Ashish Chugh's view Eon Electrics

Ashish Chugh, Investment Analyst & Author of Hidden Gems shares his view Eon Electric.

Chugh told CNBC-TV18, "In this kind of a market you have companies which are trading well below their cash values and Eon Electrics is one of them. This company had the 3 business divisions. This company sold the switchgear division to Legrand of France about a year back and realized an amount of Rs 400 crore from that sale."
He further added, "Now after the deal was announced the stock price has fallen by about 75% from about Rs 150 which it touched after the deal got announced and currently trades at close to Rs 38-40. This is primarily on account of the fact that even though this company got realization of more than Rs 200 net of tax per share, the shareholders got just about Rs 10 as dividend."
"Now you have one set of companies where there has been a massive increase in shareholders valuation, company like Andhra Paper where the promoters have chosen to sell the company as against selling a business and all the minority shareholders have been benefited by way of the open offer made by the acquirer. On the other hand you have another set of companies where the promoters have chosen to sell a part of their business even though that business was contributing 85-90% of the revenues. Companies like Zicom, GC Venture, Laffans Petro, Smartlink, where the shareholders value has been badly eroded primarily on account of the fact that there is a concern whether the money which has come from the sale will actually flow to the benefit of the shareholders. Eon Electric is no exception."
"Eon Electric has got cash and cash equivalents of roughly Rs 300 crore. Company is totally debt free and after the sale of switchgear division, this company is left with cable and lighting business. The gross block is about Rs 58 crore where the market cap of this company is just about Rs 70 crore at the current price and leave aside the residual businesses and the assets which are left, this company has got cash