In such cases one will need to see the finer details. Many of the brand/trademark is owned by Biswanath Hosiery Mills, Lux Industries was paying a small royalty to this company for use of this brand. The ownership of BMH is once again with the senior Todi’s and their immediate relatives/spouses.
A protracted legal battle is likely to get stuck for years given the ownership structure. What could happen is a gentleman like agreement in the meanwhile to operate the businesses in parallel till they figure the exact details of the aspects out. Demerger and separation is a lengthy process even in cases where the separation is amicable.
The stock price right now assumes nothing positive can happen to the business over the next 1-2 years, growth if any will be hygienic and not the 20%+ p.a. that the business was delivering over the past many quarters. The stock market tends to price in the expected pain upfront rather than wait for the real scenario to play out. The key question to ask right now would be – what is being priced in?
Volume growth printed a decent number in Q1 after 2-3 Q’s of stagnation.
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