Tuesday, October 25, 2005

Himatsingka Seide

Himatsingka Seide is not exactly what I would categorize as a “Grahamian” Value Buy but more of a Warren Buffet-like cheap stock. Here are the reasons, why –
[1] At a face value of Rs.5 per share, the net current asset per share (inclusive of investments) equals 47 rupees. So at a CMP of Rs. 125, the stock is available at 2.66 times the NCA
[2] The dividend shelled out by the company last year was a good Rs. 10 on a 10 rupees share. If the dividend payout is to remain the same, it would amount to Rs. 5 per share which is a dividend yield of 4.00 %
[3] The profit per year arrives at 11.24 rupees per share. Providing for status quo, the stock should grow by 11.24 rupees for the next 10 years. That’s a growth of 9% per year.
[4] The investments on the balance sheet have been invested in short term and liquid MFs. The management thus is a thinking one and understands the nuances of the trade.

I would consider the stock a buy on the above basis and to be kept on a “Buy and Hold” framework.


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