ITC Ltd(BSE Code 500875)

A couple of HNI investors are keen to invest sizeable amount in ITC but they prefer to wait for some time as they are expecting a marked fall in stock price of ITC. As the share price will fall below Rs. 200-mark, these HNIs will start accumulating in a big way

They expect the share price to fall as the government of India is likely to sell around 10 crore ITC shares lying with the specified undertaking of the Unit Trust of India in the market to raise funds. As the government is facing severe shortage of funds to finance healthcare expenses on account of the Pandemic and prevent widening the fiscal deficit, the sale of ITC shares is believed to be a preferable solution. Again the ITC market price is under pressure because of FII and FPI selling in order to shift funds from India and ITC, being a ESG target, it will be among the first to be divested.

These HNIs are extremely bullish on ITC with a long term perspective. They believe that the company’s FMCG business which attract lower margins at present, is going to be more profitable going ahead. As the company has already succeeded in brand building, in achieving market share and raising revenues, the management is now concentrating on pushing up margins. As a result the FMCG business which contributes around 25 per cent to the company’s turnover accounts for only 3 to 4 per cent of profits and within the next five years or so, the contribution of this segment will be over 15 per cent of profit pushing up the stock price also in the process.

Again they expect the management of the company may demerge the tobacco business into a separate company. If this happens, the valuation of the company’s FMCG business will shoot up at least 3 times from the current level. Thus in the long run, shareholders of the ITC will be Richie rich!

(CMP Rs. 250.80, 52 week H/L Rs. 266/199, BV Rs. 49.40, FV Re. 01)

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Vodafone Idea Ltd.(BSE Code 532822)

The chances of Vodafone Idea to survive have improved considerably of late. On one hand the government has decided to convert interest on spectrum dues into equity and as a result, the government of India will be the single largest shareholder of Vodafone Idea with an equity stake of around 36 per cent – ahead of Vodafone (around 28 per cent) and the Aditya Birla group (around 17 per cent). This will be a boon for the company which is crushed under heavy debt and facing severe liquidity crisis.

The company is the third largest mobile telecom network in India and 10th largest mobile telecom network in the world. With a view to further improving the liquidity, it has planned to increase promoters’ contribution as well as to bring out a public issue.

At the same time eyeing growth in average revenue per user (ARPU) the company has made a foray into the online gaming segment in partnership with Nazara Technologies. The company wants to strategically build the gaming eco-system through this partnership. Again the company plans to launch e-sports in a month or two followed by social gaming in the next 4-5 months.

Again Vodafone and A5G Network have joined together to set up a pilot private network in Mumbai utilizing the existing 4G spectrum.

Observers feel that the chances of the survival of the company have improved considerably

(CMP Rs. 9.68, 52 week H/L Rs. 17/4, BV Rs. -18.30, FV Rs. 10)

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ELCID Investments(BSE Code 503681)

Believe it or not! Elcid Investments, a Mumbai-based nonbanking finance company is offering a staggering price of Rs. 1,61,023 per piece for buying back, its shares from retail shareholders which are quoted at Rs. 17 in the market! This means March 31, 2022 Corporate India 11 that the company is offering a excessively spectacular premium of 9,47,100 per cent premium over the current market price. The question that is being discussed in the market is will the retail shareholders accept the unbelievable offer to buyback these shares as the intrinsic value of these shares is Rs. 613607 per share!

Of course the promoters – the Vakil family – had made efforts to buy back the shares lying with the public in the past. But these efforts had failed in 2013. The company had offered to buy back these shares at a price of Rs. 455 per share. But out of over 4 lakh shares only 16500 shares were offered by the shareholders and the delisting plan had met with a failure.

Shares are quoted at Rs. 17 per share and there is huge line of investors who are keen to buy these shares but as there are no sellers, nobody is getting any share. Those who are holding these shares from the earlier period are counting them among the luckiest people in the world as they have become millionaire just by investing even 50 or 100 ELCID shares!

The secret of the huge real value (over Rs. 6 lakh per share) is the fact that the original promoter of the company Mr. Arvind Vakil was one of the promoters of Asian Paints, the blue chip company listed on BSE and NSE. Elcid along with its two subsidiaries hold around 4.2 per cent equity stake in Asian Paints’ share capital.

The company’s authorized capital is Rs. 25 lakh and issued capital only Rs. 2 lakh. Earlier promoters were holding 80 per cent stake and only 20 per cent shares were distributed among various retail investors. But in view of the SEBI rules that promoters cannot hold more than 75 per cent, the promoters had to sell 4.75 per cent stake at a price of Rs. 5000 per piece. Those fortunate investors who got these shares have today become millionaires.

At there is no seller in the scrip, the trading activity in on this counter is virtually zero, under this pretext, promoters have approved the authorities to delist the company from the exchange. Will retail shareholders succumb to the somewhat attractive offer of Rs. 1,61,023 per share when the fair value of the share in almost six times of that offer price? Wait & watch.

(CMP Rs. 17.00, 52 week H/L Rs. 17/11, BV Rs. 5,08,261.00, FV Rs. 10)

Tata Elxsi(BSE Code 500408)

There are good tiding for shareholders of Tata Elxsi. The Tata group company which is the world's leading design and technology services provider across industries including automotive broadcast, communications. It provides integrated services - from research and strategy to electronics and mechanical design, software development, validation and deployment and is supported by a network of design studies, development centres and offices worldwide.

