Hemisphere Properties listing day: Anil Singhvi decodes the fair value of this new company
Zee Business Managing Editor highlights the details of newly listed company, Hemisphere Properties. This company is the demerged entity of Tata Communications. The Market Guru revealed Zee Business’s Exclusive Research which is designed to help viewers to understand the Land bank Value (not only old value but also current value) and Valuations of this newly listed company. This research will show what the fair value of the company is.
हेमिस्फेयर प्रॉपर्टीज की आज हुई लिस्टिंग...
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Hemisphere Properties has land bank of nearly 770 acres since ages. Videsh Sanchar Nigam Limited (VSNL) when it was given to Tata Communications were informed that the land bank will be demerged later which is now being done. In 2018, when the valuation of land bank was derived, DOP (Dilution of Precision) had mentioned that the value of the Land Bank is approximately Rs 10000 cr. So considering the value of the Land Bank Rs 10000 cr, the derived price will be around Rs 350. However, the value of real estate has been seen falling over the past 2 years, indicating that the current value should be around Rs 6000 cr – Rs 8000 cr. To be on safer side analyst recommends taking Rs 6000 cr, to get the derived price. Since they have 28.5 cr shares, the land bank value amount will be divided by the number of shares. After paying long term capital gains tax (20% of 6000 cr) i.e. Rs 4800 cr divided by 28.5 cr shares, the derived price would be Rs 168. The company has absolutely no business to add up except for the land bank to get the derived value.
The valuations has come down to Rs 168 due to fall in real estate market, however, if the real estate market improves going forward and the valuation of land bank increases, derived price can go high as Rs 350- Rs 400. It is difficult to say when this could happen in the future with certainty.
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Market Guru Anil Singhvi said the current price is below Rs 100 over the derived price of Rs 168 is because the holding company is trading at a discount of 45% - 50%. Also, if one takes into consideration 6 years discounted cash flow for the Land Bank that has to be developed, then the derived price would be around Rs 145 – Rs 150. This indicates that holding company prices can fall further.
Furthermore, Hemisphere properties could witness some selling pressure due to profit booking, people who would have bought shares before Tata communications demerger would be induced to book profit after being invested for 2 to 3 years. Now combining both the stocks (Tata communications and Hemisphere properties) investors are getting value of over Rs 1000, Tata communications did make life time highs of Rs 750 – Rs 775 previously which is being broken now. Investors would be glad to book some profit now but the stock could find some interest at lower levels from new investors. Hemisphere properties will be seen in action in coming days.
(Authored by Rahul Kamdar)
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