- Cash Bargain
- Net net bargain
- Book Value Bargain
Let see each criteria in detail-
Cash Bargain- As of latest Balance sheet, Cash is 339 crs. Add investments of 92 crs. Subtract debt of 34 crs. And we get a Cash per share of 103 Rs/- (I have taken investments at 60% of Book Value to arrive at Cash/ share).
Net Net Bargain- Net Working Capital minus debt comes out to be Rs 225 per share.
Book Value Bargain- Being a financial stock, comparing Price with Book Value makes sense. Book Value stands at Rs 226 per share. Hence, P/B is less than 0.4
Hence, current stock price looks very low on Graham's scales.
Mr. Market should be having some reason for this low valuation. Yes, there is a reason. Some top executives are involved in a bribery case by CBI. Stock has fallen 90% from its highs due to that CBI case. But company has no liability due to that.
I would not like to name the stock here to avoid Endowment Bias. But I expect it to go up by 100%.
P/B less than 1 for a financial stock which is not a cash burn looks absurd to me!!!!