As the company's share price has zoomed to over Rs. 9000, the highest share price among all Tata companies' the management is thinking to bring it down via either a bonus issue or a share split. Sources close to the Bombay House indicate that a decision on this matter will be take in the very near future.

These sources also indicate that there is a possibility of merger of Tata Elxsi with Tata Consultancy Services in due course.

According to these sources, Tata Elxsi is surviving as a standalone entity because of the influence of its dynamic Chief Executive Officer Mr. Madhukar Dev within the Tata group. He has already got three extensions and is most likely to retire next year. After that the group will take up the issue of merger, it is said.

(CMP Rs. 8901.80, 52 week H/L Rs. 9420/2801, BV Rs. 207.20, FV Rs. 10)

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Elegant Floriculture and Agritech (India)(BSE Code 526473)

A tiny floriculture company with an annual turnover of less than Rs. one crore is going to stage a dramatic turnover if the company’s plan meets with success. The Mumbai headquartered company has a 10-acre farm in Maval near Pune where it cultivates roses. Its sales turnover which had moved up from Rs. 57 lakh in 2010 to Rs. 1.93 crore in 2017 has once again came down to Rs. 53 lakh in the fiscal 2021 on account of the Pandemic. Likewise its net profit which had shot up from just Rs. one lakh in the fiscal 2010 to Rs. 92 lakh in the fiscal 2017 has come down to Rs. 45 lakh in the fiscal 2021.

But the company with a highly fertile land extremely useful for rose cultivation has attracted the attention of one leading Japanese floriculture company which is keen to cultivate its roses on this land and is ready to invest Rs. 50 to Rs. 100 crore. This will change the fortunes of Elegant as the Japanese company will not only cultivate roses on this land but will also take up the responsibility of marketing these roses.

The development has an electrifying impact on the share price which has already shot up from Rs. 12 to 35 by now and experts expect the price to move up further with the progress of cultivation.

(CMP Rs. 43.70, 52 week H/L Rs. 44/1, BV Rs. 10.60, FV Rs. 10)

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HDFC Ltd & HDFC Bank(BSE Code 500010 - 500180)

The proposed merger of HDFC Ltd in the HDFC Bank has created a lot of waves is the investment world. One important fall out is the fact that many mutual funds will have to sell their stake either in one or both the stocks as SEBI has turned down mutual funds' plea to allow them to retain their holdings in both these shares. As per the SEBI rule a mutual fund cannot hold more than 10 per cent stake in any one company share. Now several mutual funds have anywhere between 5 per cent 9 per cent holding in each company - HDFC as well as HDFC Bank. This means that after the merger, when HDFC shares will be converted into HDFC Bank in the ratio of 42 shares of HDFC Bank for every 25 shares of HDFC, several mutual funds' stake in this scrip will exceed 10 per cent and hence they will have to load these surplus holding in the market. According to observers as both the companies were being considered blue chips, mutual funds have bought these stocks through their various schemes in a big way-up to the limit of 10 per cent.

Thus after the merger of two company the stake of several mutual funds will shoot up to 12 to 20 per cent and they will have to offload the surplus stocks. This will give an excellent opportunity to pick up HDFC Bank or HDFC Ltd.

HDFC Ltd. (CMP Rs. 2536.50, 52 week H/L Rs. 3022/2046, BV Rs. 902.20, FV Rs. 02)

HDFC Bank (CMP Rs. 1552.30, 52 week H/L Rs. 1725/1292, BV Rs. 426.40, FV Re. 01)

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Godavari Power and Ispat (BSE Code 500106)

A research analyst tracking the steel sector believes that there is a lot of potential in Godavari Power and Ispat, the flagship of the Raipur-based Hira group of industries. The integrated steel wire company is an end-to-end manufacturer of mild steel wires and in the process it manufactures sponge iron, billets, ferro alloys, captive power, wire rods, steel wires, oxygen gas, fly ash bricks and iron ore pellets. It also has the rights for iron ore mining for captive consumption. Thus, it has traversed the entire, value chain (raw material to final product) in steel wires and has now become a fully integrated steel manufacturer.

The company has made rapid strides on the financial performance front. During the last five years, its sales turnover has expanded from Rs 1,538.89 crore in fiscal 2016 to Rs 2,875.25 crore in fiscal 2019, before declining to Rs 2,744 crore in fiscal 2020 on account of recessionary trends in the steel industry. Likewise, the profit at net level has shot up from Rs 63.39 crore in 2016 to Rs 213.26 crore in 2019, before falling back to Rs 121.40 crore in fiscal 2020.

However, demand for steel products has started growing in the current year and during Q2FY21 sales have amounted to Rs 876 crore, compared to Rs 680 crore in the same quarter a year ago. Likewise, the net profit has zoomed from Rs 32.35 crore in Q2FY19 to Rs 94.17 crore in the same quarter this year. Future prospects are all the more exciting as the company has signed an MoU with the Chhatisgarh government for projects worth Rs 2,300 crore. The investment will be spread over 4 to 5 years after getting the regulatory approvals

(CMP Rs , 52 week H/L Rs , BV Rs , FV Rs )

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