Ganges Se­cu­ri­ties Ltd

Money Times - - Best Bet -

(BSE Code: 540647) (CMP: Rs.57.50) (FV: Rs.10) (TGT: Rs.100) By Bik­sha­p­athi Thota

Ganges Se­cu­ri­ties Ltd (GSL) was in­cor­po­rated on 30 March 2015, in or­der to run busi­nesses re­lated to in­vest­ments, tea, prop­erty and pro­fes­sional ser­vices. It is a Birla group com­pany, which was de­merged from Up­per Ganges Sugar & In­dus­tries Ltd (Up­per Ganges) last year. Pur­suant to a Com­pos­ite Scheme of Ar­range­ment by the reg­u­la­tory au­thor­i­ties, the tea and in­vest­ment busi­ness of Up­per Ganges was trans­ferred to GSL. Sub­se­quently, its tea busi­ness was trans­ferred to Cin­na­tol­liah Tea Ltd, which owns a Tea gar­den at North Lakhim­pur in As­sam with an in­stalled ca­pac­ity of 12.5 lakh kg of black tea. Cur­rently, GSL is en­gaged in in­vest­ment ac­tiv­i­ties which mainly com­prise in­vest­ments in Ut­tar Pradesh Trad­ing Com­pany Ltd, a RBI-reg­is­tered NBFC pri­mar­ily en­gaged in in­vest­ments in var­i­ous mar­ket and other se­cu­ri­ties.

Gen­er­ally, hold­ing com­pa­nies trade at 70% dis­count to their NAV. The quoted hold­ing value of GSL is Rs.280 crore (Rs.255 crore of hold­ings and Rs.25 crore of bank bal­ance), i.e. 82% of its hold­ings value. It is a debt-free com­pany.

Apart from be­ing a hold­ings com­pany, it runs its tea busi­ness through Cin­na­tol­liah Tea Ltd. In FY18, its tea busi­ness con­trib­uted Rs.5 crore to its bot­tom-line. Even if take the value of its tea busi­ness as Rs.100 crore on a con­ser­va­tive ba­sis, its to­tal value works out to Rs.380 crore, which gives a value of Rs.350/share. At 70% dis­count to its NAV, which is a usual trend for hold­ing com­pa­nies, its fair value works out to Rs.105/share. Cur­rently, the stock trades at 0.5x book value and 5.5x to FY18 earn­ings, which is very at­trac­tive amongst hold­ing com­pa­nies. Fur­ther, the prospects of GSL’s in­vest­ments and tea busi­nesses also look bright. The stock has the po­ten­tial to dou­ble within a year.

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