Hope you are doing well.
Today we released new Special situation opportunity for our Alpha + members and would like to share with you details on the same.
The detailed note can be accessed HERE
Special situations constitute opportunities arising out of announced corporate transactions such as De-listing, Open offers, rights issue, de-merger, bankruptcy restructurings, etc.
In markets, every investment opportunity comes with certain risks; however, if carefully analyzed, one can always participate in opportunities with seemingly low downside and a potential for good upside.
At the same time, the holding period in general for such opportunities is 3-5 months.
Some details about the latest special situation opportunity are as follows:
Demerger based Special situation opportunity
The opportunity we are talking about has the following attributes:
- It’s a Demerger based opportunity
- Market cap < 1000 crore
- The company is currently running 2 diverse businesses and intends to demerge 1 of the businesses and list it separately
- Both the businesses are growing and profitable; however, the one getting demerged is growing faster and significantly more profitable
- The business getting demerged has reported 200% + growth in sales and almost 600% growth in profit since FY 15
- The company has surplus cash and equivalents to the tune of 20% of the market cap of the company
- Valuations reasonable at less than 10 times pre-tax TTM earnings
We believe, when listed separately, the business with superior profitability and growth can command higher valuations. Thus, the sum of the parts can be greater than the whole.
No opportunity is risk free and here the primary risks are: sustainability of profit as the business can be lumpy, and impact cost as being a small company the average daily volume is low.
Overall, at around current price the risk-reward ratio seems in favor of the shareholders and have therefore initiated the opportunity for Alpha + Members
For better understanding of the Special Situation Opportunities, you can read our Presentation on the case studies shared with the students of MDI, Gurgaon, a Premier Business School:
- Special Situation Investing, 2020 – LINK
Disclaimer: The securities quoted are for illustration only and are not recommendatory.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
Details of Associate: 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.
Address – 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur – 208002, Contact No. – +91-7275050062
Compliance Officer – Mr. Ekansh Mittal, +91-9818866676, ekansh@
Grievance Redressal – Mittal Consulting, grievances@
“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.
“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”
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
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.
Disclaimer: You can access it here – LINK
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 – No
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