This piece has been borrowed from an Emkay report. The report says -
1. While the total m-cap of JSWHC is only Rs. 334 crores, the estimated value of it's investments is Rs. 1535 crores at today's value. This represents a discount of m-cap to value of investments, of 78%.
2. The current stock price of the company is Rs. 301. The report calculates that this price has a 130% upside and Rs. 681 per share should be the ideal price.
Occurences like this (the sitting duck syndrome) should not happen often in an 'efficient' growing market but the study of equities over the years has infact solidified this belief in huge market anomalies. Only last February, we analysed Jai Corp on my previous blog. The recommended price of 104 rupees then, is today a 1857 rupees scrip.
I would signal a buy on this stock and to be kept for long. Would appreciate if someone can investigate this company further.
Friday, May 11, 2007
Sitting duck - Jindal South West Holding Co.
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7 comments:
Hi shankar,
Nice to see two successive posts after such a long gap,you have definetly something diffrent about you.I am following your blogs now from quite some time and i wonder how you are able to extract stocks out of that large heap.Now this jindal stock is on a upper circuit and you know what the total traded quantity is 195!!!! for the day.
Man it seems the guys holding this stock have all read your blog.I missed out on jai corp,for sure,i very well remember that recommendation of yours and then i was waiting for some move and until the time i could detect the move it was already on the rocks,i guess one of the longest stint at upper circuits for months altogether.And it still hits them.
Shankar what is your feeling of the markets overall,i remember once you posted a detailed list of stocks,in them featured NITT and you commented "Sasta Buy And Hold"....AND it has tripled i guess.
Shankar it will be so nice of you if you can just take out some time to comment on the overall market maybe with a perspective of two years and also some stocks which you consider are value buys,because i have seen your value buys have a lot of value in them!!
Best Regards,
Abhisek.
Hi shankar
1050 odd crores comes from the company's holding in JSW steel, 30 odd crores from other listed holding. 75 crores from unlisted holding at cost. 100 crores from the loans and advances.
70-80% of the investment value seems to be coming from JSW steel which has just reported record profts of around 1200 crs and has a major turnaround in the recent year.
JSW holding is more of a bet on JSW steel and a major portion of its value comes from JSW steel
just one year back the investment value of JSW holding was half of the current value. their Annual report is available at their website
its on lower circuit today.. have taken position in it ... hope it rocks...
Hi Rohit, it's similar to the TVS Suzuki - Sundaram Clayton case we discussed over 12 months back on http://small2big.blogspot.com
I havent gone through the balance sheet of JSW Holding Co., but here's what I have observed about these scenarios - Analysts always follow the DCF principle in evaluating stocks. Unfortunately (or fortunately) investments donot figure in most DCF models. It is primarily driven by profits, cash and other elements of the P&L and B/S (but not invt). Now, JSW Holding will derive income from -
1. profit on sale of investments and,
2. dividend income
Both these events are irregular and this irregularity often is the reason for analysts not covering most of these stocks. (in the case of Sundaram Clayton, it was a bit different as SCL was a running entity, not a holding per se)
This may be one perspective ...
Warm Rgds
Shankar
Hi Satish,
Good luck !!! (and wish me some luck too .. i too have bought some shares here)
Warm Rgds
Shankar
hi shankar
i am in agreement with your analysis. i have myself bought stocks which have a hidden value via investments. however my concern is that the 'margin of safety' or value for JSW holding is based on the value of JSW steel. i am not too sure of JSW steel as it seems to be on cyclical peak. but as i could be mistaken as i do not have a great insight into the steel business
Hi Shankar,
Was just going thorugh your blog and came across this particular post and checked Jindal SW holding. WOW... It has gone all the way from 300 to 3300.. Hope you made a kill... :)
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