Hidden value in Sundaram Clayton

Sundaram Clayton Limited's balance sheet throws the following numbers -
Equity - 18.97 crs
Loans - 109.18 crs
Investments - 57.08 crs
NCA - 16.96 crs
PAT - 70.71 crs
FV - 10 rupees per share
Dividend - 9 rupees per share
CMP - 854 rupees per share (10-Feb)

A fairly expensive stock, whose valuation from our perspective would read -
1) NCAV of negative 48.61 rupees/share
2) Dividend yield of 1.05%
3) PE of 22.64; fwdPE of 17.79 rupees/share

However notice two items here -
[A] The market capitalization ... 854 rupees/share multiplied by 1.896 crores shares equals 1,619 crores
[B] The investments in the balance sheet reads 57.08 crores.

This is the most interesting. Apparently, SCL and it's subsidiaries have a significant portion of it's investments in the TVS Motor Company. To be precise, we are looking at - 135,000,000 shares of TVS Motors that SCL holds. (thats 56.83% of TVS Motors). Multiply these 135,000,000 shares with the current price of Rs. 120.45 per share (Feb 10) and you'll find that SCL holds investments worth a huge Rs. 16,260,750,000 from TVS Motors alone. i.e. 1,626 crores.

Which means, firstly the investments shown in the books of SCL of 57.08 crores are a pittance when we calculate the same, with the current market price and secondly, the value of the shares of TVS Motors that Sundaram Clayton holds is more than the market capitalization of Sundaram Clayton itself.

Surprisingly SCL values these investments at their face value (cost) rather than the market value. It's list of quoted investments include (other than TVS Motors) - 34,346 shares in ICICI Bank Ltd., 69,740 shares in HDFC Ltd., 500 shares in HDFC Bank Ltd. .. this itslef amounts to 115,833,904 (11.58 crores) as on Feb-10 '06. These shares have been valued by SCL at an amount of 1,045,000 rupees (10.45 lacs) ... i.e. at 0.902% it's actual value

But the fact that TVS Motors in SCL is greater than SCL itself is crazy !!! Yet true. This is like me paying a 'fairly evaluated' price for a cow, only to discover that it's pregnant with a couple of calves.