The stock Bengal & Assam Company was earlier mentioned in a posting of investing in Holding Companies – https://nooreshtech.co.in/2010/01/value-picking-in-holding-companies.html
A recent research done by a very experienced deep value investor – CA Laxmikant Kabra has actually surprised me that such a deep value gem is available in the current market scenario.
Below is the synopsis of the excellent research pick by CA Laxmikant Kabra. ( All credits to him for his superb in-depth research).
“I have done a small research on the company called as BENGAL & ASSAM COMPANY LTD. I hereby invite the views and opinions of my friends/ other group members on the same.
I would like to tell you about one stock which can be considered as "CASH AVAILABLE AT A DISCOUNT" and the name of the company is BENGAL & ASSAM COMPANY LTD. ( J K GROUP'S HOLDING CO.)
This is over 63 years old company. The consolidated EPS of the company for the FY 10 is approx. Rs. 70/- and estimated EPS for the FY 11 is likely to be Rs. 85 to 90. The current Market price of the Stock is Rs. 225/-
Other Highlights of BENGAL & ASSAM COMPANY LTD. (BACL) are as under:
BACL owns 90% in Fenner India Ltd
Fenner India is an undisputed market leader in the manufacturing and sell of V Belts, Oil Seals, Eng products etc since years. There is no nearest competitor of Fenner in India. Fenner's capital is Rs. 2.48 crs and Reserves are over Rs. 225 crs and Annual Sale is over Rs. 300 crs. Book Value of Fenner is approx Rs. 900 per share.
Other Subsidiary of BACL are
Southern Spinners & Processors Limited
Modern Cotton Yarn spinners Limited
Panchmahal Properties Limited
LVP Foods Private Limited
Dwarkesh Energy Limited
Acorn Engineering Limited
Besides the above, company is holding several other investments in many blue chip listed and unlisted companies.
Total Cost of BACL's investments as on 31st March' 2010 is Rs. 375 crs (Approx.)
The Book Value of BACL is approx. Rs. 500/- per share as on 31st March' 2010 and the intrinsic value per share could be in the range of Rs. 2000 to 3000 per share.
Besides this, BACL owns sizable stakes (ranging from 30% to 50%) in other flagship JK group's listed companies such as JK Lakshmi Cement, JK Paper, JK Tyre, JK Agri genetics, JK Sugar Ltd etc.
BACL owns several properties (either directly or through subsidiaries) worth hundreds of crores.
Considering the facts stated herein above, i strongly feel that BACL shares at Rs. 225 means "CASH AVAILABLE AT A DISCOUNT.
Best Regards
CA. Laxmikant Kabra
Some of my comments:
The last time i checked the stock the holding value of only JK group of companies was 350 + crores.
As of now the book value of the company is Rs 500 as per March 2010.
Fenner India + other holdings could be worth quite a lot of money.
If a detailed check is done the value of holdings could at least by 10 times the current market cap ( It could be much higher if the properties/subsidiary group companies are added totally ) . Generally holding companies trade at 30-50% of value of holdings. So in that case the stock should trade at 2-3 times higher than the current market price.
Also if we were to look at the earnings of the company it should quote much higher.
In brief its one hidden gem with extreme deep value. The stock could give a return of 2-5 times in the next 1-2 years as the story of the company is known.
Small Cap Coverage:
I would cover the above stock in the same category – Small Cap Coverage which is an attempt to find small caps with an excellent growth potential with long term view. But due to the technical bias at times it does move up in short term. Investors with 1 year or more of patience would create wealth out of the same.
The recommendation would be to buy Bengal & Assam Company at current levels and even if it moves up higher as volumes are low so not enough quantity available but a must stock for deep value pickers with patience.
A conservative target price would be 100% or more in next 1 year. There is nothing to lose as in the long run downside is very limited with that much value.
Technically the stock has hit a fresh high which suggests a quick move to 300 is possible.
Would invite views on the stock from the readers!
Cheers,
Nooresh
Team Analyse India
August 10, 2010
Nooresh Sir,
Do you know icici code for this company? I am very sorry asking this question. I didnt code in icici.
Regards,
Patil
August 10, 2010
BENASM
August 10, 2010
Hello nooresh ,
Awesm stock u have found after ion exchange ,Bombay burmah & kovai med….This stock looks like having potential to move to 500-600 zone in long term play…..Even if it moves to 1000 odd levels in next 3-5 years,That won’t be a surprise….Thanks for sharing with us….You doing a very good job my dear friend
Thankz & regards
Himanshu
Chandigarh
August 10, 2010
🙂 Thanks to CA Laxmikant Kabra to bring it to my notice 🙂 i had overlooked the real value in the stock at 160s 🙁
August 10, 2010
Hi Nooresh, 52 week low is at rs.50 so if market corrects from here, would it go back to its old value?
