CHI Investments – Interestingly mis-priced

chi investments

CHI Investments

Investment Rationale:

  • Holds investments worth Rs. 224.00 Cr as on 11th May, 2009 while it’s own market cap is just Rs. 28.50 Cr. The company is debt free. (Annexure 1)
  • Compared to other investment/holding companies, CHI is available at just 1/10th of the value of investments it holds while others trade at about 1/4th of the value of investments they hold. (Annexure 2)
  • The company majorly holds shares of CESC & KEC International, the stock should move at least linearly to the stock price movements of both the stocks and with better stock discovery, the discounting can reduce giving it a multi-bagger potential. Being in power sector and leaders in their business areas, both CESC & KEC International are expected to do well. (Read the latest Business Line : KEC targets to be a $ 2 billion company in 3-4 yrs.)
  • CHI Investment receives almost 4-5 Cr as dividend/interest income annually.

Annexure 1:

Valuation of quoted investment as on May 11, 2009:

       

 

 

Price

Value Rs in Cr

 

CESC Limited

2056794

250

51.42

 

CFL cap

3837500

1.75

0.67

 

Harrison Mallya

728150

62

4.51

 

KEC International

4142519

258

106.88

 

Summit securities

3128298

6.7

2.10

 

Philips

1903114

56

10.66

 

RPG cable

2200280

14

3.08

 

Brabourne Enterprise

1064560

6.8

0.72

 

RPG pharma

1064560

24

2.55

 

Saregama

253444

67.5

1.71

 

Zensar Technology

2222138

95

21.11

 

 

 

Total

205.42

 

Number of shares: 11464253

Investment per share: Rs. 179.18

Current price: Rs. 25.00

Current Market Cap: Rs. 28.66 crore

Discount: 86.05%

 

Annexure 2:

Comparison with other similar co’s – holding shares of listed companies

Comparison as on 11th May, 2009

     
         

Name of company

Market cap of the co. itself

Market Value of investments it holds

Main Holding in

Leverage (No of times)

 

 

 

 

 

CHI Investments

28.66

223.92

KEC Int. & CESC

7.81

BNK Capital Markets

15.50

91.29

CESC

5.89

Octave Investments

4.06

18.60

KEC Int.

4.58

Industrial & Prudential

26.1

108.97

KSB Pumps

4.18

HB Portfolio

35.57

124.72

Jaiprakash Ass

3.51

Mc Dowell Holding

57.06

195.14

United Breweries & UB Holding

3.42

Unipos Enterprises

40.72

132.59

United Phosphorus

3.26

SRF Polymers

79.34

246.51

SRF Ltd

3.11

United Breweries (Holding)

775.11

2019.13

United Breweries & United Spirits

2.60

Nalwa Sons Investments

277.56

544.25

JSW Steel & Jindal Saw

1.96

Jindal Sowthwest Holding

449.55

833.65

JSW Steel

1.85

Balmer Lawrie Investments

177.60

283.82

Balmer Lawrie

1.60

Parry Agro

714.4

1024.74

Carborundum Uni, EID Parry & Tube Investments

1.43

Risk: Being just a holding company, one has to remember that the investments might not be liquidated for lifetime.  Hence it is not right to think that the holding company can be valued equal to the value of investment it holds until and less value unlocking is possible. Having stated this risk, I feel 90% discount is on the much higher side.

13 thoughts on “CHI Investments – Interestingly mis-priced”

  1. Hi man…
    so u got into the holding company groove after all.. 🙂
    may i request u to value this one on the basis of dividends/other income it receives from its investments?
    cheers
    Neeraj

  2. Hi man…
    so u got into the holding company groove after all.. 🙂
    may i request u to value this one on the basis of dividends/other income it receives from its investments?
    cheers
    Neeraj

  3. Neeraj,

    CHI receives almost 4-5 Cr as dividends. So valuing it at 10 times earnings the stock has 50-70% upside potential 😉 At Rs 50 you can sell half of your holding and retain the rest free of cost for possible multibagger returns 😀

    Regards,
    Ayush

  4. Neeraj,

    CHI receives almost 4-5 Cr as dividends. So valuing it at 10 times earnings the stock has 50-70% upside potential 😉 At Rs 50 you can sell half of your holding and retain the rest free of cost for possible multibagger returns 😀

    Regards,
    Ayush

  5. Amit,

    You must have yourself analysed that the proposed merger ratios are unjust to the shareholder of CHI Investments.

