Equity Watch

Ambica Agarbathies and Aroma : sum of the parts is more than the whole

Ambica Agarbathies and Aroma Ltd is actually a conglomerate of 7 different businesses namely:

  • Agarbathi Division : Ambica is pioneer in Agarbathi business with experience of more than 55 years.It has various branded agarbathies for the local and export markets.In India it has more than 300 distributors/ dealer network in AP/TN/MP/Maharashtra/Gujarat state
  • Ambica Empire Division see here: It has  a 4 Star Hotel with more than 100 rooms at Chennai.Hotel is affiliated to Best Western Inc. USA. At today’s cost Hotel is worth more than Rs. 60 crores.
  • Ambica Real Estate :It has developed land at Bangalore and realty project costing Rs. 30 crores with 600 members is nearing completion.
  • Ambica Film Production and Distribution:Under this division there are multiplexes air-conditioned theatres and it has already produced 3 feature films valued at Rs. 15 crores and multiplexes at today’s cost could be worth Rs. 10 crores.
  • Ambica Wind Power : Under this division Company is setting up  50 MW  Wind Power project costing Rs. 200 crores at Poolavady near Coimbtore TN
  • Food Plaza at Vishakhapatnam Railway Station:
  • Software Division

Company’s  Equity Capital is Rs. 13.5 crores and its market capitalisation at CMP of Rs.15  is just about Rs. 20 crores.

Except for Ambica Agarbathies and Ambica Wind Power Divisions, all other enterprises are debt free. Adding the individual enterprise values of various businesses like Ambica Empire Division,Ambica Real Estate,Ambica Film Production and Multiplexes, Food Plaza and Software Division the total enterprise value should be close to Rs. 120 crores vs. its present market capitalisation of only Rs. 20 crores.

Management is contemplating to restucture the various businesses, and most likely the Hotel, Real Estate and Multiplexes divisions will become a separate company. Similarly Power Division will also be a separate company. In the restructured company the present shareholders will get shares of the Ambica Hotel and Ambica Power FREE.

Presently the share is available at P/E of about 10.( see the financials below) However after demerger the the sum of the parts is going to be much bigger than the present  CMP of Rs. 15, probably close to Rs. 75

Scrip Code : 532335    Company Name : Ambica Agarbathies & Aroma Industries Ltd
Type Audited Audited Audited UnAudited
Date Begin 01 Apr 06 01 Apr 05 01 Apr 04 01 Apr 03
Date End 31 Mar 07 31 Mar 06 31 Mar 05 31 Mar 04
Description Value(Rs. million)
Net Sales 512.04 462.94 399.65 378.41
Other Income 10.07 20.67 30.53 11.53
Total Income 522.11 483.61 430.17 389.95
Expenditure -451.71 -427.32 -362.29 -338.64
Operating Profit 70.4 56.29 67.88 51.31
Interest -27.42 -19.78 -22.42 -21.82
Gross Profit 42.98 36.51 45.46 29.48
Depreciation -17.88 -21.43 -15.78 -12.77
Profit before Tax 25.1 15.09 29.69 16.71
Tax -5.95 -2.53 -8.28 -3.67
Profit after Tax 19.15 12.56 21.41 13.03
Net Profit 19.15 12.56 21.41 13.03
Equity Capital 135.3 135.3 135.3 135.29
Reserves 60.94 31.33 25.11
EPS 1.42 1.12 1.58 1.04
Nos. of Shares – Non Promoters 6129291 6129291
Percent of Shares – Non Promoters 45.14 45.14
Result Type A A A A
  Notes Notes Notes Notes

  Financial reproduced from BSEINDIA

Buy at CMP of rs. 15 is recommended with 2 year HOLD to see aprice close to Rs. 100 of the 3 companies after listing.

This report has been prepared solely for information purposes and the information contained herein may not be deemed to be an investment advice. Such information is impersonal and not tailored to the investment needs of any specific person. The information contained herein is not a complete analysis of every material fact representing any company, industry or security. The views expressed may change. While the information contained herein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Investors are advised to satisfy themselves before making any investments and should consult with and rely upon their own advisors whether and how to use such information in making any investment decision. Neither the author nor his firm accepts any liability arising out of use of the above information


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