Maharashtra Apex Corporation: Is It an Undervalued Gem?

Fundamental Analysis is a method of evaluating a company’s financial health, performance, and intrinsic value by analysing its financial statements, industry position, and economic conditions. It helps investors determine whether a stock is undervalued or overvalued.

 Objective of the Analysis

In this report, I have conducted a fundamental analysis of Maharashtra Apex Corporation Ltd. based on 11 key parameters to determine whether the stock is undervalued or overvalued. The objective is to identify potential investment opportunities by comparing the stock's market price with its intrinsic value.

• Undervalued Stock (Buy Opportunity): When the stock price < intrinsic value, indicating that the stock is trading below its true worth and presents a potential buying opportunity.
• Overvalued Stock (Potential Risk): When the stock price > intrinsic value, suggesting that the stock is overpriced and may pose a risk to investors.

Through this analysis, I aim to evaluate whether Maharashtra Apex Corporation Ltd. is a worthwhile investment based on its fundamental strength and valuation metrics.

Maha Rashtra Apex Corporation Ltd. (NSE: MAHAPEXLTD) is a non-banking financial company (NBFC) based in Manipal, India, primarily engaged in hire purchase and leasing activities.

Maha Rashtra Apex Corporation Ltd., incorporated on April 26, 1943, by the late Mr. Upendra Anantha Pai—who also founded Syndicate Bank—is a financial services company based in Manipal, India. Initially established as a banking institution under the name Maharashtra Apex Bank Ltd., the company transitioned into the hire purchase sector in 1955, following the transfer of its banking branches to Canara Industrial and Banking Syndicate Ltd. (now Syndicate Bank) upon the advice of the Reserve Bank of India. This strategic shift led to its rebranding as Maha Rashtra Apex Corporation Ltd.

The company's core business activities encompass leasing, hire purchase financing, and bill discounting services. Over the years, it has diversified into areas such as merchant banking, mutual funds, and retail marketing of gold coins. Additionally, Maha Rashtra Apex Corporation Ltd. has promoted subsidiaries like Manipal Home Finance for housing finance and Manipal Share and Stock Brokers.

As of March 25, 2025, the company's market capitalization stands at approximately ₹163 crore, with a stock price of ₹115 per share. Despite its longstanding presence in the financial sector, the company maintains a relatively small workforce, with 19 employees. This report provides a fundamental analysis of the company based on the following parameters:

1. Cash Bargain Analysis        

Cash Bargain represents the extra cash available in the business, helping investors assess whether a company holds significant cash reserves relative to its market capitalization. This is an asset-based approach, where the company's market capitalization (M Cap) is compared with the market value (MV) of its investments to determine its financial strength.

Unquoted Investments:

Quoted Investments:

Calculation:

For Maharashtra Apex Corporation Ltd., the calculation is as follows:

• Unquoted Equity Investments: ₹51,649.40 lakhs
• Quoted Equity Investments: ₹7.3744 lakhs
• Total Investments: ₹51,656.77 lakhs = ₹516.567744 crores
• Number of Equity Shares: 1.42 crores
• Market Capitalization (M Cap): ₹163 crores

By comparing total investments with market capitalization:

Conclusion:

The Cash Bargain Analysis shows that Maharashtra Apex Corporation Ltd.'s investments are 3.16 times its market cap, indicating a potentially undervalued stock. This suggests a buying opportunity, but further analysis is needed to assess asset quality and financial health.

2. Business Analyst View        

The Business Analyst Perspective evaluates a company's intrinsic worth by analysing its book value per share (BVPS). Book value represents the net worth of the company, calculated as shareholders' funds divided by the number of outstanding shares.

Conclusion:

Since the stock is trading at only 36.39% of its book value, it indicates that Maharashtra Apex Corporation Ltd. is significantly undervalued from a business analyst’s perspective. This presents a potential investment opportunity, provided there are no major risks impacting the company’s true value.

3. Ben Graham Value (GV) Approach        

The Ben Graham Value (GV) Number is a widely used metric to determine the intrinsic worth of a stock based on fundamental valuation principles. A stock trading at a significant discount to its GV may indicate a strong undervaluation and a potential buying opportunity.