    Rather than joining on a wrong thing, I think we all must get together and protest. I’m doing my part.

    Regards,

  6. Amit,

    You must have yourself analysed that the proposed merger ratios are unjust to the shareholder of CHI Investments.

    Rather than joining on a wrong thing, I think we all must get together and protest. I’m doing my part.

    Regards,

  7. what about ambica agarbati ) dark horse???
    Ambica Agarbathies and Aroma Industries Ltd is actually a conglomerate of 7 different businesses namely:
    Agarbathi Division : Ambica is pioneer in Agarbathi business with experience of more than 55 years. It has various branded agarbathies for the local and export markets. In India it has more than 300 distributors/ dealer network in AP/TN/MP/Maharashtra/Gujarat state
    Ambica Empire Division : It has a 4 Star Hotel with more than 100 rooms at Chennai. The hotel is affiliated to Best Western Inc. USA. At today’s cost the Hotel is should be worth more than Rs. 60 crores.
    Ambica Real Estate : It has developed land at Bangalore and realty project costing Rs. 30 crores with 600 members is nearing completion.
    Ambica Film Production and Distribution : Under this division there are multiplexes air-conditioned theatres and it has already produced 3 feature films valued at Rs. 15 crores and multiplexes at today’s cost could be worth Rs. 10 crores.
    Ambica Wind Power : Under this division Company is setting up 50 MW Wind Power project costing Rs. 200 crores at Poolavady near Coimbtore TN
    Food Plaza at Vishakhapatnam Railway Station
    Software Division

    1) Company is in Wind Power Generation, Hotel Business, Infra and
    Agarbathies. company Circle people and Operators are accumulating at current
    price. Because Company Stock Good Value at 13.9/- Good Profit making companyand
    Book Value at 17/- and Good dividend paying company.
    2) Equity is very small at 16 Cr promoters Holding 45.5% and Corporate
    Bodies 19.5% and Public 35%.
    3) Company recently allotted shares at 18/- to M/s Trinethra Infra
    Ventures Ltd and Mr. Puvvada Bhaskar Rao – for company future expansion plans in
    Wind Power Generation.
    4) Good Profit Making Company for 2008-09 EPS 1.7 and Estimated EPS for
    2009-10 is 2.3/- and 2010-11 EPS will zoom for Expansion income and Profits will
    come.
    5) Company having Good Reserves and Good Assets in Hyderabad , Chennai,
    Eluru Adonia and rajam. In Chennai Hotel Property worth of 40 Cr and Shoppring
    Malls and other lands all over worth is nearly 150 Cr. Company Equity 16 Cr
    means per share worth is nearly 95/-

    6) Company having lot of Expansion Plans in WindPower and InfraBusiness.
    7) For this year Expected Revenue 75 Cr and Net Profit 2.9 Cr EPS 1.9/-
    and 2010-11 NetProfit will zoom with Expansion Income.

    This stock is not participated for this market rally. Last 6 months trading
    between 12/- to 17.5/-; So all bulls are eyeing in this stock to grabbing for
    Good Value stock.

    Public holding is only 35%. Net worth of company is around 100 crores,so
    operators are accumulating public shares. Soon it will burst on restructuring
    infra, hotel, wind power and aroma.

    AMBICA AGARBATHIES & AROMA INDUSTRIES Ltd having good Book value at 17/- and
    Good promoters Holding, And Good Dividend paying company.

    Recently company allotted stocks at 18/- to M/s Trinethra Infra Ventures Ltd and
    Mr. Puvvada Bhaskar Rao -for expanding future business plansfor Wind Power.

    Good Valuable Buy AMBICA AGARBATHIES & AROMA INDUSTRIES Ltd; 10/- face Value
    Trading at 14/- with Target of 35/-. Risk is very very less because company
    stock was very Valuable because Book valueat 17/ and Good profit making Company
    and Good Properties in Hyderabad , Eluru, Chennai, Rajam and Adoni.

    AMBICA AGARBATHIES & AROMA INDUSTRIES Ltd declared results with 65 Cr Income abd
    1.5 Cr Net profitand EPS 1.2 for 2008-09 and for 2009-2010 estimated Income 75
    Cr and NetProfit 1.9 Cr with EPS of 1.7/- and declaring dividend also.

    ayush do your research and tell us to buy his stock or not

    1. Hi Ankur,

      Sorry, we haven’t been tracking this company. Though based on the above article the stock may hold value and do well in short term, but I didn’t like the business they are present in.

      Regards,

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