0c348d6e-0799-4dd9-9899-a885eecab255.pdf (2.0 MB)
300 cr in sastasundar marketplace pan india expansion
700cr in sshb my guess is dividend or buyback. Listed entity might see reward of 500cr or so…
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Amazed to see that Sastasudar was able to unlock significant value from its subsidiary.
few observations.
On Dividend:
SML hardly has 40cr networth, considering 20% long term capital gains (inclusive of acculumated losses & indexation) tax outgo on 690cr worth stock should be close to 100cr for SSHBL. If the management decides to funnel that money back to SSVL, then there will be taxes on the dividend- this should put the new cash to listed entity after adjusting for mitshibushi stake & 25% tax is at (690-100)(75%)(75%) ~ 330Cr. i.e 20% of current market cap.
That said, i think money will be retained within SSHBL for the working capital purposes ( in anticipation of massive growth)
Subsidiary financials:
Company Narrative:
The most important aspect of the arrangement is- Sastasundar’s story has changed from being a B2C E-pharma player to a B2B Pharma supply chain & Distribution player with a very very strong strategic partner(FK).
– Problem with this narrative is
- FK core strength is supply-chain. They are owning the B2C brand IP thereby have the ability to add more B2B suppliers. so, though FK is a strong player- the entire supply chain cannot be owned by SSHBL that said, SSHBL is expected to have a decent uptick in the topline.
- Distributor Margins are wafer-thin, with hardly 8-10% gross margins, considering supply chain & inventory costs net margins can be super low at 2-3% - just like the other players.
Image is taken from Medplus DRHP.
This brings us to the point on how to value such B2B pharma supply chain business- Views invited.
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There are more tax efficient ways to do the dividend. For example, they can merge SSHB with SSV They have also indicated about this corporate structure simplification in the slide deck.
Nonetheless, huge value unlock for shareholders. I think it’ll be super weird if they retain 700odd cr in a business which does almost no turnover. I am expecting a significant buyback or dividend after retailing capital for Genu?RS expansion.
Disc: INvested, biased
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If you buy Sasta Sundar Venture you have only 72% X 24.9% stake in the part you are interested in, which is a piddly = 17.9% sake in sastasundar.com. Dont see the point in this unless you can explain.
Please correct me if I am mistaken
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