14Mar2012181326_Holding & Investment Companies - Deeply in Discount

8/13/2019 14Mar2012181326_Holding & Investment Companies - Deeply in Discount

1/31

ANALYST:

PriteshBumb|+912240935008

[email protected]

SALES:

DevangShah

|+91

22

4093

6060/61

[email protected]

Sushil Financial Services

Private Limited

www.sus nance.com

For Private Circulation Only

Please refer to important disclosures at the end of the report


2/31

Holding&InvestmentCompaniesDeeplyinDiscount

We have covered Holding & Investment companies in this report, which are trading at very high discount to their NAVs.

Selection of stocks are based on qualitative and quantitative factors as explained below:

QualitativeFactors

Promotershistoryandbackground&theirstakeinthecompany

Qualityofinvestments

Possibilityof

value

unlocking

Majorshareholdersotherthanpromoters

Sizeofthecompany&averagevolumes

CurrentdiscounttoNAV

Historicaldiscount

to

NAV

in

various

market

situations

Otherliabilitiesinthebalancesheet

so, ns orttome umterm, v en st eon y ncome nvestorgenerates,wecons ere v en y e asase ect oncr ter a.

OURVIEWWe believe holding company discount arises due to few factors which includes lack of controlling stake, long term nature of

investment, liquidation cost etc. Over a period of time the discount varies based on market & economic conditions and due to some

fundamental changes like group restructuring, promoter increasing stake, large investor getting interest etc. In this report, we haveselected a list of 12 companies which we believe are trading at a discount much higher than historical average. We expect the

discount to decrease as investors would flock towards buying these undervalued companies, keeping in mind the sharp recovery in

the stock market and improved sentiments.

Return for investors in these companies can be two fold driven by appreciation of its investments and decrease in discount. Hence,

We expect that most of these companies will turn out to be the safest bets in the current environment & would provide extremely

2March14,2012

goo re urns over e com ng wo years.


3/31


Why holding company trades at discount? Strategicstake: Sincemostoftheholdingcompanyinvestmentsarestrategicinnature,unlockingofvalueofinvestment

couldnotbeforeseeninnearfuture.Sotheunrealizedgainsareonlyinthebooksbutseldomrealized.Thus,whatan

investorofholdingcompanyearnsisnottheappreciationinthesharepriceoftheunderlyinginvestmentsbutthedividend

earne rom ese nves men s.

Lack of majority : If a holding company does not have a majority stake in its investments, then the financials of the

investments thus held, do not reflect in the holding companys financial statements. Hence, valuing financials of the holdingcompany may not give a fair picture of the value of overall investment held by it.

Liquidation Cost:High liquidation cost of the investment i.e. if it sells a large block of shares in open market, it might have to

do so at a rice below the market rice and the rice ma correct drasticall unless the investments are hi hl li uid stocks.

Triggers that can result in decrease in holding company discount:

1. Fundamental Change

Group /Business Restructuring:Generally group restructuring results in unlocking of value of investments and reduction indiscount.

.

easiest way for them is to increase their stake in holding company at a steeply discounted valuation (rather than that of

individual companies at market related prices). This results in reduction of discount for holding company.

Launch of holding company funds:Since large number of mutual funds/PE Funds are trying to focus in niche area of

operation, we may see holding company funds to get launched in India in next few years which would result in decrease in

the discount due to fresh buying interest.2. Technical Behavior/ Market sentiments

Our historical analysis points out that when markets are at top, holding company discount is lowest and when market

bottoms, it is at highest. We have observed a trend (within the universe we covered in this report) which shows that the

discount was least, when the market peaked in Jan08 and it was maximum when market bottomed in Mar09. Despite of a

sharp revival in the market recently, the discount currently are still at high. Hence, we expect discount to decrease

3March14,2012

substantially over the coming two years as the market condition remains upbeat and expect the investors to flock towardsbuying these undervalued holding companies.


