These stocks are having the special situations those might help to these special situation stocks to grow and will get proper valuation.
We’ve seen the real potential and value unlocking in Meghmani FineChem and Jubilant Ingrevia after demerger of these two stocks from the patent companies. Though lot of subsidiaries performing well, they don’t get proper valuations due to several reasons of their group companies.
When they listed as seperate entity, if it is good business, the market will try to reward the stock with appropriate valuations. Here is the 10 stocks thay are having special Situations and conditions like demerger and management change. After these situations, the below discussed stocks may perform well and we are tracking below stocks closely.
The special situation stocks in India:
1. TIPS Industries Ltd
TIPS India Ltd is one of india’s leading music company in the listed space. this company is in the business of music labelling. actually this company along with the music labelling, also doing the other businesses like films and others. actually music labelling business is the most profitable and cash generating business.
These people are spending this profits in films business. that’s why this stock is not getting that much valuation. if the music business would get seperated from the others, the music business will get more attractive valuations and the stock has great potential to grow.
The company management also realised the concern that market has, about the company. and announced the demerger of music business as seperate entity. if it would get happens then the music business will grow a lot.
This would be also applicable for SaReGaMa India, but they doesn’t announced demerger. they are also spending their profits on other various businesses.
2. Rupa & Company Ltd
Rupa & Co has been announced their demerger of it’s subsidiary, OBAN Fashions in December, 2020. currently OBAN fashions is a loss making company. but this brand has strong potential to grow after demerger as they have a very strong portfolio with renowned brands sucha as fcuk & Fruit of the Loom, in which the global stock market king Warren Buffet was invested.
These two brands were having a strong brand presence across the world, but not in India, that much. but after demerger this company will also focus on indian market and there is a higer chances to grow and to acquire significant market share, as their product quality is very much high.
After de merger the OBAN Fashions, which actually focuses on building Value, also would focus on building volumes. so that there is higher chances to grow and there might be customers will accept this brands as they’ve already a great brand presence across the world and maintaining grat quality in their products.
3. Care Ratings Ltd
The above two stocks we’ve been discussed is all about the opportunity of demerger. But this stock has the management change as the special situation. after IL & FS crisis, Care ratings has lost their brand value as they have given fraud rating to the IL & FS.
Now the management has been changed and the compant is trying to transform themselves and completely making over to build and bring back the previous brand value. they are performing several activities to prove that they are now been transforming.
The new Managing Director & CEO of the company, Ajay Mahajan has 30 years of expertise in banking and financial services. he is doing several transformations in the company and making everything public, about the company and their activitis in order to achieve, lost brand value.
If these transformations will get succeed in bringing back their brand value, this stock would get better valuations and has strong potential to grow. also discussed the opportunities that this company has in the future. Click here to read.
4. Piramal Enterprises Ltd
Piramal Enterprises has recently announced it’s demeger of it’s financial services and pharmaceutical business as two seperate entities.finacial services will includes the piramal financial business and DHFL as they have been recently acquired the DHFL. and another is Piramal Pharma Ltd will includes it’s entire pharma business as they have two pharma subsidiaries.
The pharma business of Piramal is actually doing amazing and delivering a substantial growth. as they have strong portfolio with renowned brands such as Saridon. the pharma business is profit making but their infra and other businesses they are doing were cash burning and not doing well. till now their pharma business supported a lot to the other segments of Piramal group.
Though it takes more than 10 months of time to demege, there is better opportunity in Piramal Pharma business, ater demerger the real value of the business will get unlocked, which was not got better appreciations as a group entity. closely track this opportunity as we have time to get listed in exchanges after the demerger.
5. Surya Roshni Ltd
Surya Roshini also announced the demerger of their two segments of business, LED bulbs and Steel tubes. both are doing well and generating good profits to the company.
The LED bulb busiiness also got qualified for the central govt’s PLI scheme, which is the big boost to the LED business. again reiterating that both segments are doing well.
6. Thyrocare Technologies Ltd
Thyrocare is a diagnostic company, recently which was acquired by API holdings which is well known as PharmEasy. in this company management change is the special opportunity, which is going to create a additional value for the company. previous management was also done a very good job, but lack of aggression this stock was not get properly valued as much.
The new young promoters will fullfill this and will make this company better by integrating thyrocare business mobel into their app. the style of the business of thyrocare also perfectly fits with PharmEasy as they offer services at home.
7. Indiabulls Real estate Ltd
In this company also i am seeing the management change as as special opportunity. because this compnay receently acquired by Embasy Group. Indiabulls Real estate has lost their brand image recently. after acquisition the merged entity will have 80.8 million SFT land bank in their portfolio. and also the merged entity will be one of india’s largest real estate development firm.
The acquisition will also be the positive for the merged entity that they will have great portfolio mix as Indiabulls is having retail portfolio and Embassy is having commercial portfolio. so the meged entity will serve better and there is high chances to grow better. this acquisition will help the indiabulls to grow better and there is higher chances to unlock their real value.
8. GMR Infrastructure Ltd
In this company also the demerger is the special situation stocks opportunity as they are demerging their airport business as seperate entity. after seperating the airport business will get better valuation than the current value. but i am looking this opportunity for short term as the airport business is also the high cash burning business.
9. Strides Pharma Science Ltd
The Drug maker Strides Pharms Science announced their demeger of it’s biotech business under the Stelis Bio pharma. this Stelis biopharma will have the great value unlock. this company has already entered into the insuiline business and vaccination services. though it is loss making company the market is very bullish on this business and definitely market will reward this stock with the better valuation.
10. Ganesh Benzoplast Ltd
Here is also the same, i am seeing the demerger as a special situation stocks opportunity. this company is doing their business into two segments, one is LST – Liquid Storage Terminal, which is providing storage solutions for chemical storage at the ports as they are offering their services in 3 major ports such as Mumbai and Goa. the LST business is doing extraordinarily. and another is Chemical business and this business is not at all doing well. after seperation of these entities the LST business will get higher valuation as there is good opportunity for this business because as demand and consumption of chemicals is growing there must be the need of chemical storage terminals.
Apart from the above 10 special situation stocks, you can also look into these stocks to get benefit from the special opportunities, they are ZEE entertainment and Aarti Industries.
Conclusion :
Among various demerger and management changes, we tried to sort the data and picked 10 special situation stocks among those special situation stocks noisy announcements, which we are bullish and closely tracking the opportunities in special situation stocks that are going to reward the stock.we’ve made it not to take an immediate call on those stocks, of course you can also you should get ready to face the volatility in the stocks. so taking a call before delisting and after the relisting would be the better option. please try to analyse the company before investing and take a close track on events that are going to be happen, which we have been discussed in this article.
Disclaimer : The above all recommendations are from the individuals, working for ICICI Securities. please do your own research before investing else take an advice from your financial advisor.