Elpro International

1

Elpro internation holds 2 hidden assets which can be liquidated anytime.

  1. PNB Metlife - 12.7% holding. PNB metlife’s networth is 2207 Cr as
    on Q3FY17. If we assign 2.5X P/B, we get 2.5X2207 = 5517 Cr. Hence,
    0.127 X 5517 = 700 Cr (In FY13, J & K bank sold its 6.1% stake for 190 Cr). But is valued at 250 Cr in book. Hidden value of 450 Cr.

  2. Elpro estates - 86% holding. It owns 35 acre land in
    Pimpri-Chinchwad, Pune with construction (completed and in progress of
    10 towers having 12 storey). Though Elpro Intl have a liability of 200
    Cr, its real estate assets must be more than 200 Cr. But why this is not
    getting converted to free cash flow ?

Mkt cap = 340 Cr but NAV = 700 Cr + real estate future income (unable to calculate as information is not available on unsold part). NAV may be 1000 Cr.

I have not included surge arrester business which is negligible.

Any view on this stock (especially on the real estate part)…

5 Likes
2

doubled since then. Too much of corporate action.
Now again Rights issue and sub division.

3

As per the notice to BSE company looking for sell of part of PNB METLIFE stake @ 125 cr

4

Recent news(4th October 2021) on Elpro selling stake in PNB MetLife to Metlife at value 1424.69Cr equal to its market capitalisation of 1,110Cr as on today!!
1.Nasdaq News
2. BSE Disclosure
More ineteresting is that the stock has not responded much to the news but the disclosure informs date of completion of deal is very near i.e. 30th Nov. 2021. Is it a short term oppurtunity?
Company seems well established in Real Estate Buisness in PuneOne Elpro Park and Elpro City Square. Seniors and Pune members may comment regarding the same.
Cons of the company (during search and as per screener):

  1. Very low float stock : Promotor Holding 75%(25% Pledged), FIIs: 14.34%,Public: 10.66%
    Only 0.05% is traded on average per day.
  2. Very distributed public ownership:Only one public owner above 2 lakh that also with holding 0.13%
  3. No distributed dividents visible by company
  4. Company has poor ROE and sales growth.
  5. Crisil Rating January 30, 2021: BB/Stable with the suffix ‘ISSUER NOT COOPERATING’ , company is not willing to cooperate with rating agencies even. So very less disclosures expected.
    Triggers:
  6. May become Debt free and cash rich after this sale.
  7. Some of the cash may be distributed as dividents or deployed in thier existing real estate buisness making increased retuns.
  8. Promotor group is selling thier stake seperately, hence pledging may reduce
  9. Rerating of the stock is possible
    Seniors may inform why stock has not responed to news as a study case.
    Disclosures: Invested almost 3% of portfolio.
5

The transaction is awaiting approval at IRDAI
Approval is a formality