Shalimar Paints - Still seen colorful

Shalimar Paints is the only listed paint company, which has been posting a ‘red’ bottom line, for the last four quarters. There are only five paint companies listed on the bourses viz. Asian, Berger, Kansai Nerolac, Akzo Nobel and Shalimar. However, Hardcastle and Grauer & Weil have small portion of their income coming in from the paint sector, with no positive margins seen from it.

Shalimar Paints has a promoter stake of 62%, which is held by two promoters equally. One pie is held by Ratan Jindal of JSL Stainless and one pie by the Jhunjhunwalas of Singapore.

As both the promoters are keen to divest their stakes in the company for last over three years, all the four listed paint companies are keen in acquiring this stake. As Ratan Jindal is facing liquidity crunch, due to huge losses incurred by his company JSL Stainless, this stake sale may happen in next 12 months, as it may fetch good value in the booming paint industry. With M Cap of less than Rs.250 crore, while EV seen close to Rs. 350 crore, company can get sold at an EV of over Rs 600 crore. If this happens, share has potential to more than double from hereon. So, instead of keeping an eye on its quarterly numbers, keep a tab on the stake sale developments.