IMPAL WORKING (back of the envelope)
CORE VALUE @ 300cr (6.5x PE)
LISTED @ 1000cr (850 sundaram)
UNLISTED @ 450cr (365cr Royal Sundaram @ 5kcr)
CASH @ 200cr
Total @ 1950Cr
IMPAL Market Cap = 1060Cr
Approx 45% Discount to actual value Approx 55% Discount to investments and cash if you remove the value of core biz.
I own Sundaram finance since a decade and absolutely love that company, I wouldn’t mind seeing this as an alternative to holding Sundaram Finance + Additional cash flows/Dividends from core biz.
Core biz is trading work with 15% ROCE (ICRA) and hence would give it only a Single Digit PE.
I have valued Royal Sundaram @ 5Kcr – In 2018 aegis gave a 3800cr valuation for 40% stake. There is an optional value of value unlocking here.
The company has a good Dividend payout policy.
I normally completely avoid Holding companies, especially those with minority stake but am willing to consider IMPAL because they have a core biz of their own and I have very high regards and faith for the TVS-Sundaram group.
RISKS.
- Holdco discount widens
- Core biz does not grow/underperforms
- Misallocation of capital
- Underlying companies, SundFin/Royal Sundaram underperform.
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