In today’s briefing:
- MBK Partners Plans to Launch a Tender Offer for Makino Milling Machine
- Keisei Electric (9009) | Neither Hidden nor Structurally Mispriced
- HAL (NSE: HAL) – Strong Visibility, Undervalued Optionality
MBK Partners Plans to Launch a Tender Offer for Makino Milling Machine
- MBK Partners plans to launch a tender offer for Makino Milling Machine (6135 JP) at 11,751 yen per share by early December to take over the controlling ownership.
- The key long-term investment case for Makino is that it is one of the best companies in the world for making advanced machine tools that are increasingly becoming more sophisticated.
- One could make the argument that this may not the final offer and some investors may require slightly higher prices in order to make the deal final.
Keisei Electric (9009) | Neither Hidden nor Structurally Mispriced
- Keisei’s OLC stake distorts valuation optics, but is already transparently priced by the market.
- Activist criticism over “true” ROE reflects accounting semantics, not hidden inefficiency.
- Core business plus OLC stake offers modest returns; upside exists, but hardly suggestive of chronic long-term underperformance
HAL (NSE: HAL) – Strong Visibility, Undervalued Optionality
- Over FY22–FY25, HAL’s revenue grew at a CAGR of ~8%, while PAT rose at ~15% CAGR, with the order book doubling to ₹1.89 lakh Cr, providing LT visibility.
- India’s defence indigenization drive, large platform rollouts (LCA Mk1A, LUH, AMCA, engines), positions HAL to address a Rs3–4 lakh Cr opportunity over the next 5–10 years, including exports.
- Despite strong earnings growth, zero debt, and long-term JV upside (e.g., Safran engine), HAL trades at a P/E of ~33–38×, below many peers, indicating room for re-rating.
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