Thursday, December 9, 2010

Summit securities listing update

Last year, the RPG Group decided to merge four companies—Summit Securities Ltd, Brabourne Enterprises Ltd, Octav Investments Ltd and CHI Investments Ltd—with RPG Itochu Finance Ltd (RIFL), a 100% subsidiary of RPG Enterprises. Shares of these companies have been suspended from trading since 3rd February due to the proposed merger. In august the company decided to change the name of the merged entity from RIFL to Summit Securities Ltd.

The shareholders of those four companies have received their proportion of summit securities in their demat a/c in august but the merged entity (Summit securities) is still not listed and hence shareholders are not able to sell their holdings. Shareholders are stuck and frustrated and have been looking for several exit options. Many brokers are trying to take advantage of this situatuion asking investors to tender their share of summit securities lying in their demat a/c at Rs. 10/- through off market transaction, misleading them that their investments are of no worth now and they should exit at whatever value they are getting.

The shareholders should stay away from such brokers or people and stay calm for some more time. This is about to get solved very soon. As per the recent conversation with an RPG management representative we came to know that all the approvals have been obtained except SEBI. The approval from SEBI should also come soon as the pressure is equally high on the RPG group as well. RPG group being a 17,000 crore enterprise is not expected to cheat shareholders of such small companies.

As per the latest annual report of summit securities the top 5 quoted investments held by the company are as follows
Company NameNo of shares after MergerCMP as on
09DEC 2010
Value in crores
CESC Ltd2,056,94836074.05
KEC International4,857,790442214.71
Phillips Carbon1,903,11417032.35
Zensar Technology4,444,27616071.10
Harrison Malayalam728,150695.02
                                    TOTAL                                                            397.23

So the top 5 holding iteself are worth approximately 400 crores. On an equity capital of 10.90 crores, the per share value of the above investments comes out to Rs 365/-.
Other quoted and unquoted investments including cash held by the company are worth at least 100 crores.

Considering the above facts it is advisable not to sell any holdings in Summit securities until it is listed and has been traded for 6 months, because it might happen that because of delay in listing some shareholders sell on the listing day itself.
The book value of the company at cost as on 31st March 2010 is Rs. 362/-. Even if we discount the BV by 20%, the shares of summit securities should stabilize above Rs. 300/- within 6 months of listing.


  1. Actual value is about Rs 950 crores as of 31/3/2010. So book value is about Rs 900/sh.

  2. Yes if we revalue all the investments held by the company it is near that figure. but I think the BV mentioned here is at cost as per the figure in the latest balance sheet. The whole point is there is no point in selling our shares at less that 350-400. may be higher but certainly not lower.

  3. Listed on 28 January 2011. Highly volatile session. Price fluctuated from 116 to 209 and settled at 186. Book Value is 362. Can we expect 350-400 range in 6-9 months from listing?

  4. have patience, the market is overall down. the stock is down because of impatient investors who got stock is the stock in last 1 year. Let the noise settle, hope to see much better price in coming 3 months.


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