Shalimar Paints - Still seen colorful

Shalimar Paints is the only listed paint company, which has been posting is bottom line in red, 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 its income coming in from 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 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 just Rs.100 crores, while EV seen at less than Rs.300 crores, company can get sold at an EV of over Rs.600 crores. 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.