MAHARASHTRA SCOOTERS prefect buy

MAHARASHTRA SCOOTERS

It just comes as a complete surprise to see that a loss making unit, which has shut down its main business of making scooters since 2006 and its present activity is limited to the manufacture of pressure die casting dies, continues to remain a gainer on the bourses. Yesterday, the stock has gained 5.54% and ended the day at its high at Rs.71.40. And this gain is in a market which saw a sell off and it punished even companies which had posted good results.

There has been talk of Blackstone wanting to buy out the 27% stake held by Western Maharashtra Development Corporation (WMDC) but that has apparently not happened. So why does this stock such a high discounting on the bourses despite the dismal performance?

Its holdings in Bajaj companies is the most obvious answer. It holds 16.39 lakh shares in Bajaj Auto Finance as on 31st Dec 2008. And as on 30th Sept 2008, it held 33.87 lakh shares each in Bajaj Holdings, Bajaj Finserve and Bajaj Auto. So the value of investments in these three companies alone is itself worth Rs.317 crore. And this valuation is based as of now, when the markets are so low.

Another big positive for the company is that it is totally debt-free, it has got absolutely no term loans or unsecured loans or working capital loans and is stated to have cash close to Rs 95-100 crore in its books.
So financially, the company is breaking no records but surely, its holdings and thus the valuation goes up tremendously. Yes, the market is always perfect! thanks