We earlier discussed about Hero Honda and Majestic Auto at our blog and the valuations just keep improving.
As expected, Hero Honda has appreciated from approx Rs 1,600 to Rs.1935 i.e. a gain of 21% in less than 5 months; while Majestic Auto is yet to follow. The current upside in Hero Honda is creating fresh opportunity for Majestic as the gap between the Market Value of Investments (16.25 lac shares of Hero Honda) and the companies own market cap is widening everyday.
The valuation of Majestic as of today:
Own Market Cap of Company: 65.50 Cr
Value of investment in Hero Honda (16.25 Lakh shares) : 314 Cr
Apart from these investments, the company also has a factory, land and other assets.
Discount: >80%
Hi,
How do u actually screen & find such stocks which are trading at a discount to the price of the investments they are holding?
Hi,
How do u actually screen & find such stocks which are trading at a discount to the price of the investments they are holding?
Hi Sandesh, we have a self developed Stock Screener (will be making it available for public soon). However if you too want to give it an early try then do mail me at pratyushmittal at hotmail dot com.
Hi Sandesh, we have a self developed Stock Screener (will be making it available for public soon). However if you too want to give it an early try then do mail me at pratyushmittal at hotmail dot com.
Pratyoosh
Nice find. A few questions:
– Where can I find details to see that Majestic Auto indeed have so many shares of Hero Honda. I tired to look up in their website but no luck.
– Given these big discounts and the fact that owner owns 75% of Hero Honda why is the owner not selling this stock and returning cash?
I will be very intersted in giving try to your stock screener that you are developing. Please send details at rajeev_agr@yahoo.com
Pratyoosh
Nice find. A few questions:
– Where can I find details to see that Majestic Auto indeed have so many shares of Hero Honda. I tired to look up in their website but no luck.
– Given these big discounts and the fact that owner owns 75% of Hero Honda why is the owner not selling this stock and returning cash?
I will be very intersted in giving try to your stock screener that you are developing. Please send details at rajeev_agr@yahoo.com
Rajeev,
Its rare to see a promoter selling the shares if the company is doing well and has a good future ahead. So the same applies to Hero Honda.
So its unlikely that owners of Majestic will sell the shares of Hero Honda and give back the cash. This is the reason why usually holding cos trade at 50% discount….but here the opportunity is/was that the discount is much higher and also…Hero Honda has become a cash cow now 🙂
Rajeev,
Its rare to see a promoter selling the shares if the company is doing well and has a good future ahead. So the same applies to Hero Honda.
So its unlikely that owners of Majestic will sell the shares of Hero Honda and give back the cash. This is the reason why usually holding cos trade at 50% discount….but here the opportunity is/was that the discount is much higher and also…Hero Honda has become a cash cow now 🙂