Vardhman Holdings

Vardhman Holdings has a market cap is Rs. 61.92 crores (Apr-18) and yet has ...
1. Investments worth about Rs. 72.93 crores
2. Current assets of Rs. 22.54 crores
3. Zero debt in it's books.

As I couldn't locate the annual report for FY07, I'm using the FY06 report and some published data (here). Investments in FY06 and FY07, remain constant at Rs 72.93 crores. A bulk of this investment is in Mahavir Spinning (name changed to Vardhman Textiles) amounting to 15,402,598 shares. At the current price of Rs. 119 (Apr 18), Vardhman's Holding in Vardhman textiles amounts to Rs. 183 crores. Traditionally, holding companies are never valued over 60% of the current value of individual companies. At 61 / 183 crores, the market is pegging the discount at 33% .. which is a bit low.

The dividend proposed by Vardhman Textiles last year was 40% (Rs. 4 per share). This amounts to a dividend income of Rs. 6.2 crores for the holding company on the basis of 1.54 crore shares. The company's dividend payout for the last 5 years are 42%, 45%, 45%, 40% and 40%. I dont expect this to change much. The dividend value is a bit above 10% of the holding company's m-cap.

The current assets of the holding company are at 22.54 crores. With zero debt and 96% of the CA in cash/bank deposit ... the reconstructed NCAV calculates to Rs. 70.65 per share (36% of m-cap)

Hence, from an asset valuation :
Shares in Vardhman Textiles = Rs. 183 crores
Net current assets = Rs. 22.5 crores
Total = Rs. 205.5 crores
Current m-cap = Rs. 61 crores

Hence, m-cap to asset value = 29.7%

Or, available discount = 70.3%

There has been some bulk deal activity at the Rs 150-160 range in the stock. Else, mutual funds are pretty much inactive with this counter. Ravi Purohit wrote a blog around this (and other holding companies) sometime back (here).