August 10, 2010
Hi,
If market corrects doesnt mean stocks go to 52 wk low !!! … Get ur basics right
August 10, 2010
I had invested in chi investments …. I think its holding investments were more than bacl … The stock got merged with some other unlisted co. And now four mnths r over its not even re-listed … Can there be the same risk in BACL ….
August 10, 2010
Hi XYZ,
Well why not disclose ur identity.
Well u will get good gains on listing is all i can say 🙂
August 10, 2010
BACL as already reached the 52 Week high. Is it feasibloe to buy this stock at current rate @ 293 Please infor us so we can buy the shares.
August 10, 2010
Hi Raju,
BACL is a buy on every dip and 52 wk high is not the consideration but the value in the stock so please read the report
August 10, 2010
Hi, Nooresh,
I had ceat bought @ 142, shld i keep it or can exit frm it.
also any idea abt IFCI…..?
August 10, 2010
Sir,
Thank u so much for ur kind advise to us, pls let me know ur view abt HINDCOMPOS
REGARDS
SIVA
August 11, 2010
Dear Sir,
I have bought 2000 shares of Nutek India @rs 45 . Tell me the future of the company in short term
June 19, 2012
I have bought nutek india@27 please advice me
June 19, 2012
Exit avoidable stock
August 11, 2010
Nooresh,
can you please comment on Prakash industries, it has been still for sometime.
thanks
bhanu
August 11, 2010
Nooresh bhai,
please plan the finance course in Bangalore
I am eagerly waiting for this.
Thanks!
August 11, 2010
Hello Nooresh,
Kindly update the short term trend and the target for IFCI .I am holding Alok for a pretty long time but it seem to be a laggard .Can i continue holding or should i exit.Any idea about Gitanjali gems.Kindly advise.
August 11, 2010
Dear sir ,
There is hardly any movement in index and its looking as if it is poised for a fall. What to do with mid n small caps. pls mention tgts and stoploss for crew bos , subros , maxwell and trailing sl for time techno as it has moved from 52 to 57 and again coming back to 55. pls mention stops for maxwell as well as i think ur tgt for that is 31 but whats the sl there sir ?
Regards.
Arun
August 11, 2010
First Leasing is moving up day by day? can i buy at this level or buy whne it dips? pleae tell me if i can buy this stock for long term, is so what is the entry and target . please reply. thank you
August 11, 2010
i always get the follwing comment . what is it? kindly tell me what to do.
Your comment is awaiting moderation.
August 11, 2010
The Pop-up asks us to register our Mobile nos and Mail IDs to get Sample calls.. But so far for the last two months, I’ve got mails and messages only regarding your Technical Trainings 🙂
Could something been done to include calls too?
August 11, 2010
Hi Nooresh, another nice holding company recommendation after Bombay Burmah. Both gave strong upmove. Thanks!
Wud like to get your view on another story, this stock also looks undervalued – Sicagen India. The company operates in thin margin business, but the current valuation doesn’t even consider the money received from recently concluded SDB Cisco deal. Please try to check it and give your views.
November 21, 2011
Sirjee, what can I say, I’m the Johny-come-lately to your blog. So don’t be surprised if you see me popping up every now and then going through your old picks 🙂
a) I don’t see Fenner India on NSE or BSE. Has it been delisted in meanwhile? Or if it was never listed, then how do people find about finances of such subsidiary companies and hence their rough equivalent valuation to parent stock?
b) Since your post, stk has reached highs of ~435 and now below Aug’10 levels – ofcourse recent hammering expected with broader mkts. Has anything changed materially in this stock or the story continues to be as good as earlier ?
c) For me, looking at it first time, does this stk sit alongside yr other value picks with heavy-conviction like ABN, GodrejInd, ABN etc?
This stock immediately reminded me of Lynch’s ‘boring name’ criteria 🙂 Bengal & Assam Company (how unimaginative can one get?) 🙂 And they don’t even have an office in either of the states. They are regd in Delhi. So maybe they just want to throw away any potential value-investors off the scent. 🙂
November 21, 2011
Fenner india is a 90 % owned subsidiary. U can see results in consolidated results or on sites which give data of pvt ltd cos.
Holding Value has come down as all JK group stocks have taken a hammering.
Its a small cap stock so will wait for markets to turnaround to have a relook into the stock. Valuations remain attractive but when will returns come is difficult to take a guess.
Generally such stocks come into reckoning when markets are in a good zone. Right now we are not 🙂
Holding companies discount reduces in peak of bull markets. Look at jindal southwest holdings as an example.
November 21, 2011
Thanks. Will look. Have purchased a token share in my PF to remind me for later
“U can see results….. on sites which give data of pvt ltd cos.”
Can you point to some of these? Simple Googling didn’t reveal any.
Apologies for the high smileys/words ration in prevs comment.
April 3, 2012
Hi,
So whats’ your opinion on this company now?
It seems market is in uptrend, with BBTC doing good lately, what are the chances for this one.
Warm Regards
Aman
April 3, 2012
The stock remains a value pick 🙂 cant disclose more