maverick
09-11-2007, 06:21 AM
The valuations of JSW Holdings are summarised below:
Direct investment holdings (listed):
17.83 million shares of JSW Steel @ Rs928 p.s. = Rs16,548 million
1.23 lakh shares of Jindal Steel & Power @ Rs12,156 p.s. = Rs1,493 million
4.61 lakh shares of Jindal Stainless @ Rs165 p.s. = Rs76 million
0.25 lakh shares of Nalwa Sons Investments @ Rs2,312 = Rs58 million
TOTAL Rs18.176 billion
Indirect investment holdings:
29.12 million shares of Sun Investments (representing 40.73% stake)
11.00 million shares of Jindal Coated Steel (representing 50.00% stake)
Effective stake held in Sun Investments is as under:
Held directly - 40.73%
Held through Jindal Coated Steel - * 5.57%
Total - 46.30%
* 50%*7.71%+50% *(40.73%+ 3.855%)*7. 71%=5.57%
Sun Investments holds 50% of Jindal Coated Steel, which owns 7.71% of Sun Investments
Valuations:
Direct investment holdings (listed):
2.90 million shares of Jindal Steel & Power @ Rs12,146 = Rs39,141 million
3.03 million shares of JSW Steel @ Rs928 = Rs2,813 million
9.30 million shares of Jindal Stainless @Rs166 = Rs1,539 million
0.50 million shares of Nalwa Sons @Rs2312 = Rs1,167 million
0.63 million shares of Jindal Saw @Rs756 = Rs475 million
0.36 million shares of JSW Holdings @Rs748 = Rs273 million
16,500 shares of Shalimar Paints @Rs385 = Rs6 million
TOTAL Rs41.517 billion
Unlisted investment holdings:
JSW Energy:
Sun Investments holds 102.16 million shares of JSW Energy, which translates into 35.35% stake. It holds further % stake indirectly through Vrindavan Services Pvt. Ltd. (which holds 29.69 million shares or 10.27% stake - 21.71% held by Sun Investments directly and another 5.42% effective stake held through Gagan Trading) and Gagan Trading Company Ltd. (which holds 12.66 million shares or 4.38% stake - 39.4% held by Sun Investments) .
Calculations as under:
35.45+(0.2171+ 0.0542)*10. 27+0.394* 4.38=39.96%
Therefore, JSW Holdings' effective stake in JSW Energy is determined as under:
46.3*0.3996= 18.5%
At the minimum IPO valuation of Rs100b (likely number is Rs125-150b), this works out to Rs18.5b or Rs1667 per share of JSW Holdings.
5.21 lakh shares of Jindal Equipment Leasing & Consultancy Services (representing 6.74% stake) - listed investments worth Rs22.10 billion
32,350 shares of Nalwa Investments (representing 7.19% stake) - listed investments worth Rs5.14 billion
67.60 lakh shares of Gagan Trading (representing 39.40% stake) - listed investments worth Rs13.58 billion
78.80 lakh shares of Vrindavan Services (representing 21.71% stake) - listed investments worth Rs11.85 billion
Proportionate share of above - (6.74%*22.10) +(7.19%*5. 14)+(39.40% *13.58)+( 21.71%*11. 85) = Rs9.78b
The stakes held in the above four companies indirectly have not been considered for the sake of simplicity. Further, value of 5% stake in Abhinandan Investments, which owns stakes in most of the unlisted investment holding companies has not been considered, for ease of calculation.
Value of stakes, if any, in JSW Aluminium, JSW Cement, JSW Logistics and Infrastructure will be incremental.
Summary valuation
Value of direct stakes held - Rs18.2 billion or Rs1,638 per share
Value of JSW Energy stake - Rs18.5 billion or Rs1,667 per share
Value of Sun Investments stake - 39.96% of Rs(41.5+9.8) billion or Rs20.5 billion or Rs1,347 per share
Value of investments in JSW Aluminium, JSW Cement, JSW Logistics and Infrastructure - unknown
Total Valuation Rs4,652 per share
Probably the only reason why JSW Holdings has been underperforming Nalwa Sons is that the FII investment limit has crossed 22% and further purchases require RBI permission.
I believe this situation provides an opportunity for value buying as increase in the FII limit to 49% is a matter of time and thereafter the stock is likely to be re-rated.
