There's a merger happening between Hinduja Leyland Finance (HLF) and NDL Ventures. The big question: What should HLF actually be worth in the unlisted market? Let's do some math.
The deal: 10 HLF shares = 25 NDL shares (or 1 HLF = 2.5 NDL)
NDL's current price: ₹98.1 (listed on NSE/BSE)
So, HLF's fair value: 2.5 × ₹98.1 = ₹245.25
But HLF is trading at: ₹265 in the unlisted market
The gap: ₹19.75 or a 7.45% premium
Here's what this means: Buy 100 HLF shares at ₹265 today (₹26,500), and after the merger, you'll get 250 NDL shares worth ₹24,525. You're paying ₹1,975 more than what you'll receive.
Let's see who's stronger:
| Metric | HLF | NDL | Winner |
|---|---|---|---|
| ROE | 8.9% | 0.96% | HLF (9.3x better) |
| P/E Ratio | 18.66 | 452 | HLF (way more reasonable) |
| Book Value | ₹160 | ₹17.5 | HLF (9.1x higher) |
| Market Cap | ₹14,449 Cr | ₹330 Cr | HLF (44x larger) |
Clearly, HLF is the superior business. But does that justify the premium?
Your HLF shares will become NDL shares, so NDL's price is everything. Here's how it plays out:
| NDL Price Scenario | HLF Fair Value | P/B Ratio | vs Current ₹265 |
|---|---|---|---|
| ₹78.48 (-20%) | ₹196.20 | 1.23x | -26.0% |
| ₹88.29 (-10%) | ₹220.73 | 1.38x | -16.7% |
| ₹98.10 (Current) | ₹245.25 | 1.53x | -7.5% |
| ₹107.91 (+10%) | ₹269.78 | 1.69x | +1.8% |
| ₹117.72 (+20%) | ₹294.30 | 1.84x | +11.1% |
Notice the pattern? NDL needs to jump 10% just for you to break even on your ₹265 purchase.
HLF's book value is ₹160 per share. Let's see what you're paying:
1. At ₹265 (current price): 1.66x P/B
2. At ₹245 (merger math): 1.53x P/B
3. At ₹220 (sweet spot): 1.38x P/B
For context, mid-tier NBFCs typically trade between 1.5x to 2.5x P/B. So 1.66x isn't crazy expensive for HLF as a standalone business.
But here's the twist: You're paying 1.66x P/B today, knowing that on merger day, you'll hold an asset worth 1.53x P/B (₹245.25). That 0.13x P/B difference (₹20) is your premium.
1. Quality matters: HLF has 9.3x better ROE than NDL. Quality businesses command premiums.
2. Listing benefit: HLF is unlisted. Post-merger, you get listed NDL shares. That's liquidity you can't easily get today.
3. Optimism: Some believe NDL will rally before the merger completes. If NDL hits ₹108, your ₹265 entry makes sense.
4. Market inefficiency: Unlisted markets aren't perfectly efficient. Prices take time to adjust.
1. Wild ride: It's fallen from ₹121 to ₹98 in 52 weeks (19% drop). Your fate is now tied to this volatility.
2. Regulatory maze: SEBI and other approvals needed. Timelines are uncertain.
3. Stuck in limbo: No record date announced yet. You're holding illiquid unlisted shares with no clear exit timeline.
4. Quality dilution: You're merging a strong business (8.9% ROE) into a weak one (0.96% ROE). That's philosophically odd.
Here's a practical guide:
1. ₹245-₹250 (1.53x-1.56x P/B): Fair value zone. You're paying what you'll get.
2. ₹220-₹230 (1.38x-1.44x P/B): Sweet spot. Decent margin of safety if NDL wobbles.
3. ₹208-₹220 (1.30x-1.38x P/B): Great entry. Strong downside protection.
4. ₹265 (1.66x P/B): Current price. You need NDL to rally 10% to break even. Risk-reward isn't compelling.
This is essentially a reverse merger. HLF (the giant) is using NDL (the minnow) as a backdoor to get listed. It's faster than an IPO and avoids market timing risk.
HLF gets: Public market access, better liquidity, easier capital raising.
NDL shareholders get: Exposure to a vastly superior business.
You get: A math problem to solve.
Based purely on numbers, HLF should trade at ₹245.25 (1.53x P/B) given NDL's current price of ₹98.1.
At ₹265 (1.66x P/B), you're paying a 7.45% premium. While HLF's fundamentals are strong and the P/B ratio isn't outrageous for an NBFC, the merger math creates a constraint: you need NDL to appreciate 10% just to break even.
The sweet spot? Somewhere between ₹220-₹245. That gives you margin of safety and aligns better with the merger economics.
Everything above ₹245 is a bet that NDL will rally, the combined entity will unlock value, or that liquidity is worth paying extra for.
The question is: Are you willing to make that bet?
Data Source: Based on HLF unlisted market price and NDL Ventures listed price as of November 26, 2025. HLF Book Value: ₹160 per share.
Disclaimer: This is educational content, not investment advice. Markets are risky. Do your own research.
