Thanks @giridesh3 for providing such detailed analysis. I have been tracking this company since last 2 months and have the following queries -
By when do you think the spin off dates will come by? I think in 4 months or so i.e. by jan end
2… By when would Lasa get listed ? I think by Mar or Apr end
What would be the value of the two entities? I think omkar (only sp chemical) would trade at 90 rs (assuming 11 eps at 8 pe) while Lasa would trade at 170 (assuming 10 eps at 17 pe). I am trying to be conservative and hence the above PEs
From where did you get the 160 to 180 crores sales target of Lasa? I am looking for it and not seeing it.
Standalone numbers only include speciality chemical business, but consolidated numbers include the performance of the subsidiaries including Lasa Laboratories, the vet api business.
I am only going to answer point no 4. After AGM I had one on one chat with CFO. He mentioned their projection is between 160 to 180 Cr. It concurs with my own estimate of 170 to 180 Cr kind sales for Lasa with 70-75% probability.
Good point Akhil. I would like to add some more here…
The BS of sp. chemical business will look different post spin off. It is WC heavy but Fixed capital light business. Lot of debt and interest cost that you see in stand alone statement belong to Lasa. Post spin off it will go to Lasa. Lasa is comparatively Fixed capital heavy and very WC light business (saying just for sake of comparison with chemical biz. The fixed asset turn over of Lasa can be around 3 to 4 in steady state condition. Which is not bad)
They have 3-4 subsidiaries. There will be first merger of all these into single entity and then spin off into two entities. So stand alone statement that you see right now including debt figures, finance cost etc can be mis leading in my opinion. For example Lasa shows term loans of 20 Cr right now. Next year you will see 72 Cr or so. On the other hand Sp. Chemicals show 90 Cr or so. Next year you will see 45 Cr or so term loans.
In typical spin off situation you got to get listing entity level data and do your analysis. Else it can be misleading. Often times you can get this data only when you talk to management. In order to prepare my presentation in Pune Value Investors Meet I had to interact with promoter and CFO both. The listing entity level numbers that you see in my PPT have come after many to and fro communication and calls with management. Even then I ask myself if I miss any vital data point.
Hi Girish- Thanks for the detailed presentation and good merit to your case. There has been MF buying activity in his counter for the pas couple of months from 150 onwards. My question really is post spinoff and pledging issue resolution, given then strong technical aptitude of the management where do you see the share by Mar end?
Tarun: I will avoid giving any specific numbers because
I do not know what would be stock price in the next 6-7 months. In the short term many things can decide the price levels…especially for micro cap stocks like Omkar the price can be very volatile.
I am not trying to attempt also because I have bought this stock keeping in mind next 3 to 4 year horizon. so really not putting any efforts also to estimate price levels in the near term.
I am not SEBI approved analyst and ideally I should not give any targets or Buy/Sell recommendation.
All I can say is look at peer comparison table in the PPT for both Lasa and Sp. Chemicals to see the approximate valuation these kind of businesses command. You will get rough idea which direction price can go if the management delivers on their promises. In the above posts and also in my PPT you will see some projections on the revenue etc. Those numbers have come from management side. You can then connect the dots. But bear in mind that everything depends on how this management delivers.
Has anyone received Dividend? Normally companies credit dividend within few days of AGM. Considering its been almost 11 days since AGM, was wondering if others have received it or not.
Looks like promoter has sold more (around 3.09 % from there depledge cont call in july). ,One FII exited & pledge down somewhat !! Looks like Promoters have raised the 11 cr shortfall for closing the depledge shares .Driehaus fund “small cap” champ has exited .
In a way you are correct but as you market conditions, liquidity etc plays a role. Once results are announced we will have to review the finance costs and same questions during concall.
I am frustrated, almost fed up with the promoters.
This has similarities with treehouse education. High promoter pledge and Promoter stake sale. Plus some additional story going on, demerger in case of Omkar and QIP & Merger with zee learn in case of treehouse.
Will try to talk to the CFO today. Its quite clear that they had said there would be no more stake sale when the promoter holding was 58%.
There was no disclosure to the exchanges. If there were stake sale by promoters, then it is mandatory for them to disclose it. Although I too see that promoter’s stake is down to 53% from 58% as per the latest quarterly statement. Little confusing. Can it be the case of one/few of the promoter’s shares are categorised into non-promoter?
CFO is saying 4.9% is encumbered and parked in creditors dmat a/c. So it can’t be shown in promoter holding.
Effective shareholding is 58% (=53.x+4.9). Once the de-pledging is done in Oct. & Nov., those 4.9% shares will come back in promoters’ dmat.and will again be shown as promoter holding.
