Cos with investments worth more their market cap

556 Investors following Majestic Auto. Share this News with them.

0

Like this story, share it with millions of investors on M3

Cos with investments worth more their market cap

Maharashtra Scooters and McDowell Holdings are companies whose investment net of debt is at least four times their current market cap

Post your opinion here

 

0

Tweet

Share on Tumblr

We unearth companies where investment net of debt is at least four times their current market cap. CNBC-TV18's Research Analyst Varinder Bansal analyses two such companies.

Below is a transcript of Varinder Bansal's report on CNBC-TV18. Also watch the video.

Cos covered previously

Some of the companies covered are CHI Investments , Nagreeka Capital and Infrastructure , Majestic Auto and the pricing have been flaring up for most of those companies. But there are many other ideas in the market where investments are far higher compared to the market cap.

Maharashtra Scooters

One company is Maharashtra Scooters where the market cap is Rs 165 crore and investment net of debt is Rs 676 crore that is nearly four times if you compare the market cap of this company, this is a zero debt company. The underlying asset for this company is Bajaj Holdings and Bajaj Auto and Maharashtra Scooters is a company, which used to manufacture brands like Priya, Chetak and jointly promoted by Western Maharashtra Development Corporation (WMDC) and Bajaj Auto - where WMDC holds nearly 27% stake and Bajaj Auto nearly 24%.

There is a battle which is going between both the parties wherein the arbitrator has said that WMDC can sell its entire 27% stake to Bajaj auto at a price of Rs 151 per share but which is not been taken by WMDC. The hearing could happen anytime. There are even talks that eventually this company will be merged with Bajaj Holdings. This company has been in the market in terms of the investments it has in Bajaj Auto even if you go ahead and give a 50% discount to the investments, it still has investment value will be double of what its market cap is.

McDowell Holdings

The other company is McDowell Holdings . This company has a market cap of nearly Rs 85 crore and the investments net of debt is nearly Rs 280 crore. A zero-debt company, the underlying assets of this company are United Spirits and United Breweries where it holds nearly 96 lakh shares in United Breweries and also nearly 52 lakh shares in United Breweries Holdings. Importantly, this is a pure holding company; it is having no business at all. If you see the financials of this company FY09 net sale was around 2 crore and net loss was nearly Rs 1.1 crore; give a 50% discount in terms of investment company or holding company - still the investment of this company will be around Rs 150 crore after giving the 50% discount, which will be double of the market cap.