This is the first time I am starting the thread, but I am diverging from the usual aspect of running the entire business story, since my investment thesis is based purely on balance sheet. Risks are highlighted with respect to my thesis, rather than that for business. I have started the thread because I couldn’t find other for this company. Also, seniors and moderators, I am not sure about the categorization since I am not betting on earnings growth of this stock. Sincere apologies for missing if such categorization exists
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Den Networks is majorly hold by Reliance (~67%), followed by ~7-8% by founder promoter Mr. Sameer Manchanda
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The business has generated good amount of cash from operations, with historical performance as follows -
Column 1 | Column 2 | Column 3 | Column 4 | E |
---|---|---|---|---|
TRENDS (INR Cr) | 10 YEARS | 7 YEARS | 5 YEARS | 3 YEARS |
PAT | -194 | 589 | 901 | 633 |
CFO | 1335 | 1064 | 838 | 352 |
CFO/PAT | -6.87 | 1.81 | 0.93 | 0.56 |
Its balance sheet currently is as follows -
Column 1 | Column 2 | Column 3 | Column 4 |
---|---|---|---|
Equity | 3256 | ||
Non Current Liabilities | 70 | ||
Lease obligations | 26 | ||
Deferred revenue | 32 | ||
Provisions | 12 | ||
Current Liabilities | 432 | ||
Lease obligations | 2 | ||
Trade payables (Inc PPE payables on purchase) | 277 | ||
Provisions | 3 | ||
Employee dues | 5 | ||
Deffered revenue | 49 | ||
Statutory remittances | 28 | ||
Indirect tax + others | 69 | ||
Total Liabilities | 3759 | ||
Non current Assets | 888 | ||
PPE & CWIP | 432 | ||
Goodwill & Other intangibles | 159 | ||
Investments in operating subsidiaries | 67 | ||
Other financial assets | 3 | ||
Deferred & Non current tax assets (Net) | 156 | ||
Other non-current assets | 70 | ||
Current Assets | 2870 | ||
Investments in quoted mutual funds & bonds | 1359 | ||
Cash in FD | 1140 | ||
Cash in Hand | 16 | ||
Cash kept as margin | 178 | ||
Trade receivables | 87 | ||
Doubtful advances | 13 | ||
Unbilled revenue | 19 | ||
Other financial assets | 5 | ||
Balance with govt authorities | 47 | ||
Other current assets | 6 | ||
Total Assets | 3759 |
Its current Market Cap = ~2380 Cr
So, considering only net cash in hand and quoted investments amount to ~INR 2515 Cr, do we have a graham style bet? Where a business generating ~INR 200 Cr profit year on year is available for free? In my opinion, considering market won’t give much terminal value to cable network business, this should go for a PE of maybe 6-7? That itself- gives target market cap of ~3800-4000 Cr
Risks:
- Reliance holding - Not sure how and what they will do if they choose to take this private. I am not sure about their intentions for minority shareholders
- Wrong about terminal value assumptions - Maybe 6-7 PE for business is also too optimistic and it won’t be valued at that
- Lack of some insider info: It has been such a value bet over last 2-3 quarters at least, if we check its balance sheet and market cap. Somehow, it has escaped till now despite presence large number of quantitative formulae based screeners and investors
Request views from everyone. I am not invested yet since I am not sure why such a bet will exist for so long, and hence I think there is some point I am missing
Disclaimer: I am not invested in this yet, but have been tracking for some time now.
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