Diversified profits

Aditya Birla Nuvo (ABN) has been one scrip which has been one of my favorites over the last few years and one I believe one can really buy and forget. I had written about this at the end of Dec’ 12 here and more recently here and here.  From 1100 on 31-Dec-12, this is now quoting at 1800 an annualized return of nearly 30% over the last 2 years. And the story is not over yet. In fact, things have only improved in the last 2 years. Look at the businesses it is in and the prospects of each in the next few years.

With AB Nuvo (ABN) acquiring Pantaloons from Future group, the retail foray now looks more promising than before. They now have a play on all segments of the market from the upmarket Louise Phillipe/Van Heusen to the mid-market Pantaloons (which I can say from personal experience, does offer value for money clothing).

And the talk of Birla being interested in e-comm foray (the latest happening thing in India right now) also augurs well for ABN. This is yet a nascent market, and whoever moves first s likely to get a firm grip on the buyers (just look at Flipkart, Myntra etc). 

With Modi Sarkar’s reforms push, I believe it will only be a matter of time before Insurance reforms come in when foreign players with deep pockets can have a majority stake in their JV with Indian partners. And Birla Sun Life is doing reasonably well in this market, though it can’t be called a top player. Birla may well monetize his stake in this by selling some of it to Sun Life, who having been in the Indian market for a decade or more now, may well be happy to go for it.

Add to that the sound performance of Idea over the last few years. It has certainly earned its place among the cellular service providers in India. And from the results over the last few quarters, Indians are taking more to data on the Net than voice. And here, Idea has certainly done well. With e-commerce boom and more e-governance etc. the e-boom should continue for some time to come and players like Idea can certainly ride on it.

So all in all, most of the businesses of ABN are well positioned for excellent prospects in the coming time and should bring a lot of cheer to the shareholders, something which is long overdue.

Also, any value unlocking they do thru demerger/listing/spin-off of one or more of their numerous subsidiaries, Financial Services and Insurance being at the top of the queue,  will be an added bonus.