Hello Sir,
Hope you are doing well.
On 19th Sep’23, we released Jasch Industries (BSE Code – 500220) Special situation opportunity for our Alpha + members and would like to share with you details on the same.
It was a demerger based opportunity wherein Jasch was running 2 diverse businesses and intended to demerge the industrial gauges business and list it separately.
The terms of the demerger were simple – The gauges business was to list separately as Jasch Gauging while Jasch Industries retained the coated fabrics division.
In lieu of the demerger, if someone bought 5 shares of Jasch Industries before the record date, investor was to be allotted 2 shares of Jasch Gauging and the 5 shares of Jasch Industries were to be reduced to 3.
5 shares of Jasch Industries (before record date) => 2 shares of Jasch Gauging + 3 shares of Jasch Industries
The opportunity turned out well because when we initiated the opportunity on 19th Sep’23, Jasch Industries was trading around 244 and when we eventually closed the opportunity on 28th Feb’24, Jasch Industries was trading around 212 and Jasch Gauging around 661.
The Math is as follows:
- 5 shares of Jasch Industries before demerger @ 244 = 1,220
- 2 shares of Jasch Gauging post demerger @ 661 = 1,322, and
- 3 shares of Jasch Industries post demerger @ 212 = 636
1,322 + 636 is > 1,220 and therefore in this case the sum of the parts turned out greater than the whole.
Why did we initiate this opportunity? – When we initiated the opportunity, the market cap of Jasch was around Rs 275 crore and that included both the businesses. Our view was, with demerger, the Gauges division might end up commanding higher valuations due to its superior business quality.
This is what we had mentioned in our report:
To understand how demerger opportunities work, thought process behind participating in this opportunity, you can read the report (free access) by Clicking HERE
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Disclaimer: This is not a recommendation to buy/sell Jasch Industries and Jasch Gauging and only a way to showcase our research. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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