When Govt of India sold part of its stake in VSNL (25 per cent holding initially) to Tata group in 2002 (as part of its disinvestment programme), it was stipulated that the surplus land parcels of VSNL would be excluded from the stake sale of VSNL and the suprlus land would be transferred to another company.
It may be recalled VSNL was listed on NSE on 12Apr1995 -- which means as a government company then VSNL was publicly listed. After sale of stake to Tata group, VSNL was renamed as Tata Communications Ltd.
As of 31Mar2025, Govt of India holds 51.1 per cent stake in HPIL, while 18 per cent is held by Tata group and the rest by retail / HNI investors / others. Number of shareholders is 143,800.
The company's revenues in the past five years are practically nil, except some other income in the form of interest on bank deposits held by the company. Its accumulated losses are around Rs 47 crore.
Details of land parcels held by HPIL:
As per HPIL’s annual report of FY 2023-24, the value of all land assets owned by HPIL is Rs 10,879 crore as on 31Mar2024, according to the valuation done by NBCC, etc.
Fair value of HPIL assets as on 31Mar2025 is not yet available; and the same may be available once its annual report for FY 2024-25 is published.
Major assets of the company as on 31Mar2025:
Land assets (categorised as Investment property): Rs 662 crore at book value or carrying value
Goodwill on demerger: Rs 282 crore
Bank fixed deposits: Rs 88 crore
Cash and cash equivalents: Rs 50 crore
Major liabilities (other than equity and reserves) of HPIL as on 31Mar2025:
Stamp duty / mutation expenses payable: Rs 640 crore
Borrowings: Rs 60 crore
Against a carrying value of Rs 662 crore for its land assets, their fair value has been assessed at Rs 10.879 crore (as determined by NBCC as of 31Mar2024). As of 30May2025, the market capitalisation of HPIL is Rs 3,800 crore, with a share price of Rs 133.
Excluding certain payables--such as stamp duty and mutation charges, as outlined above--the company’s market capitalisation is quoted at a discount of 65 per cent to the fair value as on 31Mar2024. .
For retail investors, this remains the only reliable benchmark to assess the company’s valuation, given the lack of access to independently verified valuations of HPIL's land holdings.
It is an irony while private real estate developers have been able to make significant gains through robust revenues in the past four years, HPIL has been unable to monetise its land holdings.
It is significant to mention that several top private real estate players across India have been able to achieve a sales growth of 50 to 200 per cent in the past four years.
Even though HPIL is quoting at a discount of 65 per cent to its fair value of land assets, the lack of execution capability on the part of Govt of India-owned HPIL is a drag on the HPIL share price. Whether investors can make decent returns from HPIL, in future, will largely depend on the success of HPIL to monetise its assets quickly.
Given the poor track record of HPIL in the past five years, the stock of Hemisphere Properties India Ltd looks like a speculative and risky bet as of now. The key variable to watch is management’s execution capability to sell land parcels held across four cities in India.
This is just for informational and educational purpose only; and should not be construed as investment advice. Prospective investors should consult their own financial advisors before making any investments in the stocks discussed above.
- - -
-------------------
Tata Communications investor presentations
HPIL annual reports
BSE / NSE
2 NMDC Steel Ltd (steel assets demerged from NMDC)
3 BEML Land Assets Ltd (demerged from BEML)
4 Shipping Corporation of India Land and Assets Ltd (demerged from SCI)
Disclosure: I've got a vested interest in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and
opinion provided here are only for information purposes and should not be construed
as investment advice. Investors should consult their own financial advisers
before making any investments. The author is a CFA Charterholder with a vested
interest in financial markets.
CFA Charter credentials - CFA Member Profile
CFA New Badge
CFA Badge
No comments:
Post a Comment