Cheviot Jute

Stock Opportunities
1

Hi,

I was looking at Cheviot

http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=526817

Its in the just business.

Looking at their annual report I was able to quickly able to make the following conclusions

Pros:

1). Promoter / Management seems to know what they are doing and understand the risks pretty well and communicate them.

2). Debt Free

3). Consistently ROE > 25%

4). Consistent Dividend payouts

5). Simple business (How complicated could jute manufacturing be)

6). Market cap is less than the Assets value (land + other investments in mutual funds and stocks in other companies)…didnot calculate it fully

Risks:

1). Operates in the state of WB (lost working days in the past)

2). This new financial year is likely to show lesser growth (last yr due to demand from europe)

3). Demand in India due to govt regulation to store sugar and grains in jute bags

Initialassessmentleads me to believe it would be a good long term investment.

Any concerns / contrary views would be much appreciates.

2

a friend has been suggesting to see this stock since a long time. Lemme check now

3

Hi,

Couple of updates from my end.

1). The management has a lot of assets on it books.

2). The industry is not really a high growth industry unless the management enters into jute bag market replacing the plastics

This could be a classic cigar butt stuck if it gets cheap enough

4

May be go through this article. Might help on analysis

http://www.tipblog.in/analysis/cheviot-company-–-good-value-or-value-trap-or-cigar-butt-opportunity/

5

Cheviot has a huge value trapped in the form of short term investments. The company has a EPS of 63/- and most of it enhances the cash and ST holding. Very small amount (13/-) comes in the form of dividend to the investor.

In absence of huge capex i believe that the promoters should pay the investors rather than invest the money through the company.The promoters in fact hold 75% stake in the company. The company has a non current investment of 109 crore or 242 per share ( invested in debentures/ shares of indian corporates)

Add to that 46 rupees of current investment (Debentures etc).

With so much in liquid investments + business with EPS of 63 available at 5 times EPS -Anyknowledgeableinvestors suggest if this a good investments

6

i think it is a huge undervalued stock at mkt of 230 crore it has non current investment in debenture comes to 169 crores and current investment 24.80 cr. total comes about 193 and mkt is just 230 cr. and comapany yearly last five year average net profit after tax comes about 29 cr. and it is debt free company and also very small equity outstanding. company has added new product in last year. so i think at current valuation it is worth investing.

7

It is a value trap. Would suggest avoiding

8

Hi ashwinidamani

if it is value trap then company pays dividend and so much taxes ?

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