Vardhman Acrylics - A hopelessly undervalued stock


(Rohan_69) #41

The shares as I heard are poised for a buyback at 50 Rs per share in January. I think that is a positive development and it further improves the promoter holding. Please correct me if I am wrong.


#42

Nope. Promoters are participating in the buyback. Need to check reduced promoter holding % and amount of cash remaining in the company after the buyback. Nevertheless, its still a good cash generating business.


(Rohan_69) #43

Buyback here does mean that the promoters are buying shares back from the open market, doesnt it ? If they are buying how come is the promoter holding going to change please explain. What do you imply by reduced promoter holding ?


#44

There’s a distinction between promoters and the company. Promoters are just one type of shareholders. The company is buying back the shares and the promoters intend to sell some of their shares to the company so that their shareholding doesn’t cross a certain percentage when the buyback is done. They currently have 74.81% of all shares. After the buyback, they claim they will keep at least 72%. The promoters’ intention is not to increase their holdings but only reduce the number of outstanding shares. The company may spend upto Rs 69 crores in the process.

Here’s more information: https://nseindia.com/corporates/corpInfo/equities/AnnouncementDetail.jsp?symbol=VARDHACRLC&desc=Buyback&tstamp=221020161844&


(Rohan_69) #45

Please forgve me for my ignorance because I am also learning :slight_smile: But what do you mean by this ‘The promoters’ intention is not to increase their holdings but only reduce the number of outstanding shares’. Ofcourse they cannot increase their holdings as they are selling to the company. But what refers to outstanding shares. What is an outstanding share ?


#46

We are all learning…here’s some information on outstanding shares and share repurchase: http://www.investopedia.com/terms/o/outstandingshares.asp


(Rohan_69) #47

Thanks for the answers !! Cheers :smiley:


(ishandutta2007) #48

Sorry for posting here , couldn’t find a thread on Vadhaman Holding.
It produced steller results, which looks too good to be true.
Any one knows what has happeded behind the scenes? Is it real gowth or some accounting alteration?


#49

Vardhman Holdings produced good results, valuation looks cheap, is it a good buy?


(Gaurav) #50

You are getting 6 times PE ex cash its too cheap…secondly i think this qtr. the prices have firmed up due to shortage in production from China.

I am talking about Vardhaman Acrylics


(Anandca09) #51

You researched it very well … Today it is standing tall .


(ishandutta2007) #52

The question is doesn’t these numbers scare you(sales,expense,operating profit,expense) ?

  • What kind of business is it got 173Cr sales out of blue with previous quarters being just 8,5,2 Crore sales?
  • How can such sales come at no expense? If someone can generate 174cr revenue with operating expense of just 1.2 crore everyone will do such business, wont they ? If so then next quarter they can even generate 1000Cr without taking any loan/aditional equity?

My point is before geting attracted to low PE we have to understand first how number of this business are computed.


(Gaurav) #53

They had done buyback of vardhaman acrlylics … the one time profit is on that account…


#54

So, should we get fancied by this low PE and invest? When I checked last the share price was 3900 and today it is at 3100 and falling. The next quarter the results would be in single digits, holding company, is it good to invest?


#55

Is it still a value buy? Not to get intimidated with the profit numbers in one quarter alone (which was as a result of share buyback of the acrylics division). Holding company of course, market value of investments is more than its market cap.


(ishandutta2007) #56

where do you get that ?


(ishandutta2007) #57

(SriramSakthivel) #58

Presumably from screener.in – it shows that. Not sure what how they get market value of investments though.


(Gothamcapital) #59

Screener is often wrong.Check the annual report.


#60

Vardhman Holdings fell from 5702 to 2162 at present. Sales dipped : 70 to 42, other income dipped 242 to 157, PAT dipped 303 to 189.