Hindustan Composites - Cash Bargain?

Stock Opportunities
1

Hi,

I am trying to identify some cash bargains and came across Hindustan Composites.

http://www.screener.in/company/?q=509635

I would like to know the following about my understanding of Hindustan Composites as a cash bargain from the valuepickr experts

1). Feedback about the pros and cons listed below

2). Would you consider buying this stock as a cash bargain now or wait further. Why?

Pros

a. Business available at below the quoted value of investments held.

b.Investments are liquid.

c.The investment cash was received in 2010 by the business on sale of its land. The company has invested it in marketable securities.

d.Near 52 week lows.

e.Promoter stake has increased.

f.Even though the business is not debt free, the debt can easily be serviced from current investments, cash in hand and inter-corporate deposits.

Cons

a.The businessdoesn’tseem to be generating profits if investment income is ignored. But the Cash flow from operations is positive.

b.Dividend Yield is low.

c.The stock price was constantly reducing for the past year. It seems the market had provided it a higher valuation due to the investments in hand and seeing no catalyst for unlocking the value the market is now discounting it below investments.

d.Lack of catalyst for unlocking value.

Thanks

Zayan

2

Hi Zayan,

In my humble opinion, if cash is not gonna come to common investor, then its a waste. If promoter/management channels cash to shareholders be it by dividend/buy-back etc then it is valuable otherwise its just a blocked cash which wont be available to u as in investor and u should give 0 value to it.

Ashish

3

hi zayan,

Called them up.According to what ended up being a very defensive convo,the CS probably meant that at least for now any plans to reinvest the company’s capital are either in limbo,non existent Or (small probability) they wish to hold it close to their chest as they ve done the last three years or so…guess we ll know in the august meeting.

a buy back is out of the question apparently as it would lead to promoter stake going above 75% and oblige them to make a delisting offer.

also they re shifting their investments out of equities and into debt funds after three years of lackluster returns

wish u luck

4

Thanks Ashish for the valuable opinion.

Thanks Shravan for calling up & getting those details.

Thanks

Zayan

5

for anyone still tracking this restructuring,looks like change is on the way

http://www.bseindia.com/corporates/anndet_new.aspx?newsid=36e13855-a1e5-4d38-bd29-598761b23bfe

6

Yup. Just came across this company.

All eyes on what the company is planning to do with the proceeds of the land sale.

8

3 of the recent 5 qtrs have seen npm fall to single digits even though topline is stagnant.

Tbk collabration is yet to bear fruit too.

9

One of the holding companies, Rasoi LTD is being taken private. Hindustan composites has a 17pct holding. How will this affect the stock? Will cash flow into Hindustan composites from Radoi LTD or will there be no change? Hind comp is listed as a promoter company. While Rasoi stock has doubled, hind comp touched 52 week low.
Also topline and bottom line has grown but stock is touching 52 week low. What is another red flag apart from a low roce?