Read the following article link below.
The article was written Pre-demerger followed by a Detailed article even @ 60
Latest Update on indiabulls realestate:
http://rupeeneversleeps.blogspot.com/2011/11/indiabulls-realestate-standalone.html
Main Update: On top of the page
Latest update written this months. Dont want to add it here as it mixes it
Additional info:
1)court has convened a date in October for the final hearing.
2)Final record date by December
3)Entire market has drageed stock further lower. continues to remain in deep value zone.Stick to my earlier views on a combined marketcap.
(sorry for ignoring final hearing updates earlier on the site) All info to be read in prospect to Record date which increased timeframe by few months.
value:Remains and increased with fall in prices)
Indiabulls Power Demerger: Great Value unlocked for existing shareholders
Strong BUY @ 112.75::: Downside Limited. Upside: More than 20% in a month by the Record Date
Indiabulls Realestate
Price : Rs 112.75
Market Cap:Rs 4500 Crs
Indiabulls Power:
Price :18.85
Market Cap:3,800 Crs
Whats the BIG Deal????????
1) Existing shareholders are going to get 2.95 shares of Indiabulls Infrastructure and Power Limited. Indiabulls Realestate currently owns 118.5 Crs shares of Indiabulls Power which will subsequently demerged to existing share holders on Record Date
Shareholders Meet on :30th June.2011
Record date to identify shareholders :Mid July around 15-20th July 2011
--------------------------------------------------------------------------------------
WHAT MAKES ITS A BUY @ 112.75?????
1) You may have noticed i hardly write on the blog anylonger due to lack of time and am always back for a mispriced bet.
Indiabulls Realestate offers a mispriced bet primarily on account of Demerger of Indiabulls Power. I see a minimum 20% return till the record date or will be happy taking home only Free shares of Indiabulls Power.
Confused??
Let me show 3 examples as on Record Date
1) Indiabulls Realestae on Demerger : Rs 112
Indiabulls Power & Infra : Rs 50 (Assuming 20Rs a share for IB power and 20% discount=2.95*20rs- 18-20% discount holding company)
So effective value 62rs for indiabulls realestate::::::::::::::Got it wrong::::
Assuming 40rs for indiabulls power :::::72::::::::::::::::::::Got it wrong::::
Whats my calcualtion???
I am not elaborating much on Indiabulls Realestate and Indiabulls Power as it shall take me an hour to detail each and every aspect.
I would consider 80-90 Rs a Base Case Value for Indiabulls Realestate (stanadlone) Considering its Land Bank, Debt on Books and Historic Valuations over lat 3-4 years (Even Today considering entire Realestate Sector Has been literally shaken.
Now add IndiaBulls Power value of 59rs as of today::::comes to ==(80+59)= Rs 139
View 1 ==(90+59)= Rs 149
View 2: Valuing Indiabulls Power stake @ 18-20% Discount===(80+50)= Rs 129
This is the pricei expect around the record date ===(90+50)= Rs 139
THE VALUATIONS ARE ON A BASE CASE SCENARIO AND NOTT FACTORING IN ANY GROWTH.
Now if i mention a fact:
As on Record Date a shareholder will be entitled to shares of Indiabulls Infr& Power LTd and not the listed entity (Indiabulls Power:Rs18.85) Hence factoring a holding company dicount.
But these shares shall eventually be merged with Indiabulls Power and each shareholder will be entitled to 1 share of IndiaBulls Power.
Important Note:
1) Indiabulls Realesate has a good land bank and its consolidated debt shall improve aswell as it consits of loans of Indiabulls power as of today. And on a stanadlone entity should be valued much more than 80rs on a base case scenario.
2)Indiabulls Power: No one is bothered to value this co and shall give good returns in next 2 years. The power plants are doing good progress. It will stay subdued till the demerger according to me.
It offers a good Risk Reward at current Price of Rs 112.75.
A THOUGHT
JUST IMAGINE you bought Indiabulls Power at IPO OF rS45---TODAY YOU ARE GETTING indiabulls power(valued at ipo(45*2.95=132) entire stanadlone realestate company free.
Once the promoters will merge the listed company Indiabulls Power AND iNDIABULLS INFRA&POWER that holding company discount will also diminish
ONE SHALL MAKE MINIMUM 100% Return on both these companies over next 12-18 months
PLEASE DO STUDY THE COMPANY BEFORE MAKING AN INVESTMENT
Sir despite all points written above why has it fallen??
ReplyDeleteyou say 80 worst case and 80 came even 75 came.
how much downside you see? please reply
i have 3000 shares at 117.4
u stick to your message or change due to market fall? should i buy more at current price?
one more question.
ReplyDeleteWhen is power demerger record date?
i have 3000 indiabulls realestate
so i will get 2.95*3000 shares??
hi ravi sorry for the delayed reply.
ReplyDelete3 factors to note
1)the biggest point being a subsidary being transferred from realestate to the power co to enhance the networth. its a negative for standalone realestate company
2)biggest problem assumed by the market is that there will be no coal available for the power venture. here its a calculated assumption for each to take on his own.
3)finally in my opinion i had considered the coal problems but the transfer of networth was not taken into account.
adding all the above by the demerger record date in dec i expect much higher prices.
and considering the assets it owns.i continue to stick to my view in the longer term.
ReplyDeletewith regard to coal there are lot of issues on delay from coal india.
they have an option with lm mittals coal mines but nothing is in public domain.
they using the best of vendors like BHEL instead of chinese vendors.
some say there wont be any coal. so where will cash flows come from?? there could be a delay ofupto a quarter but by the time it delivers stock price would reflect it ahead of time.
by chance it doesnot work out.i dont end up loosing capital but i would loose an opportunity cost.
the plant load factors of gmr gvk lanco continue to remain lower due to raw material availabilty. but one needs to see wat bt tmmrw? if one feels NO coal then its not a buy at any price.(talking about power cos in general) cost 70% of power cos are funded by debt and they need to service the debt.
for power cos in general one might loose the entire capital or end up making multifold returns as capex is 70% done howver uncertainity has cropped up with regard to coal etc. look at various parameters -- coal linkegae que, alternate option. whether ppa signed or merchant??
what price ppas across state. if signed at higher levels need not be a positive give seb balance sheets.global production moef clearance for coal india.
Dear Aditya,
ReplyDeleteAs per my knowwledge, IPL has signed PPA with Maharashtra State Electricity Board for 1200 MW @ levelized rate of Rs 3.26 per Unit and any increase in coal price in directly pass on to MSEB.
I think IPL is great company in formation
yes ur right about the coal pass through but thats linked to escalation of coal india.
ReplyDeleterefer prospectus of indiabulls power for the same.
if it was linked to international coal imports then it would have been a no brainer.....
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