Sorry I am a bit lost here with your calculations whilst evaluating the company.

You say
1) market cap of Sical is 900 cr so 50% is 450 cr. 1/6 of 450 is indeed 75 cr (as you suggest) so the value of the holding should be 5/6 (discount = less by 1/6) which is 375 cr.

2) Similarly for the Mindtree valuation. 16.6% of 10,500 cr is 1743 cr of which 5/6 is 1452.

Both together contribute 375 + 1452 = 1828 approx. Add cash of 197 = 2025 so you get the other parts of the company for 6756 - 1828 = 4732 cr. Then add 2100 cr for debt EV = 6832cr (as opposed to your calculation of 7900 cr).

The difference in calculations is that you discount the value of the holdings of Sical and Mindtree to 1/6 whereas I discount by 1/6.

Maybe I am doing something wrong. Please advise.

Nevertheless, the story does not look good to me with the political angle and capital allocation.

BTW, apart from Rakesh Jhunjhunwala I believe his mentor Radha Kishen Damani is also an investor through his Derive investments. But why go by them. RJ also invested in A2Z maintenance and Bilcare.

Regards
Kumar

Transaction banking is ofcourse going to be more critical because in developed countries the core banking segment is pretty stagnant because of stable population base.

All of these transaction banking , core banking , risk management are individual components with a plug and play feature. This is the basis of what in IT is called as component based architecture.

No bank will go for the entire suite as the risks would be too high. So you plug in areas with maximum demand. E.g. IDFC has chosen IDA for its transaction banking component only while its core banking suite will be something else.

Another info Rakesh Jhunjhunwala has further upped his stake in IDA as per the latest shareholding pattern. That is the reason for the current upswing.

Few doubts
The company doesn't seem to be having any land holding. As per BS Mar 2015, Tangible assets of about 2 cr and i can't find any freehold land.
As per their presentation, some of the projects , it is mentioned DA-Arvind land. I assume the land belongs to either Arvind ltd or another group company. But i don't understand then why the percentage ownership is 100%.

The long term and short term advances are very high.

Understand that the company intends to develop 14 m sq ft of space. And it is expected that the cost of construction will come from sales proceeds ( advance from customers ) but as of 31 mar 15 advance from customers is mentioned as only 2.75 cr ( 4 cr in mar 2014) which seems pretty low.

In order to execute the projects the company needs to sell heavily in advance and same should reflect in Balance sheet.

Also need to monitor inventories. Mar 15 it stands at abt 76 cr.

Styrolution ABS - Margin should continue in double digits barring any inventory losses - Jun-qtr Concall update

• Q1 saw Volumes growth of 15% as compared to Industry volume growth of about 13%. The company was able to gain some market share. However due to lower crude oil prices, there was a negative value growth which led -2% decline in Revenue during the qtr.

• Margins improved on back of lower crude oil prices, better product mix and inventory gain of raw materials. While it’s difficult to project on inventory side, management expects the margins should continue to be in double digit barring any inventory losses to come in due to lower crude oil prices.

• Capacity utilization rate is around 80% in specialty chemicals. The company has increased the capacity of ABS from about 80 ktpa to around 1.1 lakh tpa in Oct'14. SAN capacity remained at 1 lakh tpa which is also used for captive consumption to produce ABS. Every 100 ton of ABS 75 ton of SAN is required. To that extent company is consuming SAN and balance is sold in external market.

• In terms of market share, overall, the company has market share of about 44% in ABS in India and about 60% in SAN. In terms of sales, about 70% comes from specialty chemicals and rests are from commodity products for the company. The sales should inch up towards specialty products which have nearly double the margins that of commodity products.

• Subsidiary company Styrolution Pvt Ltd is engaged in business of producing Polystyrene. Management expects the company to do well in FY16 given poor base of past couple of years and some visible demand recovery. Company has invested around Rs 100cr in Styrolution India Pvt ltd which has turnover of around Rs 500cr in 12 months ended Dec'14.

• Globally, the Parent is a market leader in ABS and is second to none in EU and US. In Asia, there are competitors like LG. In India, there is a local competitor called Bhansali Engineering and about 20% of total demand of ABS is met through imports.

• As per the management, they are not focused on exports and their entire focus remains on India and Make in India concept. Going forward, new products and mixtures have been aimed and will be tested. These products have higher realizations and increase the overall productivity of consumers as well. Overall, for FY16, it's difficult to say the revenue growth as it depends upon crude oil prices, but management expects strong performance on profitability to continue.