4/31


NAV Calculation MethodologyA holding company typically does not have ongoing operations other than the management of investments and cash. The valuation

of these companies usually relies significantly upon the value of the underlying asset as normal valuation techniques dont apply to

these companies as there is no consistency in revenue generation i.e. Net profit will be extremely volatile based on liquidation of

shares. If the company sells its part of holding and book profit in a particular year, its Income and Net Profit for that year will look

extraordinarily high. Hence, we estimate business value based upon the market value of the underlying assets rather than income

producing capacity or peer valuation. We used Net Asset Value (NAV) based valuation methodology, which is market value of

company assets less liabilities and apply appropriate discount to it. Discount generally depends on nature of its assets and general

.

Disclaimer:For analysis, we have considered investments breakup based on last annual report. Since some of the investments may

have been sold, since then, at much lower price, our conclusion may be inappropriate to the extent of price rise after the sale of

shares.

4March14,2012


5/31


COMPANIESCOVERED CMP(RS.) MCAP(MN) NAV(RS.) DISCOUNT(%) PAGENO.

Ba a Holdin s&InvestmentLtd. 805 89355 2230 64 6

TataInvestmentCorporationLtd. 459 22032 790 42 8

BombayBurmah &TradingCorporation 549 7686 1793 69 10

Na wa ons nvestments t . 7 5 7

MaharashtraScootersLtd. 307 3377 1688 82 14

Balmer Lawrie InvestmentsLtd. 150 3300 265 43 16

Bengal&AssamLtd. 204 1836 691 71 18

SILInvestmentsLtd. 73 803 354 80 20

UniphosEnterprises

Ltd.

26 650 106 75 22

MajesticAutoLtd. 59 614 194 70 24

WilliamsonMagor&CoLtd 46 506 212 78 26

5March14,2012


6/31


7/31

BajajHolding&InvestmentsLtd.

NAV

Calculation No

of

Share(mn) Stake(%) CMP (Rs.)(12Mar12) Cost

(RsMn) Value

(Rsmn)

BajajAuto 91.1 31.5 1,789 2,862 82,149

BajajFinserv 56.0 39.2 615 3,461 35,137

ICICIBank 12.2 1.1 930 4,460 16,061

BajajElectricals 16.7 2.0 190 1,118 1,854

OtherQuotedShares 5,987 6,654

Valueof

Quoted

Equity 17,888 218,585

Otherinvestmentincl.stake inBSE (cost) 27,847 27,847

ValueOfInvestment 45,735 246,432

Less:NetDebt DebtCash 1775

NAV 248,207

No. ofshares 111

NAVPerShare(Rs.) 2,230

CMP(Rs.) 805

Discount(%) 64

PriceHistory ValuationGapChart

7

Source: Company,SushilFinancialServicesEstimates

March14,2012 Holding&InvestmentCompanies


8/31


9/31

TataInvestmentCorporationLtd.

NAV

Calculation NoofShare

(mn) Stake (%) CMP (Rs.)

(12Mar12)

Cost

(RsMn)

Value

(Rsmn)

TataChemicals 15.8 6.2 353 455 5,560

TitanIndustries 17.2 1.9 246 171 4,236

TataMotors 14.8 0.4 284 858 4,183

Tata Global Bevera es 27.5 4.5 117 74 3 215

Tata Steel 3.4 0.4 456 615 1,544

Voltas 9.5 2.9 127 36 1,198

IndianHotels 9.9 1.3 68 581 670

OtherQuotedShares 5,269 10,546

ValueofQuotedEquity 8,059 31,151

OtherInvestment(cost) 4,850 4,850


Less:NetDebt(DebtCash) (2,095)

Less:NetCurrentLiabilities

NAV 38,097

No. ofshares

(in

Mn) 48

NAVPerShare 790


Discount(%) 42

9




10/31


11/31

BombayBurmah TradingCorpLtd.

NAV Calculation NoofShare

(mn) Stake(%) CMP (Rs.)