Direct investment holdings (listed):
17.83 million shares of JSW Steel @ Rs928 p.s. = Rs16,548 million
1.23 lakh shares of Jindal Steel & Power @ Rs12,156 p.s. = Rs1,493 million
4.61 lakh shares of Jindal Stainless @ Rs165 p.s. = Rs76 million
0.25 lakh shares of Nalwa Sons Investments @ Rs2,312 = Rs58 million
TOTAL Rs18.176 billion
Indirect investment holdings:
29.12 million shares of Sun Investments (representing 40.73% stake)
11.00 million shares of Jindal Coated Steel (representing 50.00% stake)
Effective stake held in Sun Investments is as under:
Held directly - 40.73%
Held through Jindal Coated Steel - * 5.57%
Total - 46.30%
* 50%*7.71%+50% *(40.73%+ 3.855%)*7. 71%=5.57%
Sun Investments holds 50% of Jindal Coated Steel, which owns 7.71% of Sun Investments
Valuations:
Direct investment holdings (listed):
2.90 million shares of Jindal Steel & Power @ Rs12,146 = Rs39,141 million
3.03 million shares of JSW Steel @ Rs928 = Rs2,813 million
9.30 million shares of Jindal Stainless @Rs166 = Rs1,539 million
0.50 million shares of Nalwa Sons @Rs2312 = Rs1,167 million
0.63 million shares of Jindal Saw @Rs756 = Rs475 million
0.36 million shares of JSW Holdings @Rs748 = Rs273 million
16,500 shares of Shalimar Paints @Rs385 = Rs6 million
TOTAL Rs41.517 billion
Unlisted investment holdings:
JSW Energy:
Sun Investments holds 102.16 million shares of JSW Energy, which translates into 35.35% stake. It holds further % stake indirectly through Vrindavan Services Pvt. Ltd. (which holds 29.69 million shares or 10.27% stake - 21.71% held by Sun Investments directly and another 5.42% effective stake held through Gagan Trading) and Gagan Trading Company Ltd. (which holds 12.66 million shares or 4.38% stake - 39.4% held by Sun Investments) .
Calculations as under:
35.45+(0.2171+ 0.0542)*10. 27+0.394* 4.38=39.96%
Therefore, JSW Holdings' effective stake in JSW Energy is determined as under:
46.3*0.3996= 18.5%
At the minimum IPO valuation of Rs100b (likely number is Rs125-150b), this works out to Rs18.5b or Rs1667 per share of JSW Holdings.
5.21 lakh shares of Jindal Equipment Leasing & Consultancy Services (representing 6.74% stake) - listed investments worth Rs22.10 billion
32,350 shares of Nalwa Investments (representing 7.19% stake) - listed investments worth Rs5.14 billion
67.60 lakh shares of Gagan Trading (representing 39.40% stake) - listed investments worth Rs13.58 billion
78.80 lakh shares of Vrindavan Services (representing 21.71% stake) - listed investments worth Rs11.85 billion
Proportionate share of above - (6.74%*22.10) +(7.19%*5. 14)+(39.40% *13.58)+( 21.71%*11. 85) = Rs9.78b
The stakes held in the above four companies indirectly have not been considered for the sake of simplicity. Further, value of 5% stake in Abhinandan Investments, which owns stakes in most of the unlisted investment holding companies has not been considered, for ease of calculation.
Value of stakes, if any, in JSW Aluminium, JSW Cement, JSW Logistics and Infrastructure will be incremental.
Summary valuation
Value of direct stakes held - Rs18.2 billion or Rs1,638 per share
Value of JSW Energy stake - Rs18.5 billion or Rs1,667 per share
Value of Sun Investments stake - 39.96% of Rs(41.5+9.8) billion or Rs20.5 billion or Rs1,347 per share
Value of investments in JSW Aluminium, JSW Cement, JSW Logistics and Infrastructure - unknown
Total Valuation Rs4,652 per share
Probably the only reason why JSW Holdings has been underperforming Nalwa Sons is that the FII investment limit has crossed 22% and further purchases require RBI permission.
I believe this situation provides an opportunity for value buying as increase in the FII limit to 49% is a matter of time and thereafter the stock is likely to be re-rated.