CHI Investments – Interestingly mis-priced
CHI Investments
Investment Rationale:
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Holds investments worth Rs. 224.00 Cr as on 11th May, 2009 while it’s own market cap is just Rs. 28.50 Cr. The company is debt free. (Annexure 1)
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Compared to other investment/holding companies, CHI is available at just 1/10th of the value of investments it holds while others trade at about 1/4th of the value of investments they hold. (Annexure 2)
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The company majorly holds shares of CESC & KEC International, the stock should move at least linearly to the stock price movements of both the stocks and with better stock discovery, the discounting can reduce giving it a multi-bagger potential. Being in power sector and leaders in their business areas, both CESC & KEC International are expected to do well. (Read the latest Business Line : KEC targets to be a $ 2 billion company in 3-4 yrs.)
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CHI Investment receives almost 4-5 Cr as dividend/interest income annually.
Annexure 1:
|
Valuation of quoted investment as on May 11, 2009: |
||||
|
|
|
Price |
Value Rs in Cr |
|
|
CESC Limited |
2056794 |
250 |
51.42 |
|
|
CFL cap |
3837500 |
1.75 |
0.67 |
|
|
Harrison Mallya |
728150 |
62 |
4.51 |
|
|
KEC International |
4142519 |
258 |
106.88 |
|
|
Summit securities |
3128298 |
6.7 |
2.10 |
|
|
Philips |
1903114 |
56 |
10.66 |
|
|
RPG cable |
2200280 |
14 |
3.08 |
|
|
Brabourne Enterprise |
1064560 |
6.8 |
0.72 |
|
|
RPG pharma |
1064560 |
24 |
2.55 |
|
|
Saregama |
253444 |
67.5 |
1.71 |
|
|
Zensar Technology |
2222138 |
95 |
21.11 |
|
|
|
|
Total |
205.42 |
|
Number of shares: 11464253
Investment per share: Rs. 179.18
Current price: Rs. 25.00
Current Market Cap: Rs. 28.66 crore
Discount: 86.05%
Annexure 2:
Comparison with other similar co’s – holding shares of listed companies
|
Comparison as on 11th May, 2009 |
||||
|
Name of company |
Market cap of the co. itself |
Market Value of investments it holds |
Main Holding in |
Leverage (No of times) |
|
|
|
|
|
|
|
CHI Investments |
28.66 |
223.92 |
KEC Int. & CESC |
7.81 |
|
BNK Capital Markets |
15.50 |
91.29 |
CESC |
5.89 |
|
Octave Investments |
4.06 |
18.60 |
KEC Int. |
4.58 |
|
Industrial & Prudential |
26.1 |
108.97 |
KSB Pumps |
4.18 |
|
HB Portfolio |
35.57 |
124.72 |
Jaiprakash Ass |
3.51 |
|
Mc Dowell Holding |
57.06 |
195.14 |
United Breweries & UB Holding |
3.42 |
|
Unipos Enterprises |
40.72 |
132.59 |
United Phosphorus |
3.26 |
|
SRF Polymers |
79.34 |
246.51 |
SRF Ltd |
3.11 |
|
United Breweries (Holding) |
775.11 |
2019.13 |
United Breweries & United Spirits |
2.60 |
|
Nalwa Sons Investments |
277.56 |
544.25 |
JSW Steel & Jindal Saw |
1.96 |
|
Jindal Sowthwest Holding |
449.55 |
833.65 |
JSW Steel |
1.85 |
|
Balmer Lawrie Investments |
177.60 |
283.82 |
Balmer Lawrie |
1.60 |
|
Parry Agro |
714.4 |
1024.74 |
Carborundum Uni, EID Parry & Tube Investments |
1.43 |
Risk: Being just a holding company, one has to remember that the investments might not be liquidated for lifetime. Hence it is not right to think that the holding company can be valued equal to the value of investment it holds until and less value unlocking is possible. Having stated this risk, I feel 90% discount is on the much higher side.
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Ayush
-
Ayush
-
Neeraj
-
Roopali