(12Mar12)

Cost

(RsMn)

Value

(Rsmn)

Bombay Dyeing 5.9 14.6 463 987 2,744

ValueofQuotedEquity 987 2,744

BritanniaIndustries* 60.9 51.0 570 34,719

Otherinvestment(cost) 81

ValueOfInvestment 37,544

Less:

Net

Debt (Debt

Cash) 12,419

Less:NetDeferred TaxLiability 89

NAV 25,035

No. ofshares inMn 14

NAVPerShare(Rs.) 1,793

CMP(Rs.) 549

Discount(%) 69

*BombayBurmah holds

indirect

stake

in

Britannia

Inds.

via

Leila

Lands

Senderian Berhad,

a

100%

Subsidiary.


11




12/31

NalwaSonsInvestmentsLtd.March 14,2012 CMP:Rs.768 NAV:Rs3225 Discount :76%

Nalwa Sons Investments Ltd (NSIL), formerly known as Jindal Strips Ltd, is an O.P. Jindal Groupcompany. NSIL was incorporated in the year 1970 and converted to public limited company in the

year 1975.

NSIL is an investment company and continues to hold significant investments in

STOCKDATA

ReutersCode

BloombergCode

NALS.BO

NINV.IN

BSECode

NSE S mbol

532256

NSILJin a Saw 19.4 % Sta e s one o t e country s argest pro ucers o Saw p pes, w c s

widely used in the energy sector for the transportation of oil and gas.

JSW Holdings(10.24% stake) is an Investment Company of the JSW Promoters Group with itsinvestments mainly in Jindal Group of Companies.

JSW Steel(2% direct stake and 1.5% indirect holding via Jindal holdings, which is a subsidiary

Mkt.Cap. 3840mn

Shares

Outstanding

5mn

52WeeksH/L Rs.950/510

w t 87% sta e s In a s secon argest stee ma er w t 10 MT capac ty, w c cons sts o

the most modern, ecofriendly steel plants with the latest technologies for both upstream &

downstream processes.

NSIL also hold investments in Stainless investment, Brahmaputra Capital as its majorityholdings. The company has four unlisted subsidiaries namely Jindal Holdings Ltd, Jindal

Avg.DailyVol. (6m) 447Shares

PricePerformance(%)

1M 3M 6M

(8) 33 20

200 Da s EMA Rs.700 , ., .

Strong Background:Nalwa Sons is a part of O.P. Jindal Group which is amongst the Indias largest

corporate groups having business collaborations around the world. Group is involved in

Infrastructure, Hightech realms of deepocean oil drilling, Prospecting for oil, gas and petroleum

products and Exports

SHAREHOLDING(%)

Promoters 55.6

FII 4.2

FI/MF 0.6 , , .

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

BodyCorporates 2.1

Public&Others 37.5

12ThisreportbasedonTechnoFundaResearchandourView/TargetPricehasbeenderivedaccordingly.Pleaserefertothedisclaimeronthelastpage.

FY10 237.0 158.1 (84.6) 30.8 3.2 24.4 1.2

FY11 311.9 259.1 63.9 50.4 7.5 14.9 1.1


13/31

NalwaSonsInvestmentsLtd.

NAV

Calculation No

of

Share(mn) Stake (%) CMP (Rs.)(12Mar12) Cost

(RsMn) Value

(Rsmn)

JindalSaw 53.5 19.4 169 35 9,069

JSWSteel 4.6 2.0 764 199 3,477

JSWHoldings 1.1 2.5 769 118 875

t er uote ares 14 16


JindalHolding(87%Stake) 3.1 87.0 764 610 2,424

OtherInvestment

(cost) 775

775


Less:NetDebt(DebtCash) 215

NAV 16,574

No. ofshares(inMn) 5

NAVPerShare 3,225

CMP 768Discount(%) 76


13




14/31


15/31

MaharashtraScootersLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

BajajAuto 6.8 2.3 1,789 183 12,119

BajajHoldings 3.4 3.0 806 467 2,728

BajajFinserv 3.4 2.3 615 177 2,083

BajajFinance 1.6 4.5 801 216 1,312

OtherQuotedShares 4 43


OtherInvestment(cost) 1094 1094


Less:NetDebt(DebtCash) (35)

Less:NetCurrentLia i ities 118

NAV 19,296


NAVPerShare 1,688

CMP 307

Discount(%) 82


15




16/31

BalmerLawrieInvestmentsLtd.March 14,2012 CMP:Rs.150 NAV:Rs.265 Discount :43%

Balmer Lawrie Investments Ltd (BLIL), incorporated in 2001, as a public Ltd company underthe administrative control of the Ministry of Petroleum & Natural Gas.

