Summit Securities is a Value buy among holding companies

SUMMIT SECURITIES

CEAT, ZENSAR, KEC, RPGLIFE’S holding company Summit Securities trading at 90% Discount.

RPG – Harsh Goenka group is fast growing business group in India. its presence in Tyres ( CEAT), Information Technology ( ZENSAR), Power & Transmission (KEC) , Pharma ( RPG Lifesciencea), Hospitality ( Spencer international hotels) doing very well in all sectors from couple of years.

About Summit Securities :

Summit securities is a holding company of RPG –Harsh goenka Group. It created in 2009 by amalgamation of group various investment companies CHI Investments, Summit Sec, Octave Investments, Brabourne Ent with RPG Itochu Finance

At that time CHI investments. Summit securities,octav investments,Brabourne Ent are pure quoted holding companies of group shres with market cap around 600 cr merged with un quoted company of RPG Itachu Finance which holds 50% stake in spencer international hotels.( Spencer Hotels has three five star hotel properties in Chennai, Bangalore and Ooty. All of them are managed by the Indian Hotels Co. Ltd, a Tata group firm, which runs hotels under the Taj brand. ) valued 600cr . The valuations were carried out by auditing firm Grant Thornton.

Later company name changed from RPG Itachu Finance to Summit securities and it have below quoted holdings along with its 100% subsidiary Instant Holdings.

Holdings of Summit Securities as on 17/12/15

Company name Qty mkt price Value (in Cr)
CEAT 12469937 1038 1294
ZENSAR TECH 8192495 1092 895
KEC INTL 44307003 150 666
RPG LIFE 4501767 300 135
HARRISON MAL. 2353350 60 15
STEL 2353350 36 9
SAREGAMA 253444 342 9
Total Value 3023 Crores

     Today quoted holdings value 3000+ crore and un quoted hotels property value 500cr  total 3500 crore liquid asset company available at market cap of 350cr ( cmp 326 * 1.09 cr total shares) means 90% discount to actual value and 88% discount to its quoted holdings.

Pros : > Market value of quoted investments 3023 Cr is morethan its market cap. of 350 cr. trading at 88% discount to quoted holdings
 Company is virtually debit free
 Trading at 0.7 times to its book value
 Company has good profit growth of 49% in last 5 yrs
 Company increased its stake in CEAT,ZENSAR,KEC with dividend income of group companies in last 5 years.
 Promoter holding 73% with out any pledge.

Cons : Though company not paying dividend

Compare with other Reputed Leading holding companies :

Quoted Holdings Valuations of Leading companies as on 18/12/2015 in Cr

Company Group CMP holdings value market cap debit discount

JSW holdings JINDAL 980 1820 1093 0 40%
Bajaj Holdings BAJAJ 1714 41980 19080 0 55%
Bengal & Assam JK 535 1780 464 409 66%
Pilani Investments BIRLA 1350 4900 1070 0 78%
Kalyani Investments KALYANI 1560 3196 681 0 79%
Summit Securities RPG 329 3043 358 0 88%

Conclusion : Summit securities available at attractive valuations compare to other reputed holding companies trading between 40 – 80% discount to its quoted holdings valuations .
if u take least of 78% discount also summit market price comes to 600.
Or if u take average of other 5 companies of 63% discount summit market price should be 1040