Hope you are doing good and taking proper precautions.
As you might be aware, besides investing in stocks of good companies for long term wealth creation, another smarter way of making money in stock markets is to participate in Special situation opportunities (SSOs). Have also benefited from this strategy with several Special Situation opportunities like Ineos Styrosolution delisting, Suven life-Suven Pharma demerger, Linde India delisting, Hexaware delisting, etc appreciating by 20-140% in a period of 2-11 months.
SSOs are relatively shorter term (3-4 months) opportunities and based on value unlocking from event-based triggers like de-merger, delisting, buy-back, etc.
So, just a few days back we released our New Special Situation stock report and we think you may find the logic behind the same interesting, as the downside risk is low and there’s reasonable probability of decent gains over the next 3-5 months.
Just to be clear, we are only discussing the thesis because the stock report has been shared only recently with Premium Members and included in the Model Sheet.
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Special Situation Report (Aug’20)
The opportunity we are talking about has the following attributes:
- It’s a delisting based opportunity
- Market cap > 500 crore
- Fundamentally strong company with debt free balance sheet and close to 40% of the market cap of the company in the form of surplus cash and equivalents
- Around 200% growth in PBT in the last 3 years
- Reasonable valuations with operating business available at less than 9 times before tax FY 20 operating earnings
- Promoter company’s market cap is 50 times greater and the sales are 800 times greater than the Indian company
- With good accumulation of cash in the Indian company and depressed valuations, Promoters are looking to buy out the stake of the public shareholders and take the company private
- Downside risk low as the base price is expected to be only 15-20% lower and also supported by strong fundamentals
- On the upside, taking cues from the past cases, 30-50% + is quite possible
Overall, at around current price the risk-reward ratio is in favour of the shareholders and have therefore initiated the opportunity for Premium members.
Wish you good health and wealth.
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Analyst ownership of the stock: In Hexaware and Suven Pharma
Details of Associates: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to retail clients on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690
The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision
A graph of daily closing prices of securities is available at www.bseindia.com (Choose a company from the list on the browser and select the “three years” period in the price chart
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.
Disclosure (SEBI RA Regulations)
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – Yes, investment in Hexaware and Suven Pharma.
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No