Piramal Healthcare acquisition of Decision Resources Group - An attempt to value DRG

With Piramal Healthcare stock slowly and steadily marching northwards (Disclaimer: It has been my favorite stock for almost a year, so this post may be a little biased ) following a slew of acquisitions (and a Rs17.5 dividend per share coming up), I once again pause to take a look at the latest acquisition – Decision Resources Group for a sum of approximately $635 million. All the reasons given in their investor presentation indicate the attractiveness of holding this company in the portfolio. But again the question arises (as earlier with Vodafone India’s stake), have they paid an appropriate value for this? So, I make an attempt to value DRG, but the same being a privately held company a lot of assumptions need to be made.

Analysis of Navin Flourine International Ltd

A company giving Rs66.5 per share dividend in form of (final + special) dividend always attracts attention. Since its announcement it has risen from 330 to 430 and post ex-date, it now trades at 305. Its P/E multiple shows 1.xx and it reported a fantastic result as follows:

Navin Fluorine International Limited, a part of reputed industrial house of Arvind Mafatlal Group, today reported a consolidated net profit of Rs. 217.58 crore for the year ended March 31, 2012 as against Rs. 71.34 crore in corresponding period of last fiscal year, registering an increase of 205 %.
Net Revenue for the year stood at Rs. 7.24bn, registering a growth of 68.23 % as compared to Rs. 4.30bn posted the last fiscal year. Earnings per share (EPS) increased by 214 % to Rs. 222.91 as compared to Rs. 70.81  of the last fiscal year.
(source: http://www.indiainfoline.com/Markets/News/Navin-Fluorine-FY12-net-profit-jumps-68-percent/5407635849)

The big question coming to my mind is: “Why then is this stock not catching the imagination of the prudent investors?” The answer becomes apparent on looking at its annual report.