Shares of Pilani Investment and Industries have lost over a third of their value in just three months after making a debut on the two national bourses. Investors value them at over 50 per cent discount to its investments in companies belonging to the BK Birla and Aditya Birla groups.
It was on October 25 last year that the investment arm of the BK Birla group made its debut on the National Stock Exchange (NSE) — at Rs 2,280.35. The very week, on October 31, its share value touched a high of Rs 2,619. A day later, it started trading on the Bombay Stock Exchange (BSE) — at Rs 2,394.35. Since then, the company’s shares have lost over 34 of their value. They last closed at Rs 1,500 on the NSE.
Pilani’s major holdings include Century Textiles (36.78 per cent), Grasim Industries (4.69 per cent), Hindalco Industries (1.52 per cent) and Kesoram Industries (5.28 per cent).
| INVESTMENT EROSION | ||||
|
BSE price in Rs | % change |
Value of | ||
| 25-Oct 2011 | 30-Jan 2012 | |||
| Century Textiles & Indus | 315.39 | 262.05 | -16.91 | 896.75 |
| Kesoram Industries | 120.00 | 115.00 | -4.17 | 27.78 |
| Grasim Industries | 2458.35 | 2580.20 | 4.96 | 1109.56 |
| Hindalco Industries | 125.50 | 137.50 | 9.56 | 401.30 |
| Total | 2435.39 | |||
| Pilani investment | 2,280.35* | 1491.25 | -34.60 |
- |
| *NSE closing price on October 25, 2011 Data compiled by BS Research Bureau | ||||
At on Monday’s closing prices on the BSE, the total value of Pilani’s stake in 14 listed companies comes to around Rs 2,488 crore, according to the BS Research Bureau. Interestingly, the value of its investments in these listed firms has remained almost the same after three months, but the company’s stock has plummeted.
“Initially, there was excitement in the Pilani counter, post listing on national stock exchanges as a blue-chip stock from the BK Birla group,” recalls S P Tulsian, an independent investment analyst. “However, fair price for Pilani shares should be at a 60 per cent discount to the value of its investments in both Birla group companies.”
Considering a 60 per cent discount to the value of its investments, Pilani’s market capitalisation comes to around Rs 995 crore. The company has a market cap of Rs 1,179 crore at present. Trading interest in Pilani shares has come down significantly since their listing on the NSE and BSE in late October. In the first seven trading sessions, combined trading volume on the two national stock exchanges used to be over 2,000 shares. This has now come down to a daily average of just about 300 shares in this month.
Pilani shares are also listed on the Madhya Pradesh Stock Exchange (MPSE) and the Delhi Stock Exchange. However, there has been no trading in shares of companies listed on these exchanges for several years.
In April last year, MPSE had signed an agreement, whereby companies listed on the Indore-based bourse can trade on the BSE and the NSE. Pilani was among the first set of MPSE-listed companies to start trading on the two national stock exchanges in October last year.
