Bombay Burmah Trading Corp: Attractive bet, buy

KRChoksey | Aug. 7, 2009, midnight

Huge Value unlocking from Quoted & Un-quoted Investments: BBTCL through its Mauritius arm, Leila Lands has acquired 100% of Britannia Brand from Singapore based Danone Asia. Leila LandsRs indirect shareholding in Britannia Industries, increasing from 25.48% to 50.96%. With this acquisition, Britannia Brand has now become an indirect subsidiary of BBTCL and its arm, Leila Lands. As a result of which the Quoted Investment Portfolio of BBTCL increased by Rs. 2465 crs.

Considering the Direct & Indirect Quoted Investment Portfolio of BBTL, we arrive at the Intrinsic Value of Rs. 2098/Share of BBTL. Assuming a Holding Company Discount Rate of 50%, we arrive at a fair value of Rs. 1049/Share which against a CMP of Rs 424/Share, BBTCL looks highly attractive investment opportunity.


Outlook

BBTCL at a CMP of Rs. 424/Share, is available at a fraction of its fair investment value considering its quoted & unquoted investment portfolio. We value the company applying an aggressive holding company discount of 70% on the intrinsic valuing the stock at Rs 629/share exclusive of BBTCL’s core business valuations.We recommend our Investors a Strong Buy with a 12-month price target of Rs 629/ Share and an upside potential of 48%.

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