Binny Ltd - own property in the heart of Chennai at 1/10th the cost!

Stock Opportunities
102

It would be interesting to see what the AR 2017 says about the future plans for the project and the surrounding yet to be monetized land banks held by binny. Till such time shareholders will certainly have a big smile.

It is very difficult to establish a trustworthy partnership between the landowner and the construction partner. But once it is established its equally difficult to break it. I think binny and spr have a nice little equation now. With piramal capital also in the mix it seems like a win win for everyone.

Best
Bheeshma

103

Upper circuit without any changes? Operators playing?

104

Upper circuits have been changed for binny. Its now in the 20% band. I have no clue about the rationale behind the change. Until yest it was in the 5% band. Sometimes it is frustrating when you want to add and suddenly the stock zooms and gets locked into the upper circuit without any prior intimation on circuit filters.

105

It is sheer chance I added 2000 shares @ 240-242 day before because I remembered the behavior @185 with zero transactions for days.
I vaguely recall reading that the limits [weekly/monthly/quarterly etc. change with
the circuit filters. I notice that the annual limit has not changed though, with the 20% band.
All in all, harebrained, they act as artificially instituted trading zones.

106

Guidleine value of properties in TN slashed by the goverment.
.

May not benefit Binny property buyers directly, but may help spur some real estate activity in TN.

108

Now it looks fully valued at 15% discounting also! In a matter of 2 days!!

109

Does the valuation take into account the land in valasaravakkam, chennai and the advance cash its supposed to receive back from related parties (promoter group)?

110

No. Any idea how big the land is?

111

Itā€™s about 12 acres according to an old BSE announcement.
http://economictimes.indiatimes.com/binny-ltd/stocksupdate/companyid-11845.cms (search for 12.43 on that page)

This could be the parcel of land that is being referred to, in that announcement.
http://wikimapia.org/#lang=en&lat=13.037798&lon=80.175176&z=16&m=b&search=55Ā°30ā€™5ā€™'N%2C%2037Ā°20ā€™3ā€™'E%20%2055.501N%2C%2037.33E

112

Share transfer to debt tribunal owing to order dated 25th may.Now intresting is the fact that company never bothered to inform any such order to the exchange. Prima facie seems like some old recovery case was goung on on against the promoter for which share transfer has been ordered as an interim/permanent measure.

@bheeshma

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/EFA85078_75CB_49D3_BCEF_BB2B14DBB5DC_150129.pdf

113

from what i have been able to gather, the DRT II order pertains to recovery of debts of Mohan Breweries in which Mr Nandagopal is Chairman. In my limited understanding of this issue, Mr Nandagopal seems to have transferred 4.65% Binny shares to DRT II in part or full payment ( I dont really know) of the dues of Mohan Breweries to the banks.

13/06/2017 is the date on which these shares were transferred and it would be interesting to see what the banks/drt decide to do with these shares. Hold onto it or sell it? Interesting times ahead indeed!

Best
Bheeshma

3 Likes
114

If someone wants to dig deeper, here is the official site of DRT
http://drt2chennai.tn.nic.in/Default.htm

115

reason to buy Binny ?

64 Acres JV with SPR Group at perambur.

21 Acres sold & Got revenue of 440 Cr in Q2, with whooping EPS of 137Rs per shareā€¦

12 Acres land remainingā€¦

Concernsā€‹ :thumbsdown:

  • No businesss still 117 cr utilised ,raised by way of preference shares, from promoterā€™sā€‹ , releated party transaction

  • why they didnā€™t redeemedā€‹ preference shares, they have huge cash balanceā€¦

  • why they transferred 323 crores to promoter releated company, even before share holders approvalā€¦

  • why huge capital outlay windmills project now?

  • why promoterā€™s not distributing Dividend to shareholders ?

  • why all releated party transactions ?

  • Their integrity is questionable ? 1 month back debt recovery tribunal notification shared yesterdayā€¦

What I understand is 1200cr what they get from spr jv + present money + 12 Acres land ,= Investment for wind Mill projects ā€¦ with Releated party transactionsā€¦ No Dividendā€¦

Already promoterā€™s pledged 410 cr worth shares, they are feeling heat know ā€¦

We canā€™t do anythingā€¦ Minority share holdersā€¦they can pass easily all special resolutionsā€¦ Check mate ā€¦ They can change AoA, MoA etcā€¦

They donā€™t have intent to give it back to shareholders, they told liquor businesss 2 yearā€™s back, now they are entering into land purchase contract with promoter releated company & hurrily transferred 323 crā€¦ telling wind Mills storyā€¦

Iā€™mā€‹ aware of how realestate revenue recognition they doā€¦ Unaccounted cash transactions, threat to minority share holdersā€¦

Disclosure :- No holdings

Check care rating report for clarity, available in BSE announcements

5 Likes
116

Hi @Tekumani

Every investment has certain risks that carry a value if they come to pass. Just like they carry rewards which carry a value. If the risk reward ratio is unfavorable at current valuations one should avoid the investment altogether or demand a greater margin of safety. That is true for binny and any other company. Real estate is going through a tremendous change in india and along with it almost all companies engaged in real estate development are changing their capital and ownership structure. What is important is to assess whether there is a valuation gap and if you believe that there is one despite all the uncertainties surrounding the company then the market will recognize it eventually as the uncertainties fade away with time.

