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Wednesday, August 3, 2011

Small Cap Stock Story - Tulip Star Hotels

This small cap stock has almost doubled in past 3 weeks. I really do not have any clue whether one should buy stocks of this company. But I would like to share the story I read and you are invited to make and share your judgments.

Tulip Star is different kind of small cap stock story. They are in battle with another company over a Juhu Centaur Hotel. Juhu Centaur hotel is a six acre property at prime and affluent location in Juhu in Mumbai.

Tulip Star is fighting a case with Siddhivinayak Realties. Tulip Start has almost won this case as they have recently got the arbitration award for Juhu Centaur Hotel against Siddhivinayak realties.

Juhu Centaur Hotel is owned by V Hotels Private Limited. Tulip Star holds 50% stake in V Hotels.

As per the arbitration award, they have to shell out and pay Rs. 73 crores to Siddhivinayak Realties. After this payment, V hotels can sell the property as they want on their terms and conditions.

This property could have almost 15 lak square feet of developable area. The valuations for this property can go well over Rs. 3000 crores.

Shareholding pattern of Tulip Star
Promoters hold 57%. In this, COX & KINGS holds 30.4%. Also, 33% belongs to associates close to promoters. So 57 + 33 i.e. 90% of the floating stock is not in public domain. What remains is 10% with general public.

Stock Valuation
At current stock price, market cap of Tulip Star is just Rs. 106 crore. Now, the company, with 50% stake in V Hotels, owns the Rs. 3000 crores property with their share of Rs. 1500 crores.

Tulip Star has 21 crores in debt. At the same time, it has lent 37 crores to V Hotels. This makes it a debt free company.

So the company like Tulip Star that has net value of at least 1500 crores could have the market cap somewhere close to at least 20% of it’s net value. That is 300 crores. So there is tremendous scope for company’s current market cap of 70 crores to grow in near future.

I would like to know your opinion on this one. You are invited to share your thoughts using comment form below.

1 comment:

  1. What is the sources of information for this analagy?

    Also if a 6 acre Property is valued at 300 Cr, that pegs the rate per sq. ft at 125000.
    Which begs the question, will the realisation on resale really be Rs 3000 Cr?

    ReplyDelete

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