GTL Infra - Mkt Overreaction or Deeper Malaise

Did some back of the envelope calculations ...
   

plz share your comments/suggestions ....

   

1. No GTL Infra Shares are pledged as per shareholding pattern
2. Some rough calculations
1. GTL has 32000 towers (http://www.gtlinfra.com/towerportfolio.asp)
2. Recent transactions in the space at ~Rs 0.45crs
1. ESSAR – ATC (http://articles.economictimes.indiatimes.com/2010-02-24/news/28400846_1_etipl-xcel-telecom-atc)
2. GTL- Aircel (http://www.business-standard.com/india/news/gtl-aircel-tower-deal-confirmed-for-rs-8400-cr/382725/)
3. Assuming 30000 operational towers and a per tower value of Rs 0.32crs (30% discount), you get 9,500 crs Rs as EV, Debt of ~7000 cr Rs – Equity Value of 2500 crs Rs vs Mkt cap of 1700 cr Rs….(http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/gtl-debt-management-of-arm-remains-crucial/articleshow/8932317.cms)

Clarifications by mgt

• Manoj Tirodkar: No, FCCBs are not due till November next year. So the question of default does not arise. It is all nonsense. The fact remains that today as a whole from an investment standpoint, it is completely at a standstill for telecom generally and our FCCBs are not due till November 2012. So the question of default does not arise.http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/shares-in-gtl-gtl-infra-tank-promoters-deny-selling-stocks/articleshow/8922760.cms
• FCCB due in nov 2012 is ~Rs 1000 cr
• http://economictimes.indiatimes.com/opinion/interviews/gtl-promoters-have-not-sold-any-share-manoj-tirodkar/articleshow/8924960.cms

    

Some concerns on the mgt front - GTL used to be a part of the ketan parekh stocks (http://www.moneycontrol.com/news/business/gtl-at-63-month-lowfallrisefallthe-co_558689.html )

Timken India As a delisting candidate

Had started investing in the counter from 180 levels, didnt get an opportunity to post it....

Please share your comments and suggestions regarding Timken India

had a look at the counter as a delisting candidate vis-a-vis phenomenal spurt in the volumes in month

• Global experience – Annual report shows List of subsidiaries showing ~69 subsidiaries worldwide out of which only 2 of them incl India are listed 
• 80% sh holding has to be brought down (because of the 25%  public float norm)
• 3 yr window for companies to comply with 25% sh holding norm - No hurry for mgt, however with their expansion plans they might have to shell out more later

·         http://www.ias100.in/news_details.php?id=158

·         http://www.moneycontrol.com/news/cnbc-tv18-comments/25-min-listing-norm-effective_453110.html

• Shifted entire India holding via Mauritius in 2010

A few unanswered questions - Mgt shareholder unfriendly or other plans ???

• 200cr lying in Balancesheet in Income Funds - why not being distributed as dividend or (is it being kept for delisting??)
• Capex happening thru Timken Chennai which is 100% held by Timken... Timken Chennai to do contract manufacturing for TImken India  
• http://smartinvestor.in/market/Smartmoves-68925-Smartmovesdet-Timken_plans_Rs_200_cr_capex_to_meet_wind_cement_sector_needs.htm
• http://www.moneycontrol.com/india/messageboardblog/message_thread/4399321/6199321
• Ploy to shift profits to 100% subsidiary or prevent further developments in Timken India till it is delisted 

• Ward timken (Chairman Timken) talks about delisting or diluting its stake- Apr 11, 2011
• http://lite.epaper.timesofindia.com/mobile.aspx?article=yes&pageid=6&edlabel=ETBG&mydateHid=13-04-2011&pubname=&edname=&articleid=Ar00602&format=&publabel=ET
• http://www.moneycontrol.com/india/messageboardblog/17/36/message_thread/4501670/6301670
• No denial by mgt like last time in June2010 - However why would mgt preempt notice of delisting (if any) - it will only lead to higher payout from their side for delisting??

Valuations - as per relative valuations it is the most expensive among its peers SKF and FAG

                       

Sh Holding Pattern - easily doable

• 80.02% holding - so out of the balance open offer of 19.98, they will require to get atleast 50% i.e. 9.99%
• 4.72% with Institutions
• 1.57% body corporates
• 0.64% individuals holding >1 lakh Rs
• ignoring 0.19 held by NRI's - they can mop up - 6.93% from smart investors
• out of the balance 12.86% (held by public <1 lakh) +.19 clearing membes - 13.05% - they require 23% tender to get balance 3.06%
• HDFC, DSP Blackrock (acquisition price ~175 in nov-dec 2010) and UTI are invested
  

If you analyse the share holding distribution given in 31st Dec 2010 report

• A reverse cumulative calculation will show that holders between 500-1000 shares will almost complete the required ratio of 90%
• Balance <1% can be easily got from retailers holding b/w 1-500 shares

Movement in top 100 shareholder list in last one month

Previously top 100 shrhldrs held 86.4% shares whereas the number has increased to 86.9%. Moreover, if we look at the top 50 shareholders, very few have actually sold out

New names who have bought over last 1 month include Citigroup Mauritius with 2.9 lakh shares, Puneet & Yadu Dalmia of Dalmia Bharat Cement group holding 75k shares…

In a nutshell,

Unlike Binani - no significant group of shareholder alone can lead to delisting - without a good price on offer - delisting unlikely to happen
however Share price might continue to languish incase delisting gets delayed for the period of 3 years (more of time risk than event risk).