Note: These is not a special situation its a opportunity on heavy discount to Book Value(Holding companies at very cheap valuation)
Kurlon Ltd(KL) and Kurlon Enterprises(KEL) these are 2 companies.
Kurlon Enterprises deals with Mattress and other segments here its competitor in listed space is Sheela Foam
Holding Pattern: KL hold 85% stake in KEL and rest 15% is with Motilal Oswal PE firm.
Bio about company KL : KL was incorporated in February 1962 as Karnataka Consumer Products Limited by Mr. T Ramesh U Pai. The name of the company was changed to Kurlon Ltd. in 1995. The company manufactures rubberised coir, foam and spring mattresses foam products and home furnishings through its subsidiary, KEL. The mattress and foam products business of KL was transferred to KEL through a business transfer agreement, effective from April 01, 2014. The Group has manufacturing facilities for rubberised coir in Yeswanthpur (Bangalore), Bhubaneswar and Gwalior, polyurethane foam-manufacturing facility at Dabaspet (Karnataka), Roorkee (Uttarakhand) and Jhagadia (Gujarat), and spring manufacturing facility at Peenya (Bangalore), Jhagadia (Gujarat) and Bhubaneshwar. KL currently holds 85.06% shareholding in KEL.
Kurlon Ltd earns some 8-9 Cr of PAT.
KEL(Financials):
It earns some 75 crores of PAT in FY2020
Valuations: Sheela foam trades at 45PE currently lets take a modest PE of 35 for Kurlon since its not market leader we get valuation of 2600 Crores
Now for Kurlon Ltd company which we are tracking is Maha Rashtra Apex(Listed) it holds 38% in KL
which gives it holding value of 1060Cr we can further give 25-40% holding discount to Maha Rashtra Apex.
Trigger: Motilal Oswal PE firm would need exit someday and Kurlon shares are pretty common in grey market as many are expecting its IPO
About Maharashtra Apex:
Maha Rashtra Apex trades at 120 Cr roughly. It is Manipal Group company with some other subsidiaries in it. It is pretty old NBFC which eventually became a holding company
.
Risk:
1)It can delist itself
2) It can take OFS proceedings in event of IPO and give to group companies leaving minority shareholders empty handed
3)Management has never given dividends to shareholders
Disclosure : Tracking position of 1%in Maha Rashtra Apex at portfolio level from lower levels in last down cycle.
Note: Intention of these post is for study purpose only and not investment advice please be very careful of holding companies risk before entering in such scrips.
Reference article by 2point2capital to understand risk of such companies attaching for reference of interested individuals: Investing In Holding Companies