Maithan Alloys - The Curious Case of Stock Investments with investor money
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- čas přidán 5. 01. 2024
- Maithan Alloys is a listed entity, that recently decided to invest nearly Rs 700 crore worth of cash on their books into listed and unlisted stocks.
Is this a good decision?
What does corporate finance say?
If you were an analyst or investor, would you like it?
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It's great that you created this video. On one hand, the stock looks cheap based on the cash on the balance sheet, in the form of equity investments. On the other hand, the question arises whether the management will ever return shareholders money appropriately in the future. I also do not appreciate their wish for future acquisitions and that's being the reason to hoard the money. They have not done well with their recent acquisition. Also, they do not have someone like Warren Buffett or Pulak Prasad as a star investor.
Very well explained, sir ☺️.
Thanks a lot for the kind words.
They have expansion plans and can acquire in near future .allow the money to grow .giving back to share holders or dividend is not compulsory .if they were to buy govt bonds ,may be you would agree .however the management is very strong and qualified too .will reward later i presume
Also, what's your view point on companies using a portion of their cash to SIP into a basket of equity / debt mutual funds for long term benefits?
Liquid funds is good. Anything listed equity could be a problem. Debt funds also ok - as long as the idea is to manage capital safely. Basically the company should be very careful with shareholder funds.
Promoters hold around 75% of company so I don’t think there is any conflict of interest.
Were they trying to play warren buffet berkshire game ???
:) Possibly. Just bull market things we guess.
I was about to invest in this company, but coming across your video, I see its a very big red flag.
May not be a very big red flag, but ya, better companies may be available in the market.
Rather than expanding capacity now for the sake of it, Maithan management appears to be strategically preparing for a potential downcycle in their core business by holding spare cash and maintaining flexibility to acquire stranded assets of competitors at throwaway valuations. If they return the funds now, it might be difficult to raise the same funds later for such acquisitions as capital is not easily available during bad times. Pretty sure the fund managers at Aequitas PMS are aware of this and hence continue to have Maithan as their largest holding
They can park the money in safe assets, or government bonds. Have you seen Infosys do this with the cash they hold?
If the board allows, technically controlling interest has allowed said investment to go through, which is technically shareholders deciding. Isn't it? Retail/Minority shareholders would have been overruled in case of a vote anyways.
Yup. But bad governance from minority shareholder perspective right? Why would I as a minority shareholder want them to manage my money.
Just one Question repeated 4 times with 3 different examples and no comments/answers whatsoever...