BLIL was formed under the scheme of demerger of IBP, where investment in Balmer Lawrie

was transferred to BLIL and other business was ke t with IBP. Government of India currentl

STOCKDATA

ReutersCode

BloombergCode

BLMI.BO

BALM.IN

BSECode 532485

holds about 60% stake in the company.

The Company does not carry any business except its investments in Balmer Lawrie. Hence

BLILs source of income is only dividend income.

Strong Background:BLIL is the holding company of Balmer Lawrie Co Ltd with 61.8% stake.

Mkt.Cap. 3300mn

Shares

Outstanding

22

mn


,

Logistics Management, Greases & Lubricants, Travels and Tours. Its Infrastructure business

includes three Container Freight Stations (CFSs) in Mumbai, Chennai and Kolkata. Balmer is

Indias largest manufacturer of MS drums used in packaging of lubricants, chemicals, paints,

etc and it holds the largest market share in India. It delivers BALMEROL brand of Industrial,Automotive & S ecialit ran e of lubricants.

vg. a y o . m , ares

PricePerformance(%)

1M 3M 6M

(5) 5 (7)

200 Da s EMA Rs.153

BLIL has been rewarding investors with good dividend consistently. It paid final dividend of Rs

8.5 per share during FY11 resulting in yield of 5.6%.

At the CMP, the stock is available at +43% discount to its NAV, which seems to be attractive.

SHAREHOLDING(%)

Promoters 59.7

FII 3.2

FI/MF 2.1

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

BodyCorporates 16.1

Public&Others 18.9


FY10 221.6 211.1 17.5 9.51 45.0 15.8 6.8 5.0FY11 253.0 242.2 14.7 10.91 46.9 13.8 6.1 5.6


17/31

BalmerLawrieInvestmentsLtd.

NAV

Calculation Noof

Share

(mn) Stake (%) CMP (Rs.)

(12Mar12)Cost

(RsMn)Value

(Rsmn)

Balmer Lawrie 10.1 61.8 544 327 5,473

OtherQuotedShares

,

OtherInvestment(cost)

ValueOfInvestment 327 5,473

Less:NetDebt(DebtCash) (405)


,


NAVPerShare 265

CMP 150

Discount(%) 43


17




18/31


19/31

Bengal&AssamLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

JKLakshmiCement 27.2 22.3 60 534 1,646

JK Paper 28.3 20.7 37 255 1,039

JK Tyres 8.4 20.9 74 494 628

JKAgriGenetics 1.4 38.6 333 131 450

Umang Dairies 10.0 45.1 41 5 404

Otherquoted Shares 97 166


Otherinvestment(cost) 1,514 3,903

, ,

Less:NetDebt (DebtCash) 2,151

NAV 5,994


NAVPer

Share

(Rs.) 691

CMP(Rs.) 204


Discount(%) 71

19




20/31


21/31

SILInvestmentsLtd.

NAV

Calculation Noof

Share

(mn) Stake

(%) CMP (Rs.)

(12Mar12)Cost

(RsMn)Value

(Rsmn)

ChambalFertiliser 32.2 7.7 82 526 2,638

ZuariInds. 3.2 10.9 517 80 1,659



ValueOf

Investment 1,234

4,785

Less:NetDebt(DebtCash) 1,020


NAV 3,761


NAVPerShare 354

CMP 73

Discount(%) 80


21




22/31

UniphosEnterprisesLtd.March 14,2012 CMP:Rs.26 NAV:Rs.106 Discount :75%

Uniphos Enterprises Ltd. (UEL) was incorporated in 1969 as a private company and wentpublic in the year 1986. UEL located at Gujarat was demerged from United Phosphorus Ltd

leaving it mainly with the business of trading.

