Posting in the forum after a gap. How are you all?
I was wrapping my head around this since yesterday after seeing Shreyas shipping at PE 2.5.
A business (post DP deal) with OPM=40+%, ROE=30% and ROCE=40% and DE=0.33, with no WC requirement at PE 2.5? Markets can be inefficient but can it be so crazy? Why not go in for an opportunistic investment until it catches up and valued correctly by the market? But can the market ignore such a no-brainer opportunity for so long? I was confused.
However, after reading through Aug 2020 conf call transcript, I see a Seemant from Unifi Capital questioins the cheap valuations at which the businesses are sold and that the deal is not in favour of minority shareholders, the same point already mentioned in this thread.
I also can see the same news in ET:
The promoters had also sold a pvt entity as part of the deal and got a 17% stake in DP world. Could there be some foul play by the promoters to hide the actual money involved in the deal from the minority shareholders? Could this be the reason why the stock is not catching up? Recall LEEL? I do not know, it may be or may not be true, however if there is any chance of this to be the truth, which one can never know for sure, I wouldn’t dare to touch this stock. From a risk management angle, finally I decided to drop this one.
Unifi had exited the stock as well, back in Dec 2020.
What do you all think? view points are welcome.
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