment of around $ 200 million. 29/12/2006 Shetron's board approved allotment of 12 lakh equity shares to Citicorp Finance India, 8 lakh equity shares to Kishor Construction Company and 6 lakh equity shares to Ganges Leasing and Finance Company at Rs 50 each (Rs 10 face value + Rs 40 premium) after conversion of warrants. 6. MUTUAL FUND'S SCHEME :-
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Woke up this morning.... lying in bed, I was asking myself....
what are some of the secrets of success in life?
I found the answers right there, in my very room
The fan said : be cool.
The roof said : aim high.
The window said : see the world.
The clock said : every minute is precious.
The mirror said : reflect before you act.
The calendar said : be up-to-date.
The door said : push hard for your goals.
Have A Great Year !
Wish you a very happy & prosperous new year
Truly Yours & Sincerely,
Rohit Gadia (BigGains)