UELs main business comprise into trading of chemicals, import & export of engineering

STOCK

DATAReutersCode

BloombergCode

UNPH.BO

UPE@IN

BSECode

NSE S mbol

500429

UNIENTER goo s, agr cu ura pro uc s an var ous o er ems. s r u es er c es an ung c es

for agricultural applications and it offers other products like additives for the paper industries,

adhesive tape, cotton yarn, dyes intermediates, mosquito mats, and many more products.

Strong Background: UEL is an associate of United Phosphorus group and UEL holds strategic

stake of 5.4% in United Phosphorous. United Phosphorus Ltd (UPL) is the largest

Mkt.Cap. 650mn

Shares

Outstanding

25mn

52WeeksH/L Rs.36/21

products, intermediates, specialty chemicals and other industrial chemicals. UPL has its

presence across value added agriinputs ranging from seeds to crop protection and post

harvest activity. UPL holds 50% stake in Advanta India, its subsidiary engaged in producing

seed products. Through group activities, the company has 28 branches in India, also hasresence in the UK USA Denmark Sri Lanka Australia Mexico Vietnam Zambia Mauritius

Avg.DailyVol. (6m) 11,152Shares

PricePerformance(%)

1M 3M 6M

(4) 2 (12)

200 Da s EMA Rs.27

among other countries.

At the CMP, the stock is available at 75% discount to its NAV valuation, which seems to be

very attractive.

SHAREHOLDING(%)

Promoters 50.4

FII 18.9

FI/MF 3.8

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

BodyCorporates 4.1

Public&Others 22.8


FY10 313.2 (75.2) (2.5)

(16.1)

1.2

FY11 51.5 (18.3) 75.7 (1.4) 1.2


23/31

UniphosEnterprisesLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

UnitedPhosp. 25 5.4 136 761 3,395




Less:Net

Debt

(Debt

Cash

) 720


NAV 2 689

No.ofshares(inMn) 25

NAVPerShare 106

CMP 26

Discount(%) 75


23




24/31

Majestic AutoLtd.March 14,2012 CMP:Rs.59 NAV: Rs.194 Discount :70%

Majestic Auto Ltd (MAL), established in 1973, is a part of Indias well

known Hero Group ofCompanies comprising 20 companies, each one having established its own respective production

line in India and in International Market.

MAL diversified in 1999 in the field of Fine Blanked Components by doing technical collaboration

STOCKDATA

ReutersCode

BloombergCode

MJST.BO

MATOIN

BSECode

NSESymbol

500267

MAJESAUTO .

companies of India like Maruti, Tata Motors, Mahindra & Mahindra, Ford, Toyota, General Motors,

Bosch India, Hero Motocorp, Fiat and Force Motors.

MAL has further established a modern unit to manufacture various types of silencers for HeroMotocorp, Stator & Rotor assembly for LG Electronics and Tecumseh.

MAL essentiall is a Holdin & Investment com an which currentl holds strate ic stake in Hero

Mkt.Cap. 614mn

Shares Outstanding 10.4mn


Motocorp Ltd (0.81% stake)which is a world's largest twowheeler manufacturing company. Hero

bikes currently spin out from its three globally benchmarked manufacturing units sited at in

Haryana and Uttarkhand. These plants collectively are proficient of producing out 6.1 million units

per year. Strong Management: MAL is a part of Hero Group which is amongst the Top 10 Indian Business

. . ,

PricePerformance(%)

1M 3M 6M

(8) (9) (25)

200DaysEMARs.72

Houses of India. It is a multiunit, multiproduct, geographically diversified Group with myriad

interests. Hero, known for its twowheelers business in India and the Group's other ventures

include product designing, IT enabled services, finance and insurance etc. The Group today

comprises of 20 companies, 300 ancillary suppliers, over 5,000 outlets, and has employee strength

of more than 23,000.

