Dhunseri investments - looks undervalued

A Debt free holding company registered in Kolkata with following portfolio

Here are financials

What caught my attention is a company with 2300 Crores sales and similar net asset is only valued 200 Crore. What’s the catch? What am I missing?

Key trigger :
Market cap to sales ratio = 0.09

Disc: Not invested

Read annual report of Dhunseri Petrochem which i think is the subsidiary of Dhunseri Investments. It will give a lot of clarity regarding these figures. I personally think DPTL might be a better bet. Dhunseri Investments is almost like a holding company of a holding company.

I found Dhunseri Petrochem Ltd(NSE:DPL).
Though currently loss making it seems more faily priced with market cap of 340 Crore for sales of 230 Crore.(ie Market cap to sales ratio =1.50)

Yet to dive more into figures.

If you are tracking Dhunseri Petrochem, any idea why it ran into losses after a decade of robust profit growth and why doesn’t the stock refect that, stock hardly doubled in 10 years?

Just go through their annual report (Dhunseri Petrochem). It’ll clarify a lot. They sold their petrochem business for a nice profit and now hold a lot of investments.

Kind regards

Sachit Khera

Did anyone analyse why Dhunseri Petro sales were almost zero during last financial year??

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Check Standalone number on Screener.in.
Or get it from BSE website. Today, result for Dec 2018 came.
Very good results.
EPS 7.6 vs 2.12 YoY. Prev qtr EPS 4.68.

I am talking about Dhunseri Petrochem in reply to @rajneeshfreedom and not about Dhunseri Investment.

Promoters has increased holding in last few quarters even when they already had above 70% stake.
Few details here. Hope it won’t come into spamming. Don’t feel to open new thread to write in great details.

Just checked that General Insurance Corp of India holds 1.28% stake.
West Bengal Industrial Development Corporation Ltd holds 2.61%. Also,
The New India Assurance Company Ltd holds 2.69% in the company.

Disc: Invested

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Hi Satya,

Few observations regarding the recent announcements:-

  1. DPL settled outstanding dues (~570cr) of its JV EIPET with its lenders on 25 May, 2018. As of Mar’18 it had a cash balance of 60cr, long term investments of 315cr, short term investments of 300cr, short term debt 115cr. Company probably used 115cr debt, 60cr cash, and liquidated some part of its short term investments to fund the transaction? In which case, the company’s intrinsic value would take a massive hit.
  2. It sold 65% of its stake in EIPET to Dhunseri Overseas Pvt Ltd for a sum of ~13cr (AR17) on 24th Mar’17. The on 21st May’18, company entered a share purchase agreement with ECHEM to buy ECHEM’s 23% stake in EIPET (why buy now?) over several tranches by 2023, thereby making its total shareholding to 28%? As per the announcement, company has already paid for 1st and 2nd tranche (43700 shares @100USD ~28cr).
  3. Simultaneously, the company entered another share purchase agreement with Indorama Ventures Ltd to sell 50% of DPL’s stake in EIPET. As of now, company has received ~6.5cr from ECHEM for 50% of all the shares of EIPET it currently has. Looks like a buy high, sell low strategy to me.

Please let me know if you find something wrong in above observations.

Also, what’s even more puzzling is that the promoters have been continuously buying shares for last few quarters now.

Disc: Invested

If anybody interested in attending Dhunseri petro AGM on 10.8.2018,please let me know. Company is looking very interesting with some usual corporate governance issues.Some questions if they answer genuinely and make some positive commentary I am sure this will be scrip of year 2019-20. You can pass questions to me to be asked in AGM.Thanks.

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Anyone having any updates on Dhunseri Ventures? Company doesn’t seem to be turning around anything from the Egypt plant. No.s are not showing up on the books.

Dhunseri Ventures is a highly undervalued script with a book value of Rs 400 with current yr eps in excess of Rs 30 . What most investors do not know is that they own “Twelve Cupcakes”( 86 % stake) , which is one of Singapores favourite Cupcakes shops.

They acquired the same 2 years ago from the local investors , and from 16 outlets it has now increased to 35 outlets . Further , they are currently expanding into Malaysia, Hongkong etc .

From the segment revenue , it is seen that revenue in current year has increased to Rs 64 crs ( 9 months) as compared to Rs 52 crs in FY-20 . Also the segment profit for the business has improved to Rs 12.5 crs in current period (9months ) as compared to segment loss of Rs 9 crs in FY-20.

It is credit to the mgmt that they have not only managed to improved the sales and turnaround the business in such a short span , particularly considering the difficult economic environment of the last 12 months .

Compared to the valuation of other food cos stock prices, this is available at a very cheap price as the same remains undiscovered by the investing community.

Even without considering the other investment value of the company, even if one arrives at the value of the food business on a standalone basis, the stock is available at dirt cheap price . This is a stock waiting to be discovered by value investors.

Also the company has been giving decent dividend payouts .

Discl: Investeddhunseri vents.pdf (2.5 MB)

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Yes, Dhunseri Ventures is highly undervalued stock. Management has turned around twelve cupcakes sooner than expected. DVL was recently fined around 65 lakhs for underpaying foreign employees though this practice was started by founder couple of TCC.
IMO Twelve Cupcakes is a very renowned pâtisserie brand in Singapore and DVL has been able to expand its product offerings quite impressively (like fondant cakes, whole cakes etc.)
With just 35 stores currently there is huge scope for expansion and on valuation front, TCC valuation alone should be more than total Mcap of DVL. TCC deserve a minimum valuation of around 3 to 4 times its sale.
DVL valuation of other investments even after applying holding company discount should be substantial one.
Discl: Invested (Views may look biased)

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Yes, it is a matter of time , before it gets re-rated in this market , where any company related to foods sector enjoys very high PE’s . Looking at the segment reporting, they have almost managed to double their revenue compared to last year and have managed to improve their margins substantially.

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The stocks, both the DI and DV, look very enticing. However, I am worried about the promoter being shareholder friendly. Any indications for or against the shareholder orientation of the promoter?

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