Unlisted Shares

Panasonic AVC specializes in trading spare parts for electronics, including LCDs/LEDs and mounted circuit boards for air conditioners, washing machines, and other electronic devices, along with offering related services.

Slump Sale - The company used to produce televisions but decided to exit the TV production business due to intense competition, decreasing demand, and rapid technological changes. The board approved this decision on December 27, 2019, and the TV production operations were officially terminated on December 31, 2019.

Revenue - In FY23, the company's revenue dropped by -48%. Over the past 5 years, it has experienced a total decline of -67.9%, in contrast to the industry average growth of 13.6%.

Investment Thesis - The company's performance has been steadily declining since FY19 due to the slump sale of its major business line. In FY23, the company reported losses of ₹5 cr, up from ₹3 cr the previous year. Additionally, revenue fell by 47%, highlighting the company's inefficiency in maintaining operational effectiveness.

The company undertook a share capital reduction, specifically targeting the shareholding of minority public shareholders, with a proposed payout of ₹27 per share. In December 2023, an investor petitioned to review the transparency of the valuation process. BDO Valuation Advisory LLP subsequently assessed the share value at ₹21.65, while RBSA Capital Advisors LLP valued it at ₹26.27. Taking both valuations into account, the audit committee advised the Board to maintain the payment at ₹27 per share.

However, after a thorough analysis, it appears that the company is significantly overvalued, with an EV/Revenue multiple of 132.8x compared to the industry median of 73.3x. Based on detailed calculations, the intrinsic value of the company is estimated to be Rs. 10.