SHAREHOLDING(%)

Promoters 75.0

FII 1.4

FI/MF 0.8

, ,

attractive.

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

.

Public&Others 18.4


FY10 1479 208.3 356.1 20.0 48.3 3.0 1.2

FY11 1611 66.2 (68.2) 6.8 11.6 8.8 1.0


25/31

MajesticAutoLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

HeroHondaMotor 1.6 0.8 1,928 1 3,133




Less:Net

Debt

(Debt

Cash

) 1,120

Less:NetDeferredTax Liability 38

NAV 2 013

No. ofshares(in Mn) 10.4

NAVPerShare 194

CMP 59

Discount(%) 70


25




26/31

WilliamsonMagor&CompanyLtd.March 14,2012 CMP:Rs.46 NAV:Rs.212 Discount :78%

Williamson Magor & Company Ltd (WM&C) established in the year 1949, is primarily engaged in

the business of investing and lending funds and it operates in real estate through its subsidiaries

Woodside Park and Majerhat Estates & Developers.

WM&C Ltd holds major investments in associate companies

Mcleod Russel Ltd. 10.6% stake is the worlds lar est tea roducer with over 80 mn k s of

STOCK

DATAReutersCode

BloombergCode

WILM.BO

WMC.IN

BSECode

NSESymbol

519224

WILLAMAGOR

high quality tea p.a. from tea estates in Assam, West Bengal and Vietnam.

Eveready Industries Ltd. (23% stake) formerly known as Union Carbide India Ltd, has a

portfolio comprising of dry cell batteries, flashlights, CFLs and packet tea. Mcnally Bharat Engg Ltd.(10.2% stake) is engaged in providing turnkey solutions in the areas

of Power, Steel, Aluminium, Material Handling, Mineral Beneficiation, Pyroprocessing, coal

Mkt.Cap. 506mn

Shares

Outstanding

11

mn

52WeeksH/L Rs.79/32

washing, port cranes, civic and industrial water supply etc.

Williamson Financial Services Ltd.(6.9% stake) is into fundbased activities like leasing, hire

purchase and corporate financing. It also holds strategic stake in Mcleod Russel & Eveready

Industries. Kilburn Engineering Ltd.(32.6% stake) is the worlds only company manufacturing all types of

. . ,

PricePerformance(%)

1M 3M 6M

5 17 (15)

200DaysEMARs.46

ryers an o er ng comp ete ry ng so ut on or verse app cat ons.

Strong Background & Management: WM&C Ltd is a part of Williamson Magor group, which has

grown to become the world`s largest producer of tea having 28 tea estates. The group has

successfully launched three brands of packet tea Tez, Premium Gold and Jaago. The company has

experienced and renowned names on its board like BM Kaitan (Chairman), Deepak Kaitan (Vice

Chairman and Bharat Ba oria Director amon others.

SHAREHOLDING(%)

Promoters 61.9

FII 1.0

FI/MF 2.5

Stock is currently available at 78% discount to its NAV, which seems to be very attractive.

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

BodyCorporates 5.0

Public&Others 29.6


FY10 273.1 (6.9)

80.7 (0.4) 0.4

FY11 254.3 1.2 117.4 0.1 0.1 405.0 0.4


27/31

WilliamsonMagor&CompanyLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

Mcleod Russel 11.6 10.6 236 672 2,753

EvereadyInds. 16.8 23.0 26 936 432

McNallyBharat 1.9 10.2 101 170 190

KilburnEngg. 4.3 32.6 26 107 114

OtherQuotedShares 81 49




Less:NetDebt(DebtCash) 1,309


NAV 2,323


NAVPerShare 212

CMP 46

Discount(%) 78


27



Willi Fi i l S i L d


28/31

WilliamsonFinancialServicesLtd.March 14,2012 CMP:Rs.27 NAV:Rs.138 Discount :81%

Williamson Financial Services Ltd. (WFSL), earlier known as Makum Tea Company (India), wasrenamed in Dec'94. WFSLs principal area of business is fundbased activities like leasing, hire

purchase and corporate financing.

