Maithan Alloys: Idle Cash Set To Return As India Rewires Buyback Tax

Amey Kulkarni of Candor Investing presented his investment thesis on Maithan Alloys (India: MAIT) at Asian Investing Summit 2026.

Thesis summary:

Maithan Alloys is a profitable ferro alloys producer that Amey views as a classic Benjamin Graham-style cash bargain with an identifiable near-term catalyst. The shares recently traded at a market cap of roughly $296 million against liquid investments of about $346 million as of 31 December 2025, meaning the market assigned no value to an operating business that has been profitable and cash-generative for the past decade. Amey’s thesis rests on a shift in Indian capital-return taxation that should push promoters toward buybacks and re-rate the equity.

The operating business has produced positive PAT every year for a decade, with TTM revenue of ₹2,049 Cr and TTM PAT of ₹453 Cr. Operating margin spiked to 36% in FY22 on post-COVID supply tightness before normalizing to 10-11%, and the FY21–FY23 windfall seeded the current investment portfolio. The balance sheet carries negligible non-current debt (under $1 million) plus ~$60 million of short-term borrowings tied to working capital and a recent land purchase, not to operating weakness.

The cash bargain exists because three Indian tax changes effectively eliminated tax-efficient capital return: a 2019 buyback distribution tax, a 2020 reclassification of dividends as interest-like income (taxed up to 39%), and a 2024 rule treating buybacks as deemed dividends. Investors stopped underwriting balance-sheet cash. The portfolio itself is notable: ~₹931 Cr in unlisted NSE shares (IPO expected within 6–24 months), ~₹200 Cr across 15-plus PMS vehicles, and 