Value picking in Holding Companies !!!

This is an area of Fundamental analysis and finding stocks which have huge intrinsic value.

Holding companies generally quote around 30-50% of the valuation of their holdings. In many cases this stocks would also go to 10-20% where in they could get interesting. Also many of the holding companies do not have business and only income is through dividends/payouts.
As majority of the core holdings are into group companies there is hardly a chance of liquidation of assets or stake sales which may suddenly boost up the valuations. So these stocks should be mainly defensive picks and one can only expect 20-30% upmove in 1 year in line with market sentiments. As downsides are limited the stocks become interesting for safe players.
Earlier i had made my call on J K Agri genetics and Maharashtra Scooters. In the two Maha Scooters is up 40% from recommended price but J K Agri is up only 5-10% !!!
So things take time to give returns in this space.
Again listing a few stocks !!!
J K Agri genetics / Bengal and Assam Company Ltd / CHI Investments
Now lets get into the details of all !!

J K Agri Genetics
As per the data available on the exchanged J K Agri holds major stakes in all J K group companies.
This roughly constitutes to around 90 cr in J K tyres and 50 cr in JK Lakshmi Cements.
Overall the company has 180-190 crores or more of holding value. Apart from that such a holding would generate some amounts of dividends.
Company does work in the Seeds which is an interesting business.
Current Market cap of the company : 60-65 crores. So its quoting at 30% of holding value. But it also has a business which could have some more value.
Investors looking for 20% or more annual returns should buy at 180-150 zone.
Bengal and Assam Company Limited.
This is the main holding company of the J K group with majority stakes.
This is much more value as apart from the listed J K Group it also holds many other investments !!!!
If i were to take those calculations it would take me days to do that. Listing down few important points.
1) Current Holding Value in JK group companies - 350 crores.
2) Holdings in other group companies which hold JK group stocks - namely Fenner India which cannot be valued.
3) Other quoted investments in equities/MFs and some unquoted investments
4) Apart from that there are many subsidiary companies which may be in other business.
Search more for details in the annual report link -
Current market cap : 145-150 crores
I would expect the valuation of holdings would be anywhere between 350-650 crores. Apart from that there could be certain value to subsidiary cos and more to dig into this company.
Investors can look to accumulate the stock between 175-150 with a view of 20-30% or more in medium to long term. Stock can surprise heavily on the upside too πŸ™‚

CHI Investments
This is yet another holding company which is quoting at a discount. Will soon put up a detailed view.
This stock can also appreciate by 20-30% in the long run.
Also in good times these stocks can surprise on the upside. Last bull market saw JSW holdings, HB stockholdings and many such cos shoot up.
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  1. Nirav
    January 20, 2010

    Excellent Start UP Nooresh Bhai..Good

  2. N. Sundar Shankar
    May 6, 2011

    Nooresh Bhai, Nice to read your analysis. But where are your updations.

    1. nooresh
      May 6, 2011

      Hi Sundar ,

      After the update in the next 1 year J K Agri and Bengal and Assam doubled or more. CHI investments dint do much.


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