Monday, January 4, 2010

Stock Idea: Aditya Birla Nuvo

An Aditya Birla group company, this multi faceted company has been in the limelight for some time now, with its stock price soaring. This had little to do with its financial performance but more to do unlocking value with its proposed plan to demerge its financial services business. The financial services unit comprises of companies like Birla Sun Life Insurance, Birla Sun Life Mutual Fund, Aditya Birla Capital Advisors and Birla Global Finance. The company is currently busy seeking permission from different regulators for the demerger and creation of holding company. Once this happens, the holding company is expected to be valued at over Rs 15,000 crore.
Apart from the financial services, the company has telecom, through Idea Cellular, which has been making profits. Its BPO unit has generated cash profit but on the net level, it was in the red. Its garments unit turned around on the EBIDTA level but not on the net levels. Carbon black unit is doing very well and so is fertilsiers (Indo-Gulf), rayon (Indian Rayon) and insulators.
For H1FY10, the company posted a 64% rise in net sales at Rs.10252 crore. EBIDTA was up 47% at Rs.748.80 crore. It continued to remain in the red, net loss was at Rs.33.80 crore but this was much lower than the net loss of Rs.132.90 crore it posted in H1FY09.
For now, the unlocking of financial services value would keep the stock price high.
Source: Internet (By S P Tulsian)

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