SHARES OF BSE LTD LOSING VALUE

Remember when the Demutualisation Process was Completed last year at the BSE,each Member broker got 10000 shares of FV Rs 1 in BSE LTD ?

At Rs 5200/share many tendered a large part of their holdings to the BSE who then allocated them to the Singapore and German Stock Exchanges and other Institutions

Today there are sellers at Rs 4500 but no takers as the much awaited IPO and Listing has not yet materialised…there are some issues pending with SEBI…also more Business take place on the NSE and it has been recently valued through a stake sale at just under US $ 4 billion while at Rs 5200 the Value of BSE was just under a Billion dollars

I know a member broker who divested 83% of his bonanza holdings to realise Rs 4.31 crores and paid off all his liabilities like did many other Member Brokers

I also know of a Big Institutional Broker, who also advised the BSE on the divestments,who cornered a lot of BSE Ltd Shares fronting it’s High Networth Clients…..these clients were assured that the price of BSE Ltd Shares will cross Rs 15000 within a year !  

Things have not worked out to plan yet !  

Check out for yourself the Annual Accounts of BSE for 2006/7 at http://www.bseindia.com/about/bseannual.asp to assess what should be the Value of BSE Ltd

Annual Accounts for 2007/8 have yet to be uploaded by BSE on their site

BSE Ltd earned Rs 91 crores in 2006/7 and gave an EPS of Rs 131 on an Equity of Rs 69.50 lakhs (FV Rs 1).It had reserves of Rs 1005 crs and gave a Book Value of Rs 1447 per share

Even if BSE earnings move 50% higher in 2007/8  to register profits of @ Rs 140 crs  to give an EPS of @ Rs 200 and even if an 18 Multiple is used (  1.5 times the LSE Earnings Multiple of 12)  BSE  is valued at Rs 3600….much less than Rs 5000 per share….Rs 15000 is a far cry…unless somebody has found significant embedded and revalued asset value in BSE Ltd…..But even taking a Book Value Multiple of 3 the Value would be below Rs 5000

I’ll await the latest results to assess any embedded or hidden asset values…The results seem to have been delayed as BSE Chairman and another Director resigned earlier last month…I had emailed a SCRIPTECH STANDPOINT on these resignations to clients on June 19,2008……check an earlier Blog for this  

You want to compare this with the London Stock Exchange then take Rs 85 = One Pound and the results of LSE for the Year ended March 31,2008  and consider the following

• The Share Price of LSE at GMT Noon today was Sterling Pounds 8.55 (Rs 726)
• LSE earned a Net of Pounds 174 million (Rs 1479 crs) giving an EPS of 73.1 pence on average shares 237.8 million in the year 
• LSE had an Equity of Pounds 19.1 million (Rs 163 crs) comprising 276.4 million shares of FV Pounds 0.69186 or 69 pence (Rs 58.8)
• LSE’s net worth was Pounds 1268.4 million(Rs 10781 crs) giving it a Book Value of Pounds 4.59(Rs 390)
• The P/E Multiple is 11.7 and the P/BV Multiple is 1.86