Maharashtra Scooter Limited (MSL) is promoted in 1975 by Bajaj Auto ltd and Maharashtra govt. to manufacture Priya scooters. Bajaj and Maharashtra govt, both together hold 51% of the share. For about 2-3 years they have stopped the complete production. Recently Bajaj also announced that they will stop manufacturing scooters. (http://www.business-standard.com/india/news/bajaj-to-exit-scooter-biz/379120/)
Interestingly MSL also holds significant shares erstwhile Bajaj Auto Ltd, which has split into Bajaj Auto Ltd, Bajaj Finserv, Bajaj Holdings. It also holds considerable share in Bajaj Auto Finance. As of December'09 the valuation works out to be 720+. As on 31-Mar-2009 the value of the quoted investments (mainly Bajaj companies) is 390.
As of 04-Jan-2010 it is quoting at 232. It has paid dividend of Rs 5.5 this year. As of now MSL's profit entirely depends on Bajaj paying dividend to its shareholders. its expected to grow considerably this year. I am expecting the yield to go up to 3.5% this year.
Whenever Mahashtra govt. decides to exit this venture as Bajaj is not going to manufacture scooters anymore, Bajaj will try to merge it with itself. True valuation may be considered while merging and shareholders will reap the benefits. Recently the price has escalated from 170 to 232 (ie 36%). However Bajaj is doing well and Bajaj's share price is expected to go up.
Let me know if you have any thoughts
Cheers,
3 comments:
Hi Deo,
Good insight. do you have any idea what BAL will do with majority acqusition in MSL. i guess present setup amy not be gud to make bikes.
Regards
Sachin
I am not as smart as Rahul Bajaj :-) So I dont really know.
But it was a CKD unit, that means only assembly line, its easy to change it from my a bit of knowledge while I was at Bajaj
Oh My god today its trading at Rs 363, that means almost 100% rise in price within a year. Still has a lot of room to grow. Please see my newest analysis on this.
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