Flash Focus: Fast Facts For Smart Investors

#Buy the shares of Zee Entertainment Enterprises Ltd (Rs.134.88) near the CMP for short term targets of Rs.150/161. SL: Rs.127.

Two recent developments have been favorable for the company. 

💢 Birla Opus Paints has partnered as the Co-Title Sponsor for ZEE's flagship singing reality show, Sa Re Ga Ma Pa, in Hindi and Telugu, and as a Co-Powered Sponsor in Tamil. As a dynamic new player in the paints industry, Birla Opus Paints has strategically focused on establishing a robust brand presence in various markets. According to the entertainment network, ZEE Network, with its wide reach across India and globally, has proven to be an ideal platform for the brand to connect with its target audience.

💢The National Company Law Tribunal (NCLT) has officially approved the termination of the merger between Zee Entertainment Enterprises Ltd and Culver Max Entertainment, formerly known as Sony Pictures Networks India.

Additionally, the tribunal has withdrawn its previous order from August last year that had sanctioned the merger of these two entities, a deal that ultimately could not move forward.

Both Zee and Sony had sought termination fees amounting to $90 million from each other, citing non-compliance with the Merger Cooperation Agreement (MCA) signed in December 2021.

This decision not only spares both companies the significant costs associated with litigation but also eliminates the administrative burden that would have accompanied the legal proceedings and continued merger efforts. It allows both entities to refocus their energies on independent growth strategies without the distractions and complexities of a protracted merger process.

#The following information is for those who are still confused regarding the business model of this little known company named: Swan Energy Ltd (Rs.599.30) which has diversified interests in real estate, textiles, oil & gas, defence and commercial shipbuilding and ship repairs, and heavy fabrication. Photo: Energy World.

It has intensified its shipyard restoration efforts, focusing on activities such as dredging, reinstatement of licenses and certifications, implementation of industry-standard safety measures, and upgrading basic utilities. 

A war ship contract for Reliance Naval and Engineering Ltd is due, as per market sources. The shares of RNRL are expected to list by March 2025; in the Indian bourses. 

Incidentally, in March this year Swan Energy raised Rs.3,319 crore via Qualified Institutions Placement (QIP) at a floor price of Rs.703.29, which is at a premium to the CMP of the scrip. The proceeds will be used to reduce its debt and modernise the shipyard acquired through the takeover of Reliance Naval and Engineering Ltd.

Some of the marquee investors included the who's who of India Inc: Quant Mutual Fund, SBI Life, LIC, LIC Mutual Fund, Tata Mutual Fund, Infini Mutual Funds, SBI General Insurance, BNP Paribas Mutual Fund, Nomura, Diamond Asia, Bank of India Mutual Fund, ITI Mutual Fund, Goldman Sachs, Future Generali, Anand Rathi, and other domestic and foreign institutions and family offices. 

In an interesting devlopment, Swan Energy Ltd (SEL) through its subsidiary Triumph Offshore Private Limited (TOPL), has signed an agreement to lease out its Floating Storage Regasification Unit (FSRU) vessel Vasant One to Botas, Turkey's state-owned natural gas and LNG firm.

According to a report published on 9 March, 2024, in Energy World, the lease arrangement is generating daily rental of $250,000, around Rs.2 crore (as per the present exchange rate) for SEL. The annualized cash accruals from the agreement amount to Rs.800 crore. The duration of the lease agreement is for 12 months and is extendable on this basis of mutual agreement,

The article further mentioned that: based on the bare boat charter, its subsidiary Triumph Offshore Private Limited (TOPL),  has leased out only the bare FSRU vessel to Botas and Botas will manage the operational expenses including fuel, crew, insurance, maintenance, and repair. As a result, TOPL does not incur any operational expenses during the lease tenure. This lease arrangement implies that the rentals earned essentially add to the EBIDTA of the company.

The share price is expected to double from the CMP in the next 18 months.

#The Bank of Maharashtra Ltd (Rs.59.30) has the largest network of branches of any nationalised bank in the state of Maharashtra. 

State-owned Bank of Maharashtra (BoM) has emerged as the top performer among public sector lenders in terms of loan and deposit growth in percentage terms during 2022-23. The Pune-headquartered lender also recorded highest growth in profitability with bottomline growing almost 126 per cent to Rs 2,602 crore during the year (Wikipedia).

Incidentally, the Pune-based state-owned lender, was recognized as the best bank in managing bad loans, achieving a remarkably low net non-performing assets (NPAs) ratio of 0.25% during the financial year that ended in March 2023. Photo: Adda247.com.

💢Report Card of Bank of Maharashtra💢

PE Ratio: 10.45.

EPS:  Rs.5.73.

Sales: Rs.5,874.64 Cr.

Face Value: Rs.10.

Net Profit Margin: 19.780%.

Last Dividend: 14%.

Return on Average Equity: 22.24%. 

Source: Rediff.com.

Financial performance as of Q1FY25:

➡️Net Interest Income (NII): Rs. 1,550 crore

➡️Net Profit: Rs. 430 crore

➡️Return on Assets (ROA): 0.60%

➡️Return on Equity (ROE): 10.50%

➡️Gross NPA Ratio: 5.35%

➡️Net NPA Ratio: 1.85%

➡️Provision Coverage Ratio (PCR): 80.00%

➡️Capital Adequacy Ratio (CAR): 16.50%

➡️Tier-1 Capital Ratio: 13.20%

➡️Year-on-Year Loan Growth: 13%

➡️Year-on-Year Deposit Growth: 11%

➡️Price-to-Earnings (P/E) Ratio: 7.8x

➡️Price-to-Book (P/B) Ratio: 0.62x

➡️Dividend per Share (DPS): Rs. 2.10

➡️Dividend Yield: Approximately 3.56%

Source: Internet and Bank's Official Reports.

The above financials show that the scrip is undervalued as per the current price. We can therefore look for targets of Rs.90/Rs.110, in the coming days.