Best
Bheeshma

1 Like
117

@bheeshma

Iā€™m tracking this company, very closely ā€¦ I studied my CA course in Chennai from 2011-16ā€¦

I have collected the inputs from CARE Ratings, motilal oswal & piramal group also invested in the SPR Binny project ( they are secured )ā€¦ I was sure that project will fetch at least 800cr to binny ltd in 5-6 yearā€™s, now revenue recognization method changed for real estate companies, every one aware of thatā€¦

Now whatā€™s the market cap 800cr ā€¦ Company will get 800 cr revenue in next 6 yearā€™s, by considering the time value of money . Itā€™s over pricedā€¦

There is an uncertainty , company not declaring the Dividend & diverted the funds to promoter related companies.

Just attend the Annual General meeting, ask the question to board, what youā€™re going to do with Profits, what they will tell ?

They want to utilize this funds to New businesssā€¦ Whatā€™s the point in buying this company?

I need to wait for 6 -10 yearā€™s for revenue , as per Binny -SPR JV, they are planning to complete the project in phased mannerā€¦

Iā€™m not seeing any value in this deal, since itā€™s already appreciatedā€¦

Check the promoter integrity & previous track record sir ā€¦

Un accounted cash transactions also are very common in real estate, Even after demonetization.

Considering the 6-10 yearā€™s time line , new windmill business, Releated party transactions which are not fairly priced, Iā€™m cautioning all you people to donā€™t burn your fingers.

4 Likes
118

Although I very much respect your views, the idea here is to bring in inputs to help each other and have a logical discussion. What members would make of the inputs finally is something very subjective. So letā€™s not coerce our views on others.

119

There are various ways you could look at binny depending upon your disposition. I look at binny purely from the point of view of its jv with spr. They have a blockbuster product and they have marketed it to reflect its blockbuster characteristics. All the other extraneous variables beyond that are simply too onerous to grasp. Sure, you may want to take a stab at understanding them but beyond a point you cant really predict ( at least i cant ).

One who is quantitatively inclined could also apply math to all the moving parts to come to a valuation number and then take a call. It is really the valuers decision how one looks at the company as an investment candidate.

To me i am pretty convinced that the jv is going to do a revenue of at least 8000 cr and that is over and above the other aspirations of the management. Thats the only thing i am certain about and to my mind is the aspect that constitutes the ā€œoperating businessā€ of the company.

Things that are beyond the ā€œoperating businessā€ of 8000 cr while mildly concerning cannot take center-stage in my world view. If you start looking at every conceivable thing that could go wrong and which hasnt you would suffer from paralysis by analysis. Anyways this is my personal opinion and contrary views are welcome!

Best
Bheeshma

2 Likes
120

Without ethical management, thereā€™s no VALUE in investment. Hereā€™s a Warren Buffett quote:

Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if you donā€™t have the first, the other two will kill you. You think about it; itā€™s true.

This is true both when hiring people and investing in businesses. Of all the risks in investing, unethical management is the biggest. No margin of safety would address that risk. Valuepickr should create a category named ā€˜Get Rich or Die Tryinā€™ to discuss such short-term betting ideas.

1 Like
121

Hi @vasuadiga

Warren Buffets early days were all about seeking value and if a sufficient margin of safety existed he did not hesitate in investing. One of his investment triumphs and a defining moment in his career was American Express whose stock tanked by more than 50% following the salad oil scandal at one of its subsidiaries. He saw value and acted quickly.

There are various ways to invest. One of the ways is obviously good businesses with good management. But that is not the only way. If you find businesses available at a steep discount with a real chance of that value being recognized its also a valid way to invest. There is no ā€œdie tryinā€ as there is a sufficient MOS embedded in it.

These kind of investments are called time arbritage opportunities and they form one of the least risky ways of investing in my opinion.

Best
Bheeshma

4 Likes
122

Letā€™s write to the Management , regarding the what they are going to do in future , how they resolve the debt tribunal issue , Revenue Guidance etcā€¦

Why AGM is constantly postphoning, Trying to reach CS & CFO from three monthsā€¦

There is difference between investing & speculating . My focus is not towards return, I pay more attention to risk , loss. Preservation of capital. Future is unpredictable with bad management.
Once we adopt value-investment strategy, any other investment behavior starts to seem like gambling. Previously there was good logic , now related party transactions & new business are threat to Share holderā€™sā€¦

8000 cr revenue is total income , binny share is 40% in that for 10 yearā€™sā€¦ RERA act, revenue recognization, existing preference holderā€™s ,consider the time value of money, compare with Market capā€¦ If interesting buy ā€¦

5 Likes