Expect 75-100% upside in Nahar Capital and Financial Services, says Ashish Chugh, Investment Analyst.

Chugh told CNBC-TV18, "Nahar Capital is a company belonging to the Ludhiana based Nahar Group. This company was incorporated for the purpose of taking over the investments of Nahar Spinning pursuant to a scheme of arrangement which happened in 2006. This company holds investments not just in the group companies but also has fairly large portfolio of other investments. If you look at the financials of the company, the equity capital of the company is about 8.37 crore, book value is about Rs 250 and the marketcap at the current price is close to Rs 80 crore. If you look at the value of investments as on 31 March, 2009, this company was holding a total of Rs 218 crore of quoted investments, out of which investments in the group companies accounted for about Rs 55 crore and balance Rs 163 crore was the portfolio of other investments.”

He further added, “At the current market price Rs 55 crore of investment in group companies has gone up to about Rs 130 crore, the various indices have gone up about 70% since 31 March. If we try to be slightly conservative and assume that their portfolio of investment has only gone up by 40%, this would result in an investment portfolio of about Rs 220 crore for non-group investments. So the total equity investments or the quoted investments as on date is valued at close to Rs 350 crore and besides the quoted investment this company has got about Rs 10 crore in unquoted securities, out of which 5 crore is in the equity of Delhi Stock Exchange Ltd. Delhi Stock Exchange Ltd is also expected to start operations in the next couple of months and I believe once it starts operations, the valuation of this investment will go up.”

“Beside this they have cash and bank balance of about Rs 44 crore. All in all this company has got investments and cash of close to 400 crore at the current market price. Marketcap of the company is just about Rs 80 crore, which means about 20% of the total value of investment. If you look at the holding companies, these companies generally command about 40-70% of the value of investments in the group companies. In case of Nahar Capital the group portfolio only accounts for roughly 1/3rd of the total investment, it is only about Rs 130 crore out of Rs 400 crore of total investments, which it owns. But if again we try to be conservative and assume that it will have a 40% of the total value of investment, I think stock has a potential to go up by about 75-100% from these levels.’            

Disclosure: I or my family may have small investments in Nahar Capital.