Thursday, June 23, 2011

Timken India As a delisting candidate

Had started investing in the counter from 180 levels, didnt get an opportunity to post it....

Please share your comments and suggestions regarding Timken India

had a look at the counter as a delisting candidate vis-a-vis phenomenal spurt in the volumes in month
  • Global experience – Annual report shows List of subsidiaries showing ~69 subsidiaries worldwide out of which only 2 of them incl India are listed 
  • 80% sh holding has to be brought down (because of the 25%  public float norm)
  • 3 yr window for companies to comply with 25% sh holding norm - No hurry for mgt, however with their expansion plans they might have to shell out more later
  • Shifted entire India holding via Mauritius in 2010
A few unanswered questions - Mgt shareholder unfriendly or other plans ???


Valuations - as per relative valuations it is the most expensive among its peers SKF and FAG

                       
Sh Holding Pattern - easily doable
  • 80.02% holding - so out of the balance open offer of 19.98, they will require to get atleast 50% i.e. 9.99%
  • 4.72% with Institutions
  • 1.57% body corporates
  • 0.64% individuals holding >1 lakh Rs
  • ignoring 0.19 held by NRI's - they can mop up - 6.93% from smart investors
  • out of the balance 12.86% (held by public <1 lakh) +.19 clearing membes - 13.05% - they require 23% tender to get balance 3.06%
  • HDFC, DSP Blackrock (acquisition price ~175 in nov-dec 2010) and UTI are invested
If you analyse the share holding distribution given in 31st Dec 2010 report
  • A reverse cumulative calculation will show that holders between 500-1000 shares will almost complete the required ratio of 90%
  • Balance <1% can be easily got from retailers holding b/w 1-500 shares
Movement in top 100 shareholder list in last one month
Previously top 100 shrhldrs held 86.4% shares whereas the number has increased to 86.9%. Moreover, if we look at the top 50 shareholders, very few have actually sold out
New names who have bought over last 1 month include Citigroup Mauritius with 2.9 lakh shares, Puneet & Yadu Dalmia of Dalmia Bharat Cement group holding 75k shares…

In a nutshell,
Unlike Binani - no significant group of shareholder alone can lead to delisting - without a good price on offer - delisting unlikely to happen
however Share price might continue to languish incase delisting gets delayed for the period of 3 years (more of time risk than event risk).

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