Cmp-46
STEL remains essentially a holding and investment company. Of the total income received by the Company (‘STEL’), dividend income constitutes the main earnings. The performance of the Company is directly related to the performance of the Investee Companies. During the year company has received a dividend income of Rs. 829.13 lakhs from its Investments compared to the previous year which was Rs.626.86 lakhs. The Company has also earnings in the nature of interest from fixed deposits maintained with banks.
The Company holds investments in Equity Shares viz., CEAT Limited, Phillips Carbon Black Limited, KEC International Limited, CESC Limited, RPG Life Sciences Limited etc., besides certain investments in other Companies. The Company continues to invest for the long term while availing opportunities to realize a better gaining position considering the macro economic conditions both globally & domestically.
Key Takeaway
- Company is 100% debt free.
- The main source of income for the company is by the way of dividends.
- Company has a profit growth of 62% over the period of 3 years.
- Company has a profit growth of 29% over the period of 5 years.
- Operating cost of the company is extremely low as a result Operating Profit Margin of the company is more than 85%.
- Company has reserves and surplus of 624 Crore rupees.
Conclusion
STEL is a holding company as a result it can never trade at the full book value unless some extraordinary circumstances prevail. It will always trade at a steep discount to book value. Chances are it may even remain stuck at the current price thereby leaving little of no choice for capital appreciation for the investors.Also the stock is highly illiquid with very less total traded quantity as a result investors might even find it difficult to sell the shares of the company.
In a nutshell the company does possess huge value but can investors get a slice of that value by appreciation of the stock price is highly questionable as result we advice users to be very careful while exploring this stock.
Normally the holding companies do trade at a 80% discount to book which is exactly the current market price of the share. When the market rise chances are discount may decrease thereby causing the stock price to appreciate and investors getting good returns but there is a high risk that investors can get stuck in this type of stocks.
Note-: Penny stocks are extremely risky, Investing in such stocks can lead to complete loss of capital. In past we have suggested many ideas but majority of those have failed. The company fundamentals have remained intact in some cases but why those stocks have failed to perform we have no idea. Users are requested to take due care if they choose to invest in such stocks. Darkhorsestocks would not be responsible for any loss. The above idea is presented for mere informational purpose only to bring it to the notice of users the company and the value hidden inside it which would help understand people on how to carry on fundamental research.
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Hi, can you highlight what are the implications of Tax on Dividend in the hands of STEL LTD as per new Income Tax law. Will it have an as this company has major revenue from Dividend only
Dividend is taxable when recieved in the hands of the stel Holdings.
But when stel holding pays Dividend then it has to not pay tax on the income on which tax has already been paid. (That is the income recieved via Dividend from other companies.)
For example if stel recieves 10cr as Dividend and if it declares 12 crore as dividend then Dividend taxable is only 2 cr. Rs.