Dhunseri investments - looks undervalued

(ishandutta2007) #1

A Debt free holding company registered in Kolkata with following portfolio

Here are financials

What caught my attention is a company with 2300 Crores sales and similar net asset is only valued 200 Crore. What’s the catch? What am I missing?

Key trigger :
Market cap to sales ratio = 0.09

Disc: Not invested

(sachit) #2

Read annual report of Dhunseri Petrochem which i think is the subsidiary of Dhunseri Investments. It will give a lot of clarity regarding these figures. I personally think DPTL might be a better bet. Dhunseri Investments is almost like a holding company of a holding company.

(ishandutta2007) #3

I found Dhunseri Petrochem Ltd(NSE:DPL).
Though currently loss making it seems more faily priced with market cap of 340 Crore for sales of 230 Crore.(ie Market cap to sales ratio =1.50)

Yet to dive more into figures.

If you are tracking Dhunseri Petrochem, any idea why it ran into losses after a decade of robust profit growth and why doesn’t the stock refect that, stock hardly doubled in 10 years?

(sachit) #4

Just go through their annual report (Dhunseri Petrochem). It’ll clarify a lot. They sold their petrochem business for a nice profit and now hold a lot of investments.

Kind regards

Sachit Khera

(rajneeshfreedom) #5

Did anyone analyse why Dhunseri Petro sales were almost zero during last financial year??

(Satya Prakash) #6

Check Standalone number on Screener.in.
Or get it from BSE website. Today, result for Dec 2018 came.
Very good results.
EPS 7.6 vs 2.12 YoY. Prev qtr EPS 4.68.

I am talking about Dhunseri Petrochem in reply to @rajneeshfreedom and not about Dhunseri Investment.

Promoters has increased holding in last few quarters even when they already had above 70% stake.
Few details here. Hope it won’t come into spamming. Don’t feel to open new thread to write in great details.

Just checked that General Insurance Corp of India holds 1.28% stake.
West Bengal Industrial Development Corporation Ltd holds 2.61%. Also,
The New India Assurance Company Ltd holds 2.69% in the company.

Disc: Invested

(kchaharia) #7

Hi Satya,

Few observations regarding the recent announcements:-

  1. DPL settled outstanding dues (~570cr) of its JV EIPET with its lenders on 25 May, 2018. As of Mar’18 it had a cash balance of 60cr, long term investments of 315cr, short term investments of 300cr, short term debt 115cr. Company probably used 115cr debt, 60cr cash, and liquidated some part of its short term investments to fund the transaction? In which case, the company’s intrinsic value would take a massive hit.
  2. It sold 65% of its stake in EIPET to Dhunseri Overseas Pvt Ltd for a sum of ~13cr (AR17) on 24th Mar’17. The on 21st May’18, company entered a share purchase agreement with ECHEM to buy ECHEM’s 23% stake in EIPET (why buy now?) over several tranches by 2023, thereby making its total shareholding to 28%? As per the announcement, company has already paid for 1st and 2nd tranche (43700 shares @100USD ~28cr).
  3. Simultaneously, the company entered another share purchase agreement with Indorama Ventures Ltd to sell 50% of DPL’s stake in EIPET. As of now, company has received ~6.5cr from ECHEM for 50% of all the shares of EIPET it currently has. Looks like a buy high, sell low strategy to me.

Please let me know if you find something wrong in above observations.

Also, what’s even more puzzling is that the promoters have been continuously buying shares for last few quarters now.

Disc: Invested


If anybody interested in attending Dhunseri petro AGM on 10.8.2018,please let me know. Company is looking very interesting with some usual corporate governance issues.Some questions if they answer genuinely and make some positive commentary I am sure this will be scrip of year 2019-20. You can pass questions to me to be asked in AGM.Thanks.