Hemisphere Properties India Ltd (HPIL) was demerged with the surplus land of VSNL (now Tata Communications Ltd) and listed in October 2020. Business activities of HPIL are to acquire construct, hold, manage, develop, preserve and to deal in any other manner with the properties, including sale and purchase.
Government of India still holds 51% in the Company. HPIL has announced that the value of its land parcels which can be monetized is to the tune of Rs.19,000 cr based on current circle rate prices. In comparison current market cap is just Rs.5200 cr. So there could be a major upside in the stock. If not 4x, potentially it could easily double.
The Ministry of Corporate Affairs issued an order of demerger between Tata Communications Ltd and Hemisphere Properties India Ltd and under which 739.69 acres of land, located in Delhi, Pune, Chennai and Kolkata, was transferred into the Company.
The Company holds prime real estate land in Greater Kailash in New Delhi (69.46 acres), Padianallur, Chennai (53.04 acres), Dighi, Pune (524 acres) and Halishar, Kolkata (35.19 acres) and Chhatarpur, New Delhi (58 acres). The biggest land parcel by far is in Pune.
There is a possibility of the company partnering Tata Housing and Tata Construction to develop these land parcels for mixed use real estate which would mean malls, shops apart from primarily residential development. The Company is working closely with Ministry of Housing & Urban Affairs and very soon will decide the future plans associated with the land.
The stock is up about 80% from listing price. The net worth of the company was negative in past years, as the Company did not have any business and operations and now the goal is to begin monetizing these lands to its best extent. Currently the company has minimal debt, clean balance sheet. On the other hand there are no sales/ zero topline currently. Monetization may take time as they tie up with developers, so to get true potential may take 1-2 years at least, but given the land parcels there is definitely value on the table.
Since it is a de merged business with little business operations, there are no financials to show or fall back on valuations, but intrinsic value of land parcels which can potentially be monetized over next few years.
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 13 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.