Bajaj chetak : Hamara bajaj
- Kamal J. Sharma
- Dec 13, 2021
- 2 min read
Maharashtra scooters after discontinuing scooter manufacturing in 2006 became the holding company of the group. And is selling at a huge discount from its intrinsic value.
Disclaimer: The accounting numbers used in this report are not accurate to the last digit, as it made not much difference.
Before investing, do your own due diligence, consult someone who might help, or ask us at least.
Report
Maharashtra Scooters is a holding company of Bajaj Finance, Bajaj Finserv, Bajaj Auto, and Bajaj holding & investment.
It became a subsidiary of Bajaj Holding & Investment in 2019.
The market value of these assets is around Rs. 25,000 crore and intrinsic value should not be less than Rs. 15,000 crore in my opinion.
But the company is selling for less than Rs. 5,000 crore as of 13 Dec 2021..
Investment Assets at CMP:
Bajaj auto: Rs.2,260 cr @3340/share
Bajaj finance: Rs.14,000 cr @7430/share
Bajaj finserv: Rs.6,580 cr @17,680/share
Bajaj holding & investment: Rs.1,900 cr @5650/share
Total: Rs.24,740 cr + (185+50)cr
Dividend income was about 120cr in fy2020
Of lesser importance:
Tangible assets of about 15 cr. excluding investments
Sales from operation = 15cr
Expense = 20-25 cr
Loss = 7cr/year
Plus Extra income from dividends.
Summary:
The thesis for buying this stock is simple,
most of its investment is in Bajaj Finance directly/Indirectly.
By buying Maharashtra Scooters, you get Bajaj Finance shares indirectly at around 75-80% discount to the market price.
If you like Bajaj Finance as a business and would like to hold it for a long time.
No doubt you will benefit greatly as a shareholder of Maharashtra Scooters.
If you buy Maharashtra scooters at the current market price,
For every 20% gain in the intrinsic value of Bajaj Finance, Your investment value should grow by 100%.
(not in IND AS accounting terms)
Negative points:
Recognition of intrinsic value might take a longer time than usual, sometimes years.
Very little cash flow. 1-2% of the share price.
Plus points:
The market price is at 1/5th of asset price and at least 1/3rd of intrinsic value.
Compounding returns at high rates.
Good future prospects of growth in underlying assets.
Credible management and group(Bajaj Group)
Great quality and growing underlying asset, i.e Bajaj Finance.
I am of opinion, in a 2-5 year time frame, this stock can give 20%-100% average return/year or more, by taking in consideration underlying assets quality and past stock movement relative to underlying value.
above returns projections are relatively conservative and returns could vary according to how underlying assets perform.
By no means this is a perfect investment.
You are not sure when you will get your whole value, but there are high chances that you will get it and it’s a great bargain to buy great companies at a fraction of its value.
Hope you liked our report on this wonderful investment opportunity.
Before investing in the mentioned company, make sure to do your own due diligence.
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Till then
Stay active and invest in equity.
Thanks
Kamal J. Sharma
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