Nahar Export revisited - interesting announcement !!!
Nahar Exports Ltd has informed BSE that ....
Thus upon sanction of the scheme shareholders of the Company holding 100 Fully paid up equity shares of Rs 10/- each on the record to be fixed for the purpose, shall receive 55 Fully paid up equity shares of Rs 5/- each in NSML (post demerger of investment business) and 70 Fully paid equity shares of Rs 5/- each in the Company.
Questions -
1. Any arbitrage?
2. short/mid/long term prospects?
There was one report by EmKay which talks of latent (and now exposed) shareholder value in this deal. Here's how ...
1. The invt business in NSML (Nahar Spinning Mills Ltd.) is worth 346 crs which'll be merged with NCFSL (Nahar Capital and Finance Services Ltd.). Allotment ratio: 1 equity share of NSML = 1 equity share of NCFSL (FV Rs 5) + 1 equity share of NSML (FV Rs 5)
2. Textile business of NEL (Nahar Export Ltd) to be hived off and merged with NSML. Allotment ratio: 100 shares of NEL (FV Rs 10) = 55 shares in NSML (FV Rs 5) + 70 shares NEL (FV Rs 5)
The investment summary presented : a sum-of-its-part valuation of NEL gives Rs. 112 as the fair value of the stock. Hence the potential upside of NEL is 38%. (for a copy of the report, kindly email me)
Thus upon sanction of the scheme shareholders of the Company holding 100 Fully paid up equity shares of Rs 10/- each on the record to be fixed for the purpose, shall receive 55 Fully paid up equity shares of Rs 5/- each in NSML (post demerger of investment business) and 70 Fully paid equity shares of Rs 5/- each in the Company.
Questions -
1. Any arbitrage?
2. short/mid/long term prospects?
There was one report by EmKay which talks of latent (and now exposed) shareholder value in this deal. Here's how ...
1. The invt business in NSML (Nahar Spinning Mills Ltd.) is worth 346 crs which'll be merged with NCFSL (Nahar Capital and Finance Services Ltd.). Allotment ratio: 1 equity share of NSML = 1 equity share of NCFSL (FV Rs 5) + 1 equity share of NSML (FV Rs 5)
2. Textile business of NEL (Nahar Export Ltd) to be hived off and merged with NSML. Allotment ratio: 100 shares of NEL (FV Rs 10) = 55 shares in NSML (FV Rs 5) + 70 shares NEL (FV Rs 5)
The investment summary presented : a sum-of-its-part valuation of NEL gives Rs. 112 as the fair value of the stock. Hence the potential upside of NEL is 38%. (for a copy of the report, kindly email me)
posted by Shankar Nath at 11:18 PM
11 Comments:
Truely, I didnt understand too much of the report !!!!
shankar ji sorry but i could not understand your's blog to.Are you advicing to buy or to keep a watch.
Shankar,
Aftek results are out. Amazing results. I bought a few more shares of Aftek.
-Amol.
Shankar,
Did you buy NOCIL. If yes, what price have you entered it ?
-Amol.
Ofcourse, I bought NOCIL !!! Some 600 shares .. am short of monies. Never recommended a stock before me clicking the buy button first.
Hi shankar,
First of all i will like to thank you for all your hard work.Shankar sometime back there was a news of arbitrage opportuninty in Tata Infomedia,i bought 50 shares of the same for 223rs,but since the share has fallen down to 200.I am not sure of what to do.There is no news about the buyback.If only you can provide some information it will be helpful.
Moreover if actually the buyback has to happen then is it not wise to enter and buy some more shares of it as the returns will be 25%.
Please reply,
harish.
Hi Harish,
The "deemed arbitrage" news of Infomedia can to light a few months back .. the stock was at around 190 rupees. Prasanth had a post on the same at indianvalue.blogspot.com
Harish, why does a company go in for a buyback? In most cases, it feels that the stocks are undervalued and it makes sense for the promoters to purchase shares to hike their investments in the company. Also, companies use cash (mostly, although use of leverage should not be ignored). Now Infomedia is at a PE of around 70 ... (CMP = 230; 9mnth profits are 6.48 crs on a share cap of 2288 cr) which means a highly overvalued stock. Who would like to re-purchase shares which are very high?
That's one logic to the entire episode. Do take a second opinion .. but this is my first take.
Hv a gr8 weekend, (unless someone is in collections like me ... month closing !!!)
Shankar
Hi Sunil,
I think you have a most impressive portfolio of scrips. In any market, some stocks do very well. I think metals, paper and chemicals are doing well for now. There are number of trends around the world that help. E.g. rubber prices are touching the roof ... so stocks like harrison mal should be good. .. you might want to invest in such stories.
25% is easily possible any given yr !!!
Warm Rgds
Shankar
can you email me the report you mentioned to my id : rohitc06@yahoo.co.in
I have been looking for sites like this for a long time. Thank you! »
Shankarji
Please clarify whether Nahar export is a good buy at Rs.32/- quoted today.
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