In a recent land deal company will recieve 5200 cr in cash. Total enterprises value of company is around 6500 cr , that makes other buisness and land bank is worth 1300 cr only . Out of which promoters plan to further monetize another 15000 cr in coming years.
Can’t figure out why market is not responding to news as agressively .
Can anyone show any antithesis about this or is this a big opportunity ahead
1.Institutions holding is very low. Until they don’t take significant positions marker won’t let go up
2. It take 2 more quarters to get debt free
3. Entering JV or Start of development project take years so market has lot of time to accumulate before start rally
Yes, there are many reasons why people are skeptical.
First, the management had been talking about land monetization for more than 5 years now. It took them an eternity to proceed with the transaction. So, naturally, no one is betting than further asset sales will de done anytime soon.
Second, the management has a horrendous history of allocating capital. Look no further than BBTC (Bombay Burmah Trading Corp) & what it does with Britannia’s dividends. Post the debt reduction, will the management dividend the excess cash (from future asset sales) or reinvest the cash in the existing bad businesses (which is the status quo)?
Third, the board constantly mistreats minority shareholders. Consider the latest example. The CEO pay should be directly related to a company’s performance. However, the board refused to reduce Bombay Realty’s CEO’s pay despite bad performance of the firm. So, the CEO gets to share the upside but not the downside. How is that fair?
In short, the management & the board are not credible.