AV Birla NUVO

Aditya Birla Nuvo (CMP Rs 880) is a classic theme stock. The company holds interests across varios businessess like Insurance (Birlas Global Finance), Telecom (Idea), Branded clothing (Indian Rayon) and Fertlizers (Indo Gulf Fertizers). The company recently amalgamated two of its subsidaries i.e Indo Gulf fertlizers and Birla Global Finance. Indo Gulf Fertilizers being a cash rich company acts like a cash cow from where the company couls use the cash proceeds to fund the other buinsess emerging businesses like Insurance,Telecom etc. It also made an overseas acqusistion of  Minacs, Canadian BPO firm.

There is nothing much to talk about the financials about AB Novu, the only to talk about is that company is sitting on big set of investmenst that are yet to materialized. the company involves the business that has growth cum value.

Telecom: Idea

AB Novu holds a whopping 35.74% stake in Idea which by coonservative estimates amounts to more than Rs 10000 crore (estimates take the base value of Rs 40 i.e. price at which stake was acquired from Tata). The company has subscriber base of 10 million as compared to Bharti 28 million (Approx.) The numbers that we see are mind boggling becuase company is still in a very nascent stage and is yet to materialise its opertaion across the country. Moreover, the company is profitable in all the cirlces it is operating so it puts less burden on the financiala as it enetrs the new areas of operation like Mumbai, Bihar etc. Also,the company is to place 10-15% stake of Idea to few QIP whihc will reduce the debt burden of the company. So, looking at the growth potential of telecoma sector per se and company potential it could be be emerging star in AB Novu portfolio.

 Insurance: Birla Global Finance

The company includes the integrated play of Insurance and mutual fund business. In the annual report of AB Novu the assets under mgmt by company have increased from 11457 to 14611 for FY06. And with high GDP growth and buoyant capital market, the grwoth potential for the AUM business seems at very right position. Also, the company has slight shares in corporate business finance and with interest rates rising it gets good premium to its business financials. The only laggard in its financial portfolio is Insurance business which is still in losses  and decreasinf market of 6.2% but mgmt indicated the company will breakeven in Q3 of FY06. But with string mgmt skills and financial sector grwith reforms the company could be multibagger. Also the company does not face any financial constrains because of good cash flows generated by Carbon and Insulator business.

The other business of Garment,BPO and fertlizers are all well established business. So there is no doubt that AB Novu is great buy. Amd with the businesses the company is ventured into the price of stock could easily double from current levels in next 12 months or so. Also if company anytime decided to demerge and of its business it could be huge value unlocking for the shareholders. So on all declines its a great buy for all medium to long term investors