CHI Investments, one of the investment companies of RPG Group, might offer multiple returns in the future. CHI is a debt free company with huge investments in other RPG Group companies from which it derives income in the form of dividend. Unlocking of the investments will create huge value for CHI shareholders.
Equity Share Capital - 11.46 Cr
No. of equity shares – 1,14,64,508
Promoter holding – 43.51%
Institutions/Corporates – 23.84%
General Public – 32.63%
Market Cap – Rs. 63.02 Cr
Book Value – Rs. 115
Reserves – Rs. 122.96 Cr
EPS (Rs) – Rs. 2.7
52 week high/low – Rs. 68 /Rs. 8.81
CMP – Rs. 54.80
For FY-09, total revenue was Rs 5.21 Cr & Net Profit Rs. 3.1 Cr, thus posting an EPS of Rs.2.7. CHI has posted good results for Q1FY10 with total revenue of Rs.2.86 Cr (2.11 Cr) & Net Profit Rs.2.59 Cr (Rs. 1.98 Cr) which brings EPS to 2.26.
Investments in quoted equity shares – Rs. 388 Cr
Total Debt – Nil
Investment Value per share – Rs. 340
Investment Rationale:
*CHI holds investments worth Rs.388.00 Cr in listed group companies as on 30th June, 2009 while its own market cap is just Rs. 63 Cr. The company is debt free.
Equity Share Capital - 11.46 Cr
No. of equity shares – 1,14,64,508
Promoter holding – 43.51%
Institutions/Corporates – 23.84%
General Public – 32.63%
Market Cap – Rs. 63.02 Cr
Book Value – Rs. 115
Reserves – Rs. 122.96 Cr
EPS (Rs) – Rs. 2.7
52 week high/low – Rs. 68 /Rs. 8.81
CMP – Rs. 54.80
For FY-09, total revenue was Rs 5.21 Cr & Net Profit Rs. 3.1 Cr, thus posting an EPS of Rs.2.7. CHI has posted good results for Q1FY10 with total revenue of Rs.2.86 Cr (2.11 Cr) & Net Profit Rs.2.59 Cr (Rs. 1.98 Cr) which brings EPS to 2.26.
Investments in quoted equity shares – Rs. 388 Cr
Total Debt – Nil
Investment Value per share – Rs. 340
Investment Rationale:
*CHI holds investments worth Rs.388.00 Cr in listed group companies as on 30th June, 2009 while its own market cap is just Rs. 63 Cr. The company is debt free.
*Apart from this, CHI also has investments in other non-listed group companies.
*Compared to other investment/holding companies, CHI is available at just 1/4th of the value of investments it holds i.e. around 67% discount to its investment values. Other investment companies trade at about 1/4th of the value of investments they hold.
*The company majority holds shares of CESC & KEC International, which being in power sector and leaders in their business areas are expected to do well. This will create value for the company.
*CHI Investment receives almost Rs.4-5 Cr as dividend/interest income annually.
Below is given the investment details of CHI.
Below is given the investment details of CHI.
No. of shares held x CMP = Value of investment
1) CESC: 20,56,948 x Rs.380 = Rs.78,16,40,240
Div. income: Rs.4 around Rs.82 lacs
2) KEC International: 41,42,519 x Rs.558 = Rs.231,15,25,602
Div. income: Rs.5 around Rs.2.73 Cr
3) RPG Cables: 22,00,280 x Rs.23.10 = Rs.5,08,26,468
Div. income: Nil
4) Zensar Technologies: 22,22,138 x Rs.232 = Rs.51,55,36,016
Div. income: Rs.4.50 around Rs.1 Cr
5) Saregama: 2,53,444 x Rs.80 = Rs.2,02,75,520
Div. income: Nil
6) RPG Life sciences: 10,64,560 x Rs.48 = Rs.5,10,98,880
Div. income: Rs.1.20 around Rs.12 lacs
7) Harrison Malayalam: 7,28,150 x Rs.124 = Rs.9,02,90,600
Div. income: Rs.1.50 around Rs.11 lac
8) CFL Capital: 38,37,500 x Rs. 4.10 = Rs.1,57,33,750
Div. income: Nil
9) Summit Securities: 31,28,298 x Rs.16 = Rs.5,00,52,768
Div. income: Nil
Total investment value: Rs.388 Cr
Total Div. income: Rs.4.75 Cr for FY08-09
Apart from this, CHI also has investments in many other unlisted companies.
Risk:
Being just a holding company, one has to remember that the investments might not be liquidated for lifetime. Hence it is not right to think that the holding company can be valued equal to the value of investment it holds until and less value unlocking is possible. Having stated this risk, I feel 90% discount is on the much higher side.
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