Lloyd Electric & Engineering Ltd (LEEL)


(Alphin) #83

My initial valuation per stock of Lloyd’s was 520 due to the consumer durables, but due to the sale of consumer durables the resulting valuation was rs 385, though still above the current price, I sold out at 301 due to low margin of safety and the opportunity cost of holding a stock with less potential upside.


(aadhar.aggarwal) #84

One big positive is that Havells will continue to outsource the manufacturing to Lloyd. This would mean that revenue is protected. Also debt would reduce considerably. Is it a correct assumption that post this deal this will be a 1000 crore Mcap company with 0 debt. And in addition to that they will have 500 crores on books as cash.

Am I looking at this right? Because if that is the case then it remains a great story to remain invested in

Thoughts?
Aadhar


(KugelBlitz) #85

" In fact it will be wrong to reduce the sales of branded goods from Lloyd’s turnover going forward as a bulk of it would get reflected under sales to OEM’s"
" OEM business and the Heat Exchanger businesses had revenues of 850cr and 590cr. So what you are left with is a company with 1440cr of revenue"

Does this mean the revenue figure of 1440cr would be protected since it includes the inter-segment sales* of Rs. 441.29cr ?

PS : inter-segment sales* - I am guessing this is the sale of from OEM segment to Consumer segment.


(KugelBlitz) #86

Disclosure - Invested at current levels


(manomagg3) #87

Is it possible for someone to comment on the managementif you look at it they spend money in last 3 years to build the brand and are now selling it at decent valuation ( not very night margin )
OEM business should be more predictable
Thinking of investing


(rohansurana123) #88

Can anyone give us update regarding the latest con call held by the company , thanks.


(Rohit Balakrishnan) #89

Was just trying to value the remaining business. It seems fairly valued. Don’t think its very attractive. The manufacturing business is available @ 7 EV/EBIT. Anything I am missing here?


(Sahil Taneja) #90

attended it briefly… the management was hesitant in answering and providing details about how the amount would be used, what would be the net value they would get after all WC debt transfer, paying taxes etc… Seems strange that a company closed a 1550 crs deal and they have no idea how these numbers would pan out…


(Kushal Masand) #91

A little off topic, I read that Fedders Lloyd will get 50 Crs in this transaction. Fedders Lloyd is anyways a steady business, with mcap of INR 50 crs. Company should be able to invest further in the business and decrease its interest outgo.


(Vinay Arya) #92

Hi Rohit,
Most of the turnover that used to show up as inter segment transfer to durable segment from OEM segment will stay as it will be supplied to Havells, hence after accounting for the net cash, EV/EBIT should be much more attractive.


(Alphin) #93

As per me it has lost pricing power and essentially sold off a potential disruptive position.


(Rajeev Jawahar) #94

I think the Lloyd share holder list is likely to see a lot of churning with growth seekers getting out & value seekers coming in. A bit ironic that with a far healthier balance sheet after the the sale of the brand, & much improved return ratios as a result of a leaner balance sheet, the Co. would go off the radar of investors who were earlier bullish on it! A B to B business just doesn’t excite the markets…

Lloyd mgt.'s credibility is perceived to be sub par, but one will have to give it to them for creating enormous value for its minority share holders over the last 3 odd years. The Co paid some 13 odd crs for the Lloyd brand sometime around 2011, & sold the brand for a whopping 1550 crs in under 6 years. So much for poor corporate governance!!


(sta) #95

When is the sale likely to be completed?


(Sahil Taneja) #96

As per the concall, March 31st


(Rohankore) #97

e
1.They are OEM suppliers to almost all AC brands of India. Growth of these companies will add numbers to Lloyd.
2. Margins are good in OEM business.
3. Debt free balance sheet( If proceeds used for repaying debt)
4. Even after debt repayment they will have some cash in hand
5. Reduced interest outflow will increase EPS

Disclosure: Invested


(ASPN) #98

In the Conf call dated 21/2 (available on RB), the management has clarified the following :

  • They are presently undergoing due diligence, and the working capital liabilities employed in CD division will be reduced from the consideration of Rs.1550Cr. From the interview of Mr Tulsian on CNBC TV18, approx Rs.50Cr will go to Fedders Lloyd – the owner of the brand. So post tax basis, IMHO, the company will likely to receive approx Rs.1000Cr net. (This is just an assumption, just to show that the company is not going to get Rs.1550Cr).
  • They have not committed on exact debt reduction, but were talking about a much healthy balance sheet and investments in related business activities
  • In Air conditioners, the company says its competitors (who are buyers from Lloyd) were apprehensive as Lloyd was also selling under its own brand. Now that the brand is gone, it expects higher business from existing AC mfg customers.
  • The inter segment revenue which was being supplied to CD segment (and getting cancelled / not counted into total turnover) will be an addition to the total TO as it will be supplied to Havells,
  • The company is a dominant player in OEM and Heat Exchanger business and looking forward to more profitable growth with reduced WC requirement and debtor days.

But I am still not clear how to value this.
Disc : Contemplating exit.


(Nirav Dedhia) #99

Does anyone have a clue of their acquisition of Noske Kaeser w.r.t the market share it has in the segment and how much does it contribute to the current sale? I just started researching on the company and the last transcript which I could find online reads that they were still in the process of strategic integration of the company.

I found a 2006 article which read a sales turnover of 53mn. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10389416

Looking at the purchase price tag of 2.3mn I am not sure it had the same numbers. I am curious to know if shifting focus from consumer durable business can allow it to now focus on these business segments.


(nagarjuna) #100

A little off topic, I read that Fedders Lloyd will get 50 Crs in this transaction. Fedders Lloyd is anyways a steady business, with mcap of INR 50 crs. Company should be able to invest further in the business and decrease its interest outgo.
[/quote]

hi @kushal
just read about fedders getting 50 crore out of the deal,may I know the source,
thinking of investing in fedders,
this is my first post so ,sorry if i am dumb in asking
cheers


(Jiten Parmar) #101

Promoters have invested in preference shares in Fedders Lloyd at 75 recently.


(Kushal Masand) #102

It was mentioned in one of the promoters interview, as brand in owned by Fedders.