Thursday, January 03, 2013

United Breweries (Holding) Ltd: Buy
CMP: Rs.116.50
I think the time now has come to pick up stakes in United Breweries (Holding) Ltd (BSE Code:507458) at the CMP of Rs.116.50. We have seen some rally in Kingfisher Airlines Ltd (KFA Ltd), yesterday and some positive movements in UNITED SPIRITS LTD, UNITED BREWERIES LTD and U B Engineering Ltd. Now, my optimism stems from the fact that, United Breweries (Holding) Ltd holds around 24.44 % shares in KFA Ltd and hence if the latter is rising, it gives value addition to the shares of United Breweries (Holding) Ltd.
However, the story does not end here. Let us consider the following cases too:
(i) In United Breweries (Holding) Ltd the family of Dr.Vijay Mallya, had direct holding of 7.91% which means this is one of the family jewels of Dr.Vijay Mallya.
(ii) In UNITED BREWERIES LTD, a Dr. Vijay Mallya Group Company, the United Breweries (Holding) Ltd, holds 11.46% of the shares. Now at the current market price of Rs.944.85, the value of this holding comes to Rs.2862509150 8.35 or ~Rs.2862.51 Cr, against the market cap of the company of only Rs.790.80 Cr and Book Value of Rs.236.90.
(iii) In UNITED SPIRITS LTD, another Vijay Mallya Group Company, this company holds 18.03% of the shares. Now at Rs.1983.20 per share, of United Spirits Ltd, the value of this holding comes around Rs.46758487477.6 or ~Rs.4675.85 Cr.
(iv) In UB ENGINEERING LTD, it holds 37.18 %, whose value become Rs.244621106.7 or ~Rs.24.46 Cr.
This shows that the hidden value of the shares of United Breweries (Holding) Ltd are much higher than the CMP of Rs.116.50. This implies that the scrip would soon be re-rated in the coming days. I therefore, stronly recommend a buy on the scrip for a short term target of Rs.127-132-145, in the  next few trading sessions. 
The philosophy of buying the shares of this company is that, the shareholders are actuallying buying the shares of Blue Chips like, United Breweries Ltd and United Spirits Ltd at a fraction of their current price.