Finolex cables

Finolex cables.

The current market price per share is Rs.25 and the current market capitalization is Rs.390 crores. A month before, it was trading at about 19 Rs. per share. The deal is, about 316 crores of that capitalization is covered by Finolex's investment value in the balance sheet. So essentially, we get the entire business for about Rs. 290 crores (which is the debt obligation).

When a business generates positive cash flows and earns an operating profit of about 100 odd crores a year, i would not be too worried about a Rs.290 crore debt.

Finolex's return on Net Operating Assets ( Net Profit divided by Fixed + Net current Assets) is about 20%.

Just to add more, Finolex's book value stands at 41 Rs per share.

To me this is a neat value story. The entire market wants to run hoping they get the next multi-baggers and in the process they ignore the certain 50 percentagers.