I am new to financial side and still trying to understand the basics.
As much the tile says, what might be the reasons that Temasek is buying stake with 8500cr in Haldirams (valuation of 85k crores).
I see that the Haldiram’s sales as 4500 cr and profit number is 600 cr for FY24.
Making a fixed deposit with 8500cr will fetch more money right? what is the thing I am missing.
Is it that Temasek is expecting a great future growth which beats normal investments.
Is it doing fixed deposit difficult with such high amount of 8500cr?
Is it for the kick/respect that they get on sharing a seat with promoter?
Is it that Temasek gets access to some unknows of company.
I am aware that multiple PE and even tata’s tried for a stake but backed out owing to valuations. At the sametime, I understand we cant say what might be going in Temasek’s head. But any approximate reason would be fine.
Any experts, help me here.
Googling around a little, I’m getting around 12,800 cr in sales for FY24 and FY25 should be around 15,000 cr then. That would give it a PAT at 2,250 cr at reasonable 15% margin.
This would be a P/E ratio of ~38 which is on the higher side but not something completely out of sync with the market (there are many companies with 40+ P/E ratio trading today even after the correction of last few months).
Also, another additional aspect to consider is that Temasek is a sovereign wealth fund while Tata and PEs are not.
Sovereign wealth funds are closer to low risk pension funds so, in theory, they don’t have the option of investing in higher risk equities even if the risk adjusted returns are greater.
Hence, a more generous valuation should, in theory, be offered by Temasek as Tata and PE have a wider universe of equities to choose from to spend 8500 cr.
Haldiram’s consolidated net sales for the financial year 2023-24 (FY24) vary across different reports, ranging from ₹4,551 crore to ₹14,500 crore. This discrepancy arises due to the complex structure of Haldiram’s operations, which are managed by separate family-run entities based in Delhi, Nagpur, and Kolkata.
Specifically, Haldiram Foods International reported consolidated net sales of ₹4,551 crore in FY24, marking a 10.9% increase from the previous fiscal year. citeturn0search1 In contrast, the combined entity of Haldiram Snacks Foods Private Ltd (HSFPL), formed through the merger of the Delhi and Nagpur branches, reported revenues of ₹12,800 crore in FY24. citeturn0search5 Additionally, some sources indicate that Haldiram’s total revenue reached ₹14,500 crore in FY24, surpassing the combined turnover of Domino’s Pizza and Burger King in India. citeturn0search4
These variations highlight the fragmented nature of Haldiram’s corporate structure, leading to differing financial figures across its various entities.
Right, my mistake. I just glanced at a high level and mistook the revenue as 4500cr.
It makes sense. But now, I feel the current valuation is a but cheaper for stake in Haldirams. Considering britannia’s, bector’s or other fmcg/consumer facing businesses, aren’t the valuations good?
Not sure on what PE’s are thinking, but tata’s themselves in consumer facing businesses isn’t it greed if they are expecting valuation far below current standards?
I wouldn’t call it greed. Along with Tata, Blackstone, which was also initially in talks to take a stake in Haldiram opted out due to valuation.
At the end of the day, markets are all about perceived future value and these can be different for different investors having different investment horizons and risk appetite.
Moreover 30-40 PE for a mature business which will grow at more or less nominal GDP rate seems to be on the higher side to me. Considering the under performance of many FMCG companies in recent times and the agressive entry of new start-ups
