Thursday, June 23, 2011

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 (
    2. Recent transactions in the space at ~Rs 0.45crs
      1. ESSAR – ATC (
      2. GTL- Aircel (
  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….(

Clarifications by mgt


Some concerns on the mgt front - GTL used to be a part of the ketan parekh stocks ( )

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
  • Shifted entire India holding via Mauritius in 2010
A few unanswered questions - Mgt shareholder unfriendly or other plans ???

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).