VLS Finance @ just Rs 36 because of a colourful past !~Relax it has Relaxo Footwears!

Promoted way back in 1986 by the  Mehrotra Family of Delhi, VLS Finance @ Rs 36 (Rs 10) has had a very colourful past !

A candid conversation ,which I had,with one of India’s top Bureaucrats based in New Delhi ,since deceased, in the 1990’s  was peppered with really aggressive and loud colourful language by him when it came to the VLS Group and it’s Promoters

In 1994 the Share Price of VLS Finance had recorded a high of Rs 855 !….yes Rs 855 !….. before crashing into oblivion to Rs 2 levels by 2003 !  

But Relax it ‘s Resurrecting through Relaxo Footwears !

…….but should a Minority Shareholder really Relax or should one Buy in? 

Relaxo Footwears ( FV Rs 1) is @ Rs 900 from Rs 800 a month ago and has declared a 1: 1 Bonus with Record Date of July 2,2015

VLS Finance’s Audited Consolidated Book Value is Rs 60+ as on March 31,2015  while Adjusted Book Value is Rs 180+ based on Current Valuations of the Non Current Quoted Investments of which Relaxo Footwears itself constitutes over 70% of the Value in the Quoted Holdings….assuming all such Investments  have been carried over from FY 14  with more added

In fact  Consolidated Non Current Investments at Cost have climbed from Rs 168 crs on March 31,2014 to Rs 211 crs on March 31,2015

The Haircut is a huge 80% between the Adjusted Book Value and the current market price

In fact the VLS Group holds 14.33 % of the Equity of  Relaxo Footwear as of March 31,2015 :

  • VLS Finance holds 4523528 Equity Shares of FV 1  => 7.54 % of the Relaxo Footwears Equity
  • VLS Securities( subsidiary & NSE Member) holds 4075000 Equity Shares of FV Rs 1 => 6.79% of the Relaxo Footwears Equity   
Promoters ,the Dua Family, of Relaxo Footwears hold 75% of the Equity in their Company
We do not know the cost of the holding by VLS Securities but can safely assume that the  Consolidated Adjusted Book Value will be much higher than computed above if the holdings of VLS Securities too are considered.This means the Haircut is much higher than 80%  Interestingly VLS Finance seems to specialise in Footwear Domain Knowledge with it’s huge investment exposure to Relaxo Footwears and it’s Clientele that includes leading Leather and Footwear Manufacturers,Mirza,Liberty & Lakhani

The intriguing observation is that VLS appears to have invested in many listed  companies where it also has a Consultancy Client Relationship !

VLS Finance has shed it’s NBFC Status and is now a member of both NSE & BSE through group companies

Over a Month ago, I had covered it in greater detail on the SCRIP WATCH Module of my company website when it was lower @ Rs 41 when Relaxo Footwears was @ Rs 800…check it out

VLS Finance @ Rs 41 ~ Sheds NBFC Tag as Stocks Beckon ~ 20-May-2015

Now when Relaxo Footwear has moved up by 12.5 % in a month from Rs 800 to Rs 900 levels ,we see VLS Finance move down by 10% from Rs 41 to Rs 36 !

Is it that the Past of VLS Finance remains a Heavy Stone to bear ?

Whatever ! ….VLS Finance may simply not be bothered by it’s Low Market Price !…..It’s making Life Changing Gains on Relaxo Footwear,albeit notional as of now….that should keep the Promoters and Top Management happy

…..why bother about Minority Shareholders now  when it has never done so in it’s history !

Watchout ! ……VLS Finance may just delist at these low levels to keep the goldmine gains in Relaxo Footwears within Promoters !  

Is the Price being kept low deliberately for this !

What can explain such huge  Market Operations Turnover of Rs 4625 crs shown as Income with corresponding Rs 4610 crs shown as Purchases in the Consolidated FY 15 P & L with just Rs 7.1 crs as PAT  !….and some stock kept as Margin with Stock Brokers !…..What is the Nature of Such Market Operations and why indulge in this?

VLS Group’s Big Life Changing Value lies in the Multibagger Value of  it’s Investments in Relaxo Footwears….This has not been unlocked yet and does not reflect in the Share Price of Rs 36

In simple words if VLS Finance Group had to close down today,each Shareholder would get in excess of Rs 200 at least

….and that’s why Delisting at these low level quotes may just be on the Promoters Mind….they hold 44.86% of the Equity of Rs 38.78 crs (FV Rs 10) and even at Rs 50 would need just Rs 107 crs to buy out the remaining 55.14%   

Pit this against already over Rs 400 crs notional gains on Relaxo Footwear holdings in Standalone  VLS Finance…then add the Notional Gains on Relaxo Footwear holdings held by it’s subsidiary VLS Securities

Praying for the sake of Minority Shareholders that VLS Finance Group Promoters redeem themselves by unlocking all such Notional Gains while remaining Listed

Keep a watch on Promoter increasing their stake through Markets…their Holding has already moved up from 43.51% on December 31,2014 to 44.86% on March 31,2015 through buying  an aggregate 365309 shares through VLS Commodities & VLS Capital …..They will continue buying and VLS Finance itself may announce  a Buy Back !…….all of these actions are alert indicators for a possible delisting    

 

 

5 thoughts on “VLS Finance @ just Rs 36 because of a colourful past !~Relax it has Relaxo Footwears!

  1. Dear Gaurav, at end do you support minority shareholders to hold this stock or exit from the stock. With all the value it has I am holding it from past 4 years. What is your take on this. I am very small investor having 2K shares.

    1. Vijay,as you can sense I’m not a great fan of VLS Group as if they really care I am !…having said this,there seems little downside from Rs 36 as long as Relaxo Footwear keeps playing God for them as it has in recent years…However in 4 years you’ve held it you’ve not seen Value unlock and I pray you see it do soon

      1. Gaurav Sir – thanks for publishing the note on VLS finance and subsequent comment. the stock has been on a tear recently. thanks again for publishing such a convincing note, bolstered the retail investors a lot.

        Regards
        Sidhartha

  2. Today, the price of Relaxo Footwears is Rs. 554 (ex-bonus). The market value of VLS Finance and its subsidiary’s holding is worth more than Rs. 1000 crores… :-))

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