Why Stock Has Higher Book Value Than CMP ?
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What is Book Value ?
Book value per share (BVPS) is the ratio of equity available to common shareholders divided by the number of outstanding shares. This figure represents the minimum value of a company's equity and measures the book value of a firm on a per-share basis.
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Here I am explaining you one of the reason why Book value per share exceed the CMP, the reason is related to , company's portfolio current valuation.
It is been very common that one company buys shares of other company , the dividend income is reported as other income, and the current valuation of these stocks is added to company's Book value.
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For example Let us study this share name : Maharashtra Scooter
A well known brand of Geared scooter in early days. I think every body has a childhood memory attached to it's scooter . Now from a well known established scooter manufacturer to a holding company the journey is very different from usual.
Some interesting fact about Maharashtra scooter , that I found reading it's fundamental
Market Cap : 4,204 Cr ( opp .. That is not so great finding ✏️✏️✏️)
Book Value of Company : 22702 Cr (That is interesting)
Story is not over yet , wait
👇🏻👇🏻
Maharashtra scooter is holding 🫴🏻🫴🏻🫴🏻
💵💸💸💵💸💸💵💸
1) Bajaj Finance Ltd
Number of shares : 18974660
Holding Percentage : 3.13 %
CMP : 5519
Current Value : 10472.11 Cr .
🅱️🅱️🅱️🅱️🅱️🅱️🅱️🅱️
2) Bajaj Holding & Investment Ltd.
Number of shares : 3387036
Holding Percentage : 3.04%
CMP : 4640
Current Value :1571.58
🛵🛵🛵🛵🛵🛵🛵🛵
3) Bajaj Auto Ltd .
Number of shares : 6964277
Holding Percentage : 2.41%
CMP : 3607
Current Value :2512.01Cr
These three stocks announced dividends recently where ex date was 30 June , Dividend of 20 , 25 , 140 per share Respectively.
If I multiply and calculate the dividend earning of Maharashtra scooter that it stands at 143.92 Cr .
When I checked it's shareholding than I found more interesting things
1) All these companies are Bajaj Group Companies where Chairman is Mr. Sanjeev Bajaj .
2) Bajaj Holding has 51% stake in Maharashtra scooter and Maharashtra scooter has 3.04% stake in Bajaj Holding.
3) Company's ( FY 21-22)
Sales : 17Cr while
Expense : -20 Cr
But,
EBITA : +174CR (because of the dividend income got the point ? Comment Below)
If I add current portfolio value of these three stocks only (According to CMP) it it around 9605 Cr.
That is Why the book value of this stock is exceeding its cmp.
Book value per share (BVPS) is the ratio of equity available to common shareholders divided by the number of outstanding shares. This figure represents the minimum value of a company's equity and measures the book value of a firm on a per-share basis.
---------------------------
Here I am explaining you one of the reason why Book value per share exceed the CMP, the reason is related to , company's portfolio current valuation.
It is been very common that one company buys shares of other company , the dividend income is reported as other income, and the current valuation of these stocks is added to company's Book value.
----------------------------
For example Let us study this share name : Maharashtra Scooter
A well known brand of Geared scooter in early days. I think every body has a childhood memory attached to it's scooter . Now from a well known established scooter manufacturer to a holding company the journey is very different from usual.
Some interesting fact about Maharashtra scooter , that I found reading it's fundamental
Market Cap : 4,204 Cr ( opp .. That is not so great finding ✏️✏️✏️)
Book Value of Company : 22702 Cr (That is interesting)
Story is not over yet , wait
👇🏻👇🏻
Maharashtra scooter is holding 🫴🏻🫴🏻🫴🏻
💵💸💸💵💸💸💵💸
1) Bajaj Finance Ltd
Number of shares : 18974660
Holding Percentage : 3.13 %
CMP : 5519
Current Value : 10472.11 Cr .
🅱️🅱️🅱️🅱️🅱️🅱️🅱️🅱️
2) Bajaj Holding & Investment Ltd.
Number of shares : 3387036
Holding Percentage : 3.04%
CMP : 4640
Current Value :1571.58
🛵🛵🛵🛵🛵🛵🛵🛵
3) Bajaj Auto Ltd .
Number of shares : 6964277
Holding Percentage : 2.41%
CMP : 3607
Current Value :2512.01Cr
These three stocks announced dividends recently where ex date was 30 June , Dividend of 20 , 25 , 140 per share Respectively.
If I multiply and calculate the dividend earning of Maharashtra scooter that it stands at 143.92 Cr .
When I checked it's shareholding than I found more interesting things
1) All these companies are Bajaj Group Companies where Chairman is Mr. Sanjeev Bajaj .
2) Bajaj Holding has 51% stake in Maharashtra scooter and Maharashtra scooter has 3.04% stake in Bajaj Holding.
3) Company's ( FY 21-22)
Sales : 17Cr while
Expense : -20 Cr
But,
EBITA : +174CR (because of the dividend income got the point ? Comment Below)
If I add current portfolio value of these three stocks only (According to CMP) it it around 9605 Cr.
That is Why the book value of this stock is exceeding its cmp.
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