Conclusion:

The stock is currently trading at only 7.79% of its Ben Graham Value, reflecting a massive 92.20% discount. This suggests a significant undervaluation, making Maharashtra Apex Corporation Ltd. an attractive investment opportunity for value investors following Ben Graham’s principles.

4. Old-Fashioned Banker Approach        

The Old-Fashioned Banker Approach is a conservative valuation method where a cautious banker assesses whether a company's interest obligations are sustainable even during a downturn. This approach ensures that debt levels remain manageable under stress scenarios.

For Maharashtra Apex Corporation Ltd., the key financial figures are:

• Current Market Price (CMP) = ₹115
• Market Capitalization = ₹163 crores
• EBITDA (Last Year) = ₹344 crores

A prudent banker limits interest payments to a maximum of one-third of EBITDA to ensure financial stability.

Conclusion:

Even after a sharp 67% decline in EBITDA, Maharashtra Apex Corporation Ltd. can still manage interest payments within a safe limit, reflecting strong financial stability. This approach suggests that the company can handle economic downturns without excessive financial distress, making it a relatively safe investment from a fundamental perspective.

5. Hidden Loan Component Value Per Share        

The Hidden Loan Component Approach compares a company's market valuation with the loan amount a bank would be willing to offer based on its earnings. If the market values the company lower than the loan value, it indicates undervaluation, making equity investment more attractive than debt financing.

A cautious banker would be willing to lend ₹1433.33 crores to the company, but the market is valuing the entire company at just ₹163.3 crores—far below this amount.

Conclusion:

This indicates significant undervaluation, as the stock is trading for much less than what a banker would consider a safe loan.

• Instead of earning only interest as a lender, shareholders get to own the entire company at a bargain price.
• Investors gain all future profits, growth potential, and value appreciation—making it a far better deal than lending money to the company.

This reinforces that Maharashtra Apex Corporation Ltd. is deeply undervalued and presents a strong investment opportunity.

6. Leveraged Buyout (LBO) Approach        

The LBO (Leveraged Buyout) Approach evaluates whether a company can be acquired primarily using debt and then repaid through its own earnings. If the company's profitability is strong enough to clear the debt quickly, it indicates a highly undervalued stock with significant investment potential.

a. Buying the Whole Company

To acquire Maharashtra Apex Corporation Ltd., we consider:

b. Using Debt Instead of Full Cash Payment

Instead of paying ₹195.96 Cr in cash, we leverage debt financing:

• Debt financing (85% of ₹195.96 Cr) = ₹166.566 Cr
• Own investment (remaining 15%) = ₹29.394 Cr
• After acquisition, the balance sheet of the new entity "Acquirer" would be:

• Assets: 100% ownership of Maharashtra Apex Corporation Ltd.
• Liabilities: ₹166.566 Cr (loan)
• Equity: ₹29.394 Cr (our investment)

c. Paying Off the Loan Using Maharashtra Apex’s Profits

Maharashtra Apex generates an EBITDA of ₹344 Cr per year.

 d. Owning the Company for Free After 1 Year

• Using the ₹231.472 Cr PAT, we pay off the ₹166.566 Cr loan in just 1 year.
• After 1 year, the debt is fully repaid, and we own Maharashtra Apex Corporation Ltd. completely—at no additional cost.

Conclusion:

This LBO strategy highlights the strong cash-generating ability of Maharashtra Apex, allowing an investor to acquire and fully own the company within a year using leverage. This suggests deep undervaluation and an extremely attractive investment opportunity.

7. Low P/E Ratio Supported by High Earnings        

The Price-to-Earnings (P/E) ratio is a key valuation metric that helps determine whether a stock is cheap or expensive relative to its earnings. A low P/E ratio suggests that the company's earnings are high compared to its stock price, indicating potential undervaluation.

For Maharashtra Apex Corporation Ltd.:

• P/E Ratio = 0.38 (exceptionally low)
• Market Capitalization = ₹163 Cr
• Profit After Tax (PAT) = ₹428 Cr

Conclusion:

The company's profits exceed its total market capitalization, meaning an investor could theoretically recover the entire investment within a single year’s earnings. This extremely low P/E ratio, combined with high earnings, indicates that the stock is deeply undervalued and presents a strong investment opportunity.

