Stock Review: VLS Finance

 

VLS Finance is a flagship company of VLS Group. It operates through four of its subsidiaries and VLS Investment is another peer into the same subsidiary group. VLS Finance is a very interesting as the stock is terribly undervalued. The market cap of this company is just Rs 60 crore. The company had investments in Sunair Hotels, which is a Delhi metropolitan hotel, which is roughly worth Rs 800 crore. There is a pending litigation on the company with Gupta brothers.

If I see the entire litigation aspect I feel the case should be in favour of the VLS Finance Group and then this stock can be a multi-baggier because if I see the entire aspect—Rs 800 crore of worth where the company would be holding approximately 87% after the case hearing is closed—that will mean that the value of the stock itself would be around Rs 600 crore.

The current market cap is Rs 60 crore. Apart from this the company holds 14% in Relaxo Footwear along with its subsidiary, which again works out to be Rs 60 crore that means you are having a free stock available for you where there is unlimited upside—5-6 times even from here—and almost no downside for the stock.

The stock last time in 2007, just before the hearing, was approximately hovering around Rs 80-90 levels. With the case hearing coming near the stock could again go to those levels and if the case hearing is actually going to be in favour of the VLS Finance Group the market cap could be anywhere between Rs 400-500 crore also.

At Rs 600 crore marketcap where there is no downside risk because of Relaxo Footwear and other holdings like Gati etc, and there is unlimited upside potential we feel that this stock could be a multi baggier from current levels.