I have constructed the graph which @anirband87 asked for, I think this graph can actually help us understand things better and actually reveal if the change in P/I value (Price/Investment value)
(which is nothing but 1 - Discount %) is due to this factor or because of the change in investment value held by MSL.
This is the graph, which I have constructed using the data available to me.
1. Orange line: Price Value (The closing price of that day for MSL)
2.Black Line: Investment Value (Core holdings of Bajaj group with MSL calculated using the closing price can also be called the ‘Book Value’ or “Net Value Per Share”)
3.Blueline: P/I value (%) (Price/Investment value %, which I had presented in the previous post)
On looking at this graph the first time, It was extremely overwhelming but on closer observation, I noticed something.
I noticed several spikes in the MSL graph (on a closing price basis) during several periods specially when the P/I Value touched 27%/28%, this spike might look small at a first glance and one might think that it doesn’t really mean anything substantial but all those awkward spikes indicate a return of 20/30% at least and one can actually observe this easily.
Talking about the orange line, MSL price on closing basis
1st spike: Takes place near 01/12/15 when the “Net value per share” was increasing steadily but the Price of MSL (price value) was decreasing rapidly which brought down the P/I to 28% odd levels, and after touching that zone it spiked significantly.
MSL went from 900 levels to 1400 levels
2nd Spike: Takes place near 01/12/16 when the “Net value per share” was increasing steadily but the Price of MSL (price value) was decreasing rapidly which brought down the P/I to 28% odd levels, and after touching that zone it spiked significantly.
MSL went from 1500 levels to 2000 levels
3rd Spike: Takes place near 01/10/17 when the “Net value per share” was increasing steadily but the Price of MSL (price value) was increasing at a slower pace which brought down the P/I to 30% levels this time and after touching that zone it spiked to lower 40% levels.
MSL went from 2400 levels to 3050 levels
4th and 5th spike: These spikes were absolutely meaningful but the fourth spike never reached attractive levels for a person to take positions, the 5th spike actually tested the patience of the investor, it had touched a good level back in 1/12/18 but took almost 6 months to reach a good level for us to offload our position.
The common thing in all these spikes was the gradual decrease in the P/I level, with a steady increase in the investments but the price of MSL decreasing/growing at a slower pace than compared with the Investment value.
This time MSL has actually retested the 7 year level and the P/I Value (%) is now at 24% levels and has been significantly decreasing for the last one year since the infamous crash back in 2020. The P/I value decreasing, Investment value shooting up rapidly and Price value of MSL decreasing or growing slowly does match with what we have observed in the past, but the past barely resembles the future…
Is this scrip actually testing the patience of the investors and will soon be rewarding them with handsome returns or the discount will continue to be at such high levels only?
Where are we really headed?
Let me know