1st day, 1st Show and intention is out and clear.
Today, Jubilant Ind Ltd has reported its 1st post merger result for FY12 and the stock is locked in 20% down circuit. Probably we may see few more.
While assessing the impact of merger of unlisted retail business of promoters in the listed Jubilant Industries Ltd, I had all my doubts about the rational and real intention of the management behind the merger.
A company which had an EPS of Rs 35.70 in FY11 has reported a loss of Rs 47.85 per share in FY12. The reason for this upside down is only one. Merger of hugely loss making privately owned retail business with the company.
Retail business continued to bleed and has reported an even larger loss of Rs 98.59 cr this year on a sale of only Rs 359 cr. This loss is more than 8.3 times of equity capital of Jubilant Ind Ltd. I see no hope and possibility of this retail business coming to even break even level at any point soon. Profit from this business should be a distant dream.
Till such time management finds some magic of turning this huge loss making business into even no loss situation, shareholder will continue to suffer and see their wealth being eroded.
We, shareholders are very accommodating and seldom question the management and pay the price.