It plans to play an advisory role in foreign exchange dealing and corporate restructuring including

STOCKDATA

ReutersCode

BloombergCode

WILF.BO

MAKM.IN

BSECode 519214

mergers, es es merc ant an ng an a so s are ro ng. e company s reg stere as a

with RBI.

WFSL holds strategic investments in

Mcleod Russel(5.4% stake) is the worlds largest tea producer with over 80 mn kgs of high

quality tea a year from tea estates in Assam, West Bengal and Vietnam.

Mkt.Cap. 227mn

Shares Outstanding 8.4mn

52WeeksH/L Rs.41/18

Eveready industries(7.1% stake) formerly known as Union Carbide India Ltd, has a portfolio

comprising of dry cell batteries, flashlights, CFLs and packet tea.

Strong Background & Management:WM&C Ltd is a part of Williamson Magor group, which has

grown to become the world`s largest producer of tea having 28 tea estates. The group is on

course added value to its products and has successfully launched three brands of packet tea

. . ,

PricePerformance(%)

1M 3M 6M

10 23 (51)

200DaysEMARs.28

, .

like BM Kaitan (Chairman), Deepak Kaitan (Vice Chairman) and Bharat Bajoria (Director) among

others.

At the CMP, the stock is available at 81% discount to its NAV, which seems to be very attractive.

SHAREHOLDING(%)

Promoters 65.2

FII

FI/MF 1.2

Y/EMar. Revenues

(Rs.mn)

PAT

(Rs.mn)

PATGrowth

(%Ch.)

EPS

(Rs.)

ROE

(%)

PER

(x)

Price/BV

(x)

Dividend

Yield(%)

BodyCorporates 4.1

Public&Others 29.5


FY10 39.3 14.6

1223.1 1.8 2.0 14.8 0.3

FY11 41.7 7.0 (52.1) 0.9 1.0 27.6 0.3


29/31

WilliamsonFinancialServicesLtd.

NAV

Calculation No

of


(RsMn) Value

(Rsmn)

Mcleod Russel 5.9 5.4 236 589 1,394

EvereadyInds. 5.2 7.1 26 516 133



ValueOf

Investment 1,162

1,584

Less:NetDebt(DebtCash) 97

Less:NetCurrentLiabilities 330

NAV 1,157

No. ofshares(inMn) 8.4

NAVPerShare 138

CMP 27

Discount(%) 81


29



Holding & Investment Companies


30/31


Out of the discussed 12 holding & investment companies, we have further refined to 6 companies on the basis of following criteria:

(1) Number of Investments by the company should not be less than two. Imposing this criteria will remove names where investment is

highly concentrated and chances of value unlocking or business restructuring are remote, thereby eliminating companies Balmer

Lawrie Investments, Uniphos Enterprises and Majestic Auto.

(2) Investment Holding Discount should be above 50%, thereby eliminating Tata Investment Corporation, where discount is less than50%, i.e 42%.

On t e asis o a ove two criteria, we are now e t wit 8 companies. O t ese 8 companies, we ave urt er re ine to 6 companies

on the basis of(a) size of investments and (b) Nature of Investments i.e Cross Holding. The Whole idea behind applying these two

more filters is to see opportunities of value unlocking or business restructuring in the long run. Thereby, 2 more companies SIL

Investments and Williamson Financial Services get eliminated from the selection amidst their smaller size of investments and lack of

cross holding.

On the basis of all the above criteria we have arrived at the final list of 6 companies in which we could see higher probability of

triggers. The name of companies areBajaj Holdings & Investments, Bombay Burmah & Trading Corporation, Bengal & Assam, Nalwa

Sons & Investments, Maharashtra Scooters, Williamson Magor & Company.

30March14,2012


31/31

Documents

14Mar2012181326_Holding & Investment Companies - Deeply in Discount