8. Altman Z-Score Analysis        

The Altman Z-Score is a financial metric used to assess a company's financial health and predict the likelihood of bankruptcy. A higher Z-score indicates strong financial stability, while a lower score signals potential financial distress.

Score below 1.1 -         Company is near Bankruptcy

Score between 1.1 – 2.6 -          Grey area chances are there of improving or even downgrading

Score above 2.6 -          Condition is good (Green Signal)

For Maharashtra Apex Corporation Ltd.: Altman Z-Score = 4.22

Interpretation:

A Z-score above 2.6 is considered safe, meaning the company is financially stable with a very low risk of bankruptcy. Since Maharashtra Apex’s Z-score is 4.22, it indicates:

·       Strong financial health

·       Low risk of insolvency

Conclusion:

The company’s high Altman Z-score reinforces its fundamental strength, making it a low-risk and financially sound investment opportunity.

9. Promoter Holding Analysis        

Promoter holding refers to the percentage of a company’s shares owned by its founders, management, or key stakeholders. A high promoter holding (typically above 60%) is considered a positive indicator as it reflects the promoters' confidence in the company’s future growth.

For Maharashtra Apex Corporation Ltd.:

• Promoter Holding = 62.5%

Interpretation:

·       Strong promoter confidence in the company’s potential

·       Low risk of excessive dilution or hostile takeovers

·       Alignment of promoters' interests with shareholders

Conclusion:

Since promoter holding is within the ideal range (60-70%), it indicates that the company has a stable ownership structure and long-term commitment from key stakeholders, making it a positive sign for investors.

10. Hidden Dividend Value Approach        

The Hidden Dividend Value Approach suggests that Maharashtra Apex Corporation Ltd. is highly undervalued because its stock price does not fully reflect its financial strength and investment holdings. This approach is based on the Modigliani-Miller (MM) dividend theory, which states that a stock’s price should drop by the same amount as the dividend paid. However, real-world scenarios often contradict this assumption.

a.     MM Theory on Dividends

According to the Modigliani-Miller (MM) theory:

• When a company pays a dividend, its stock price should decrease by the exact dividend amount.
• Example: If a stock trades at ₹115 and pays a ₹200 dividend, the price should theoretically fall to ₹-85—which is impossible!

b.     Real-World Application to Maharashtra Apex

If we assume MM theory holds, then:

• After a ₹200 per share dividend, the stock price should drop to ₹0.
• However, Maharashtra Apex still holds ₹516.567744 Cr in investments and generates an EBITDA of ₹344 Cr, meaning the company remains valuable even after a large dividend payout.

c.      Recalculating the True Value After Dividend

Conclusion:

Even after a ₹200 dividend payout, the stock should still be worth ₹163.74 per share, proving that the company is significantly undervalued. This suggests that Maharashtra Apex’s current market price of ₹115 fails to reflect its true value, making it an attractive investment opportunity.

11. Hidden Share Repurchase Value        

This section explains how a company can boost its stock price by buying back its own shares. Here’s how it works:

a. Buyback Plan

• Current market price (CMP): ₹115 per share
• The company believes the stock is undervalued and decides to buy back 50% of total shares at ₹230 per share (double the CMP).
• Buyback target: 50% of shares = 50% X 1.42 = 0.71 Cr shares
• Cost of buyback: ₹230 × 0.71 Cr = ₹163.3 Cr

b. After Buyback?

• Remaining shares: 0.71 Cr (half of the original)
• Remaining investments after buyback: ₹516.567744 Cr - ₹163.3 Cr = ₹353.267744 Cr
• New stock value per share:

Conclusion:

By buying back shares at ₹230, the stock price rises to ₹589.85, proving that at ₹115, it was heavily undervalued. This reinforces that shareholders benefit from buybacks when a company’s intrinsic value is much higher than its market price.

FINAL VERDICT        

Maharashtra Apex Corporation Ltd. is a hidden gem in the market—its true worth far exceeds its current price. Strong financials, undervaluation across multiple metrics, and hidden value in assets and buybacks make it a high-potential investment. Smart investors spot opportunities before the market does—will you?

Thank you for reading this analysis. Do post your feedback on the case.

Opportunities lie where value is hidden—invest wisely!