Friday, April 11, 2014

Piramal Healthcare’s 11% Vodafone Stake – Definitely worth it!

A little over 2 years ago I had written an article talking about Piramal's acquisition of an 11% stake in Vodafone India titled "Piramal Healthcare’s 11% Vodafone Stake – Is it worth it?". With the final conclusion of the sale of Vodafone, we can definitely say "Definitely Worth It".

But what does this mean to the stock price of Piramal? It has already risen 5% for two consecutive days since the announcement. So is the valuation just about right? Or is there an more room for growth? These are the questions a wannabe investor of Piramal must be asking himself.

In my opinion, Piramal is again at the same stage it was 2 years back. They have made a capital gain of around 2000 crores after tax on the transaction and further bolstered their coffers. They are again poised in investing these funds in their existing business or a new venture and get a decent ROE. All that we can know probably during their next analyst presentation/call.

But the Book Value of the company keeps increasing. The market cap is still INR 10,000 crore whereas their Vodafone investment itself was worth INR 8900 crore. Hence in my opinion, this still remains a BUY!

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