Aravali Securities-Majestic Presence
BSE 512344, CMP Rs 17.8
The process of unlocking assets in the Poddar family owned Aravali Securities is ready to reach the culmination stage. The High Court of Rajasthan at Jaipur is expected to approve shortly the de-merger of the hotel division. The Hotel division run under the Boutique Hotels Limited name, is owned to the extent of 50 per cent by Aravali Securities and balance shares are held by the Poddar family in their personal names. Boutique Hotel operates Palace Devigarh, a 39 suite hotel at Udaipur.
With the tourist season on, the Hotel is racking up ARRs of Rs 18000 a night, an amount as high as that prevailing in some of the priciest hotels in Bangalore. More importantly, the Hotel Devigarh Palace is almost booked till February 2007. Some high profile events like the marriage reception of British actress Elizabeth Hurley are expected to be hosted there in early November 2006.
Shareholders of Aravali Securities will receive 19 shares free of cost in Boutique Hotels for every 100 shares held by them. While post de-merger the shares of Boutique Hotels will be listed on the BSE, the corporate under the advise of Ernst and Young has devised a growth plan that includes setting up two more all suite hotels with 50 rooms each in Jaipur and Cochin. Land for both properties has been acquired and construction will commence by end 2006, with commissioning in 2008.
While IDBI has sanctioned debt of Rs 70 crore for the expansion, a Singapore based FII is likely to acquire upto 4 million shares of Boutique Hotels in a preferential placement at about Rs 125 per share, thereby bringing in the Equity component of Rs 50 crore.
A Rs 100 bill selling for next to nothing?
Aravali Securities which is a shell company of the Poddar family, is a duck sitting to be taken over. Look at what Aravali Securities owns:
4729131 shares of Sirpur shares, CMP Rs 86 Rs 40 crore
Boutique Hotels (which owns and operates
Palace DeviGarh Udaipur) 30,00,000 shares
currently unlisted, expected listing price Rs 36 crore
Rs 100-Rs 125
Land and Residential Property carried at
cost, including a farm house at Rajokri Greens
Market Value Rs 25 crore
Total assets Rs 101 crore
Aravali's Equity Rs 15 crore
Break Up Value Rs 67
Current Market price Rs 17.8
There is substantial upside to the Aravali Securities stock from hereon.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Investors are advised to consult their certified financial advisors before making any investments.
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