In 1932, the father of Security Analysis, Ben Graham wrote an article in Forbes called “Is American Business worth more dead than alive?” .He cited many instances where businesses where sold for a fraction of their net quick assets.
The wealth destruction in the Indian markets in small and mid cap stocks in the last six months has lead to many instances of good businesses being sold for less than their liquidation value
Take for instance Emkay Global..
Started in 1995,Emkay Global is one of the leading brokerages of India with around 350 retail outlets spread across the country.Its finances and stock price has taken a knocking in line with the markets.
For the year 2010-2011,its consolidated results show the following:
Long Term Debt:2.94 Crores
Net Current Assets: 114.15 Crores
Quick Liquidation Value = Net Current Assets- Long Term Debt i.e 111.21 Crores
Quick Liquidation Value/Share= Rs.45.57
Current Market Price of Emkay Global (as on 13 April, 2012) =Rs 29.3
Conclusion: As per the Indian markets, Emkay Global is worth more dead than alive
3 replies on “Is Emkay Global worth more dead than alive?”
I think u dont know about indian so called proffesional culture,not to share wealth with iinvestors and partcularly stock brokers (haa haaa ) wo bhi bombay wale,
THEY cant be net net cash
Hi DP,
You have raised an interesting point about corporate governance.If corporate governance were to be the only yardstick, most of Indian companies ought to be worth more dead than alive !!:)
I am reminded of a very successful fund manager in India.He was asked what was his biggest regret in his investing career.He said “Not investing in Reliance”. When asked why he did not invest, he replied “Integrity concerns kept me away from the stock”.
If corporate governance were to be the only yardstick, an investor holding HUL would had a top class company with high corporate governance values but would have got negative real returns between 2000-2010.
So moral of the story is every scrip is a good buy and a good sell at a particular price.
Sir,HUL was very expensive at 2000 and no further blockbuster product in their portfolio,modest growth in existing products coupled with
fundmanager completion to buy some defensive stocks led to no (real) gains from this stock for ten years.
Regarding RIL in 2009 march fall I did not buy a singal share of both Mukesh and Anil as other well managed stocks were available at lower rates with good coroprate goverence.And I have no regerts as i know how RIL manuplates a/c’s.