Investment Company with a Robust Book Value Exceeding 3500 Rs

Important Note

Holding companies are meant to hold the investments forever. Despite huge holdings this companies might never realise the money by selling all the investments, therefore chances of getting any money in the hands of the investors from realising this investments are negligible.

Holding companies since do not have their own business and rely mostly on the income in the form of dividends and other profits from selling investments, there are high chances that there wont be good profitability in this companies, and moreover sometimes can even experience loss in some cases.

In past companies suggested from this category are Bajaj Holdings and investments which was suggested 4 times at prices such as 2700, 2740, 3200 and even 5000 Rs , tata investment was suggested at 1026 Rs, Riddhi Siddhi Gluco at 207 Rs, Kalyani Investments at 1743 Rs, BF Investments at 410 Rs and Vardhman Holdings at 2900 Rs. As you see all the companies have delivered superb returns, however if you observe the time frame it was quite long. So despite quite intriguing financials this might turn out to be a dead investment.

Users need to understand the risk while investing in this type of companies.
That is this type of companies are not meant for investing rather they are for exploring/educational purpose only.
Despite amazing financials and high book value of the company, it may so happen that over a period company may fail to deliver any meaningful return for the shareholders thereby leaving it as dead investment.
Investments in Holding companies should be done with extremely long term view that is of atleast 5 years.

Dhunseri Investments Ltd

Current Market price on the date of publishing this report-: 747 Rs

Introduction

Incorporated in 1997, Dhunseri Investments Limited was established to carry on the business of an investment company and for that purpose to invest in, acquire, sell, transfer, subscribe for, hold and otherwise deal in and invest in any shares, bonds, stocks, obligations issued or guaranteed by any company constituted and carrying on business in India or elsewhere and debentures, debenture-stocks, bonds, obligations and securities issued or guaranteed by any Government, State, Sovereign, Commissioners Central or Provincial, public body or authority supreme, municipal, local or otherwise in India or elsewhere either out of its own funds or out of funds that it might borrow.

It is also objective of the company to carry on the business of processing, converting, manufacturing, formulating, using, buying, selling, acquiring, storing, packing, dealing, transporting, distributing, importing, exporting and disposing including trading, marketing and packeting of all kinds of goods, merchandise, articles and services including that of tea.

Dhunseri Investments Limited is presently recognized as a Non-Banking Financial Company, duly registered with the Reserve Bank of India, specializing in investment activities.

Business

As previously stated, the introduction already encompasses the key aspects of the company’s business. Given this comprehensive overview, we see no need to provide an excessively detailed description in a separate section.

Dhunseri Ventures Limited

A significant share of Dhunseri Investments Ltd’s investment value is attributed to its holdings in Dhunseri Ventures Ltd. Consequently, it is crucial to gain insight into the operational specifics of Dhunseri Ventures Ltd.

Dhunseri Ventures Limited (formerly known as Dhunseri Petrochem Limited) has a diverse corporate history. Initially incorporated as Dhunseri Tea Co. Ltd., the company began its journey in Assam, focusing on tea cultivation and production.

In 2009, the company expanded its scope by acquiring the Bottle Grade PET Resin business of South Asian Petrochem Limited in West Bengal. As a result of this acquisition, the company’s name changed to Dhunseri Petrochem & Tea Limited, and it operated in two divisions: Petrochem and Tea.

In 2014, a new phase commenced with a demerger of the Tea Division and a reorganization of the IT SEZ division. Consequently, the company transformed into Dhunseri Petrochem Limited, concentrating on its Petrochem business, operating plants in Haldia and Egypt.

The company further underwent a significant transformation in 2016 through a Scheme of Arrangement with Dhunseri Petglobal Limited (now known as IVL Dhunseri Petrochem Industries Pvt. Ltd.) and their respective shareholders. This led to the transfer of the PET Resin business in India to DPGL. Dhunseri Petrochem Limited also engaged in a 50:50 Joint Venture with Indorama Ventures Public Company Ltd. to revive its Egyptian Indian Polyester Company S.A.E. PET facility in Egypt.

Dhunseri Ventures Limited is involved in treasury operations, holding shares and securities of other corporate entities. It has a wholly-owned subsidiary, Dhunseri Infrastructure Limited, focused on developing infrastructure facilities in a Special Economic Zone for IT/ITES services. (Use code: dhs_10_discount to get discount when we open for subscription.) Additionally, the company has a foreign subsidiary in Singapore known as Twelve Cupcakes Pte Ltd., engaged in confectionery manufacturing and retail.

