Arrow Coated Product : Update based on SHP

Latest SHP shows a very interesting pattern (as a continuation pattern from the previous quarters and more specific).

Corporate Bodies and NRI investors increased their holding, where Retail investors (Holders Less than 10000 shares) decresed their holding substatially, and a mild reduction in Individual holders holding more than 10000 shares.

A detailed table and analysis is given below.

SHP of ACP

	June 2014		Sep 2014		Difference
Share Holder Category	Number of Share Holders	Number of Shares Held	Number of Share Holders	Number of Shares Holding	(in number of shares)
Corporate Bodies	109	107454	117	139869	+ 32415
Non Resident Indians	54	97414	61	117703	+ 20289
Total					+ 52704
Individual shareholders holding nominal share capital up to Rs. 1 lakh	2071	1432061	2373	1383037	-  49024
Individual shareholders holding nominal share capital in excess of Rs. 1 lakh	42	1197539	40	1193859	- 3680
Total					- 52704
Net Change	(Considering this four groups)				0

If we analyze all previous multibaggers, 95% of time you can see retailers holding (Less than 1 Lakh nominal capital) will be reduced during the initial Bull Run to just before saturation period. Arrow Coated is also showing a similar trend and that too with an aggressive value. Almost 50 K shares changed from retailers to NRI's or Corporate, showing weaker hands exit from this one. If company shows better performance in the coming quarters, this trend is sure to continue, along with share price appreciation.

On the other hand, if share price moves based on operator play, the Share holding of retailers will increase gradually as operators start dumping their ones to the retailers. Check the future SHP too to see and ensure any specific operators plays are going on or not. Anyhow by reading in between the lines -for the past few quarters - the Share Holding Pattern is moving on an expected line showing a bright future for the company and the beginning of a bull run.

Another very interesting fact check

In the past two years annual report of Arrow Coated Products, we might have read from Chairman’s message:

“It is more important to note that besides revenues, the grant of a patent necessarily means the increase in the intrinsic value of the company. Recently, our Japanese competitor bought out the American competitor and paid a very interesting value, which was much more than the value of the bricks and mortar of the company.”

Was aware about the competitors names, as American Competitor (MonoSol LLC - US manufacturer of water solvant film) and Japanese Competitor (Kuraray Co. LTD), but recently only came to get the valuation of the deals. Sharing it here, if you are not checked it.

The details of the deal (Got it from the company website of Kuraray Co. LTD, company business results 2012-2013)

Acquisition cost            US $ 395,825,000

Amount of goodwill      US $ 170,515,000

If we consider an exchange rate of Rs. 60/- for US $, we will get the following figure in Indian Rupee.

Acquisition cost            : 2374.9 Crore

Amount of goodwill      : 1023.1 Crore

Total                            : 3478 Crore

[ Of course, the size of operations and number of patents may not be directly comparable with MonoSol and Arrow Coated, and I have not done any extensive study on these lines. But both these companies are working in the same area / field]

The deal happened two -three years back, when markets were going bear. And in the present bull market, and the present Mcap of Arrow Coated is  236 Crore.