We had recommended Majestic Auto here at just Rs 60/- (then at approximately at 80% discount to its value of investments). The stock has been hitting upper circuits for last few days and is trading @ 138.75 now.
The valuation gap discussed earlier has now reduced to approx 52% now from 80% earlier. We would recommend investors to book profits at current levels and upsides.
The other stock idea on the similar concept is – BNK Capital. We had discussed the same at our blog here. BNK capital is still available at more than 75% discount to NAV value.
Hi, Majestic Auto seems to be very interesting pick specially at the current market price of Rs.52 but don’t you think the Company has piled up huge debt, thereby reducing their interest coverage ratio. My another concern about the Company is the investment in Hero Motocorp will make value to the Company only at the time of unlocking (which I believe does not look promising being a group company). Do you also have an idea about why this Company is not paying out taxes? Fundamentally this seems to be a fantabulous stock idea, however, above concerns are bothering me to park some of my money with this Company. I also noticed up above here that the stock which had hit an upper circuit for so many days during the last year and went up to Rs.130’s seems to have had a free-fall as well. Will be awaiting a response before I look forward to go for this investment 🙂 Happy Investing!
Hi Saurabh,
We had provided an exit in the above post and haven’t been tracking the stock closely. Like you mentioned, as no one knows when the value will be unlocked hence there is a big opportunity cost involved.
These ideas do well during bull markets for short periods. Other good times to look at these concepts is when the underlying investments are doing very well.