Decent Growth in Core Income:- In FY24, the company showed a decent growth of 114.6% in Income earned from its core operations i.e. Income from Dividends from Equity Investment and Interest Income from Debt Instruments Investment
Volatility in Net Income:- Due to the nature of the business, the company has a lot of volatility in its net income due to the change in the fair value of the investments creating a net gain/loss for the company
Debt Free Company:- Company is a debt free company and that is due to the nature of the business of the company
Business Prone to Market Fluctuations:- Company's investments are into stocks and therefore the business of the company is prone to the market fluctuations and volatility of the stock market
Strong Legacy of Management:- The management of the company has been part of the esteemed Asian Paint Group which brings a lot of credibility in the corporate governance of the company
Investment Thesis:- The company does not have an attractive business model (investments in equity shares) as such and has very little equity (20 Lakhs Only). Though the company has strong numbers to show.
The median M.Cap to Sales ratio of the industry stands out at 41.6x whereas the M.Cap to Sales for the company stands at 38.4x.
The median Price to Book Value ratio of the industry stands at 0.38x whereas, for the company, it stands out at 0.37x.
The median Price to Earnings of the industry stands at 33.4x whereas for the company it stands at 23.8x.
Based on our analysis, the share is relatively undervalued, and its target price should be around Rs. 2,93,478.
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