Monday, December 3, 2012

Standard Industries Ltd

Standard Industries Ltd @ CMP of Rs.17.10 ( Market Cap : Rs.110 cr )

Cash & cash equivalents ( nett of debt of 11.53 cr ) : approx 80 cr
Equity : 32.16 cr ( FV: Rs.5)
Promoters : Pradip Mafatlal group
Promoter holding : as per exchange disclosures: 20.12%. Another 38.86% is held by Satin Ltd ( under non promoter shareholding ) which appears to be a promoter related entity.

The company has no major operational business to speak of and is purely an asset monetization play.

Land assets:

1)  Thane - Belapur Road , near Ghansoli station : 62.25 acres.As per lastavailable  information ( may stand corrected), as per prevailing  land usage norms, this can be developed as 20 % residential + 30% commercial + 50% IT park.

They had entered into a MOU for this land which was reversed in the last quarter due to insufficient progress from the opposite party.

In 2008, the company had sold a 30 acre plot here to a subsidiary of Capita Land  Commercial Ltd , Singapore for Rs.230 cr

http://www.capitalandcommercial.com/inITPark.html

2)  Prabhadevi , Mumbai  : Stanroze apartments with a built up area of approx, 30,000 sq ft. This is a sea-front location in one of Mumbai's most prime areas. The building is largely vacant and can be redeveloped. My sense is, if redeveloped, saleable area should be approx 75,000 - 80,000 sq ft. Rates here are approx Rs.30,000 psf.

3)  Sewree - Mumbai : approx  58,275 sq ft plot , wherein the Municipal authorities have notified reservation as a recreation ground. There is some dipute with the municipal authorities regarding the compensatory TDR available against this. This should be about 16,825 sqft  in the worst case scenarion and about 23,300 sq ft in the best case scenarion.

4) Bharuch, Gujarat " approx 10 acre plot . The company has already sought and received shareholder approval for sale of this plot.

5) Surat ( Salt pan land ) : 3200 acres  consisiting of two parts of 2000 acres & 1200 acres. These have been with the company for a long time through its wholly owned subsidiary Standard Salt Works Ltd  though each lease has been for a short period of 5 years. Till now, the company has not faced any lease renewal problem.

Contingent liabilities are about 35 cr which include disputed rent of about 13.64 cr, excise / customes duty of 5.53 cr, & electricity duty on captive power plant of about 13.75 cr.

Management performance leaves a lot to be desired and is a major negative. The stock trades on the BSE & NSE in the Trade to Trade group currently.

Notwithstanding the above, at current valuations, the stock seems to offer a favourable reward to risk ratio. Moreover, dividend yield ( assuming they maintain a dividend of 15% i.e. Rs.0.75 / share) is about 4.5%. 

At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.

4 comments:

  1. In India do you think it is favorable to get into stocks for asset play? I am saying from the view that most of the land deals happen in black money so mostly shareholders can/will go unrewarded.

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  2. Hi

    I notice that they have taken loan of 11cr from some corporate bodies, though they themselves have around 74crs in term deposit. Any thoughts on this?

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  3. Hi Anil,

    it forms a part of their consolidated b/s though difficult to make out the reasoning for that .
    note (iii) on page 56 of the 11/12 AR will give the details.Part of the loan is for Stanplaza from Stanrose Mafatlal Inv & Fin ltd ( listed) which is the holding company for Standard Ind. I understand that Satandard Ind, Stanplaza & Stanrose Mafatlal Inv & Fin ltd have together bought a land parcel of about 104 acres in Pune. ( ref Stanrose Mafatlal Inv & Fin ltd ) AR for this.

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    CapitalStars

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