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“In India, companies may fall sick, but promoters rarely do!”

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June 24, 2015

RBL Bank Ltd IPO @ Rs 200 & a Listing Market Cap of over Rs 8000 crs

RBL Bank Ltd (earlier The Ratnakar Bank Ltd) has finally filed it’s Draft Red Herring Prospectus with SEBI yesterday,Tuesday,June 23,2015

The  IPO will in all probability be in a Band of Rs 190 to Rs 200


FY 15 Year End Networth is @ Rs 2200 crs with Book Value @ Rs 75 levels with Equity at  Rs 300 cr levels.PAT was Rs 207 crs giving an EPS of @ Rs 7

The indicated IPO Pricing of  Rs 200 would mean PE of just under 30 times and a PBV of 2.7

Post IPO the Networth will move to Rs 3300 cr levels with Equity @ Rs 355 crs and Book Value rising to Rs 93 levels

The Listed DCB Bank @ Rs 129(FV Rs 10) is more or less similar in size to RBL Bank.In FY 15 it earned Rs 191 crs on an Equity of Rs 282 crs giving an EPS of Rs 7.2.The Networth is Rs 1534 crs giving a BV of Rs 54.PE & PBV are 18 and 2.4.Market Cap is Rs 3654 crs

Post IPO  of RBL  a similar 2.4 PBV if applied  on the post IPO BV of Rs 93 will mean a listing level of Rs 225…more likely Rs 250

Market Cap of RBL Bank on Listing should therefore be over Rs 8000 crs 


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 ! read more

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