March 16, 2011

Bharat Nidhi , PNB - "Exercise Caution " -Unwarranted Price Run up - Satyakam Mishra

Looking at prices of Nidhi, Camc Comm and PNB, is almost giving me a heart attack. I have never witnessed the price run up like this in delisted shares. The hoarders/speculators, rumormonger and testosterone-driven traders and not to ignore the dim witted investors are all gaga on this company. My best wishes to them.

Let me narrate you some gimmicks of BCCL. Many investors would not like them but that will not prevent me to blurt out the truth.

•Times Innovative Media Limited, the Out of Home media subsidiary of Entertainment Network India, a BCCL got investment from Goldman Sachs and Lehman Brothers India Holdings for an aggregate consideration of Rs. 200 crores. The deal valued TIM at over Rs. 1,200 crores. Goldman Sachs and Lehman Brothers have an equity stake of 8.28% each in TIM.

• The entire equity stake in Times Innovative Media Limited to was again sold to Bennett, Coleman & Company Limited for a cash consideration of Rs 45 crore. Thus the company previously valued at 1200 cr was sold back to promoters at mere 45 cr. ENIL owned 83.44 per cent of Times Innovative Media, which values the company at Rs 540 million (Rs 54 crore).

• We had another example where Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.

Times Guaranty, a NBFC, is another BCCL company which brought pains to its investor. It has taken various legal and remedial actions for asset recoveries, including recovery suits, winding up petitions and criminal complaints for dishonour of cheques.

So the key takeaway is that, let us not just carried away and throw caution to wind. When speculative forces works, it magnifies your gains and it becomes addictive as well. . Pay attention to what are the triggers of this frenzy.

Warrant Buffett says and I quote “once having profited from wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero.

I aim not to depress someone with my logic but being cautious always help. I regularly extol the accomplishments of great companies but one has to look at the other side as well to avoid mega-catastrophe.

The challenge, of course, is the calculation of intrinsic value of BCCL on which the whole stories are based. I invite readers to comment on this.

 Satyakam Mishra


Ashwani Kumar Aggarwal said...

What effect would the news of IPO by Bennett , Colemsn And Company on the re rating of Bennette Coleman and its holding companies like Bharat Nidhi and PNB ?

Is this development not unprecedented ?

Manish Somani said...

Off course the development is interesting and unprecedented but not limitless positive.

BCCL being the market leader will attract premium. The current lot of media companies trade between 8-17 PE, lets assume BCCL trades at 25x EPS of 300 (assuming profit of nearly 1000 cr). This will give a expected share price of Rs 7500, valuing the company at Es 7500 x31 cr equity = Rs 23000 cr.

I have heard rumors and hearsay of BCCL priced at one lac. Lets us debate the price.

Anonymous said...

I agree with Manish's View and this i believe is fair and conservative valuation of the bennett business. Now if I were to use this to calculate the value of Bharat Nidhi, which owns 24% of BCCL, then taking 24000 Cr as Value of BCCL, Bharat Nidhi comes to 6000 Cr. With approx 30L shares outstanding the value of each share comes to 20000. This value is only realisable if BNL share holders get BCCL shares. Else apply a 50% discounting. There are rumours and talks of a reverse merger and allotment of BCCL share to all the holding company shareholders. If that is the case, there is value left in the shares to march forward. Another pont to be noted is that the group has a huge inventory of assets acquired and built over the last 160 guess is that these assets and the investments will vest in a seperate entity. And this value thought not realisable immediately will come to the shareholders of the holding company further down the road. Would like to see more analysis and comments

Tanya said...

The scars of others should teach us caution. Unbridled enthusiasm in Nidhi, PNB and Camac is disaster in making.

Tanya - 9871162597

Anonymous said...


Ashwani Kumar Aggarwal said...

Mznish Somani's calculation of the enterprise value of Bennett , Coleman And Co. seem to take in to consideration the value of Bennett Coleman only on the basis of the revenue and profit ( of print media ). Bennett , Coleman ( on zero debt ) is a massive investment company too . What is the current value of its holdings ? . It has around 59 subsidiaries . It is , probably , the biggest Dot Com ( Internet ) Company in India .

All this calls for a different set of valuation parameters than , let us say , HT Media

Ashwani Kumar Aggarwal said...

We have a vested interest as we hold PNB Finance.

Tanya said...

59 subsidiaries yes but how many of them are profit making. Times Group’s foray into the television arena is yet to yield much dividend. Its subsidiary, Times Global Broadcasting, posted a loss of
over Rs 50 crore in FY08, taking its total accumulated losses so far
to Rs 150 crore.

Tandav said...

I think the TV businesses are now turning around....ET Now is doing pretty well, as also Zoom...ET Now will take some more time to turn profitable...but not as long as it took CNBC....Internet is also doing great....remember seeing an Ad in their paper where their site economicstimes beat moneycontrol to become no.1

Anonymous said...

Can u name 1 profit making company in news or portal business. None of full scale media cos r making profits ... NDTV, TV18 , Zee all posted huge losses till last year

- excercise caution bfor buying bharat nidhi, pnb fin shares. It will come down

- Sharedon

sivan said...

bharat nidhi and pnb finance address please send me and demat processe