STEL Holdings Limited (STEL) – Can the 80% discount sustain?
STEL Holdings Limited (STEL)
It is an Investment Company of none other than Goenka Group (Sanjeev Goenka and Harsh Goenka).
STEL holds shares of Group Companies. These Group Companies belong to two brothers
Sanjeev Goenka of Kolkata (CESC Ltd) and Harsh Goenka of Mumbai (Ceat Ltd).
Its investments in Goenka Group Companies are as follows
Ceat Ltd 1,372,835 shares
Phillips Carbon Black Ltd 90383 shares
KEC International Ltd 4685880 shares
CESC Ltd 2493470 shares
RPG Life Sciences Ltd. 502550 shares
Summit Securities Ltd 69815 shares
Spencer & Company Ltd,Chennai (Spencer) (1057135 shares)
Besides above STEL holds shares of some other group investment companies also.
STEL holds shares in Spencer And Company Ltd, Chennai . Some perception is there in the market that this Spencer is Retail chain but actually this Spencer is investment and property play and owns very good properties in south including some hotels having negligible book value for lands.
An extract from the Company History –
Indian Hotels Company Ltd.”The Company signed an agreement with Spencer International Hotels, Ltd. a wholly owned subsidiary of Spencer and Company, Ltd., to get license to operate Connemara Hotel at Chennai, West End Hotel at Bangalore and Savoy Hotel at Ootacamund.” This dates back to the year 1983.
Spencer holds some properties and hotels in south which are leased out and rental income forms a substantial portion in its revenues.
Dividends from investments in group companies form approx.. 35-40% of its revenues.
Against a capital of Rs.9.84 crores Spencer has Reserves of Rs.75.45 crores .It has Cash & Bank Balances to the tune of Rs 11.53 crores in its books. A very cash rich and profit making company.
The discounting should be much lesser in such investment / holding company where there is interest of 2 big industrialists as compared to other investment/holding companies which are owned by rather a single promoter.
If we take the above at current market values on a very conservative basis the NAV for STEL shares should be anywhere around 400/-.
The discounting of more than 80% currently is not justified at all and has to narrow down in short time.
Disclosure: I personally hold the stock so my views may be biased.
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