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Wednesday, 7 March, 2007

HB Stockholdings Ltd

Company Details: Kotak Securities

Few facts to begin with.

Current Market Price (As on March 7, 2007): 26.75
Market Cap: 68.56 Crores

The company is in the business of investing. They try to make money by investing smart. They invest smart all right but they don't always make money (evident from last years result).

They have a huge portfolio with. Major holdings in Jaiprakash Associates Ltd and IFCI. Apart from these two they have a three page long list of stock under "investments" schedule.

Here is the interesting part. HB holds about 140 crores of Jaiprakash Associates Ltd.

If someone can buy out HB Stock and liquidate JP at current prices (although JP has taken a toll in the recent weeks), the money made would be two times the money put in. Basically its like paying 68 crores to pick up 140 or more crores. This investment has been with them for over a year and hence it's tax-free.

I somehow don't see any catches. May be am turning blind to the risk free short-term profit.

I was told that company is not making any profits and hence not lucrative. In my opinion, since HB is in the business of investments, they can't really make profits. And they shouldn't aim to make any profits at all (The power of compounding !!!!).

All they do is buy stocks and forget about them. After 5,6,7 years they wake up and suddenly realize that their holdings have turned into multibaggers. Reminds me of one Mr. Buffet ... he does essentially the same thing - buys a stock, forgets about it and one day he realizes he’s become a billionaire. And no I am not trying to compare HB to Berkshire Hathaway.

Question at the end of all remains ... Why aren't people like Jhunjhunwala, Prof. Bakshi buying this company out ...? Why cant this company be bought out and all the holdings liquidated ...? There are simply tons of wads of money on the table and its there for the taking.

And no ... I dont have any holding but yes, few friends have HB in thier portfolios.

PseudoSocial@gmail.com

4 comments:

nals said...

u bashtard guy!
who are these 'few friends' who hold HB Stock

Anonymous said...

HB Stockholding (HBS) is one of the worst companies in corporate governance. It has not sent annual reports after March 2003! As per the BSE site, for the year ended March 2005, HBS earned a net profit of Rs 1.54 crore against its capital of Rs 24.32 crore, thereby yielding an EPS of 61 paise. In the last quarter (ending December 2005) it posted a net profit of Rs 91 lakh which gives an annualised EPS of Rs 1.51 which too can’t justify the scrip’s current price of Rs 24. Then, what is the driving force behind the scrip’s upward movement? Nothing has been heard from the company, nor do we have the company’s last annual report to gauge anything. However, one thing is certain. HBS used to hold a lot of scrips in its portfolio which might have appreciated handsomely now. For instance, as per the 2003 annual report, HBS held 30.52 lakh shares of Jaiprakash Industries whose cost was only Rs 10.76 crore. If the company continues to hold the same shares, at the current market price the investment value would have gone up to Rs 142 crore.
Since these investments would attract long term capital gain tax (as per the 2006-07 budget) from next fiscal onwards, the company may encash all the capital gains this year itself. This may give a hefty lift to the company’s bottom line for March 2006. The promoters’ creeping acquisition of HBS’ shares (from 38 percent to 46 percent) in recent times probably would confirm this. However, whether the promoters distribute the capital gain benefits to the shareholders is a million dollar question.

Anonymous said...

"http://www.sebi.gov.in/cmorder/creditcap.html"

Refer the above post from the SEBI site, it talks about all the entities that are related to HB stockholdings.

For God's sake, do not mention Buffet and HB in the same article

Ravi S Ghosh said...

This stock is selling at Rs 20. Isn't it more tempting to buy compared to when it was Rs 69?

Any insight?