The company officially adopted the name Dhunseri Ventures Limited in 2018. It has also established a wholly-owned subsidiary named Dhunseri Poly Films Private Limited for a new project involving the manufacture of Polyester Films (BOPET), with the first phase of expansion carrying an estimated capital expenditure of Rs 400-500 Crores.

As of the latest update in June 2023, approximately 75% of the shares in Dhunseri Ventures Limited are in the possession of its promoters. Dhunseri Investments, a key shareholder, holds a substantial 56.44% stake in the company.

On the balance sheet, the majority of the equity investments are derived from Dhunseri Ventures, as it serves as the primary source of consolidation. Consequently, Dhunseri Ventures, being the parent company, is a potential avenue for direct investment. However, predicting the precise extent of profitability for the company remains challenging.

In scenarios with intricate layers of investments between companies, capital appreciation occurs, but discerning which company will ultimately benefit more is a complex task to identify.

Financials

For Q1FY24

In June 2023, the company recorded net sales of Rs. 52.95 crore, marking a substantial increase of 26.99% from the Rs. 41.69 crore achieved in June 2022.
However, the quarterly net profit for June 2023 was Rs. 23.40 crore, reflecting a significant decrease of 73.7% compared to the Rs. 88.96 crore earned in June 2022.
Remarkably, the EBITDA reached Rs. 40.75 crore in June 2023, representing an impressive surge of 3506.19% from the Rs. 1.13 crore reported in June 2022.
Notably, Dhunseri Invest’s earnings per share (EPS) experienced a decline, dropping to Rs. 38.37 in June 2023 from the higher figure of Rs. 145.91 in June 2022.

For the Year ended March 23

In March 2023, the company’s net sales amounted to Rs. 243 crore, reflecting a decline of 16% compared to the Rs. 289 crore recorded in March 2022.
Significantly, other income, which constitutes a substantial portion of the net profit due to the company’s role as an investment company, surged to Rs. 723 crore in March 2023, marking an impressive 100% increase from the Rs. 363 crore reported in March 2022.
The net profit for March 2023 reached Rs. 528 crore, marking a remarkable 65% increase from the Rs. 320 crore achieved in March 2022.
The operating profit, though less relevant due to the exclusion of other income from its calculation, was reported at Rs. 11 crore in March 2023, marking a significant 85% decrease from the Rs. 78 crore in March 2022.
Considering the impact of other income, the profit before tax reached Rs. 706 crore in March 2023, representing a substantial 70% increase from the Rs. 413 crore recorded in March 2022.
It’s worth noting that Dhunseri Invest’s earnings per share (EPS) demonstrated notable growth, rising to Rs. 480.15 in March 2023, which signifies a 90% increase from the figure of Rs. 252 in March 2022.

Management’s comments

No information in the balance sheet or anyewhere online is available about the same. Therefore we are not able to provide any update regardiing this .

Conclusion

Dhunseri Investments, a well-established company with a 26-year history, and Dhunseri Ventures, a subsidiary of Dhunseri Investments, share a close affiliation as part of the same corporate group. Dhunseri Investments maintains a majority stake of over 50% in Dhunseri Ventures. On a consolidated basis, Dhunseri Investments displays a significant portfolio of investments spanning various subsidiaries, mutual funds, stocks, and substantial cash reserves.

Despite a relatively modest current market capitalization of just 456 crores, the company’s investments alone amount to around 750 crores, with total financial assets exceeding 1000 crores. When considering non-financial assets, the company’s total assets listed on the balance sheet reach approximately 3900 crores. With an equity capital of 0.61 lakh shares, the total asset value surpasses 6000+ Rs, while the stock of the company is trading at a comparatively lower price of just 750 Rs.

Furthermore, in 2023, the company has incrementally increased its debt, now totaling 365 crores, which, when viewed in the context of the overall size of the company’s balance sheet, remains relatively negligible.

In light of the information presented above, both Dhunseri Investments and Dhunseri Ventures appear to be promising investment prospects. However, it’s essential for users to recognize that investing in both companies simultaneously does not necessarily yield added returns. Therefore, it is advisable to conduct your own research and make an informed decision by selecting either of the two.

Furthermore, it’s crucial to consider the key points highlighted at the beginning of this report. The primary purpose of this report is to bring these companies to the attention of users and should not be construed as direct investment advice. It is imperative that you conduct your own thorough research, and should you choose to invest, please be aware that neither darkhorsestocks nor any affiliated individuals can be held responsible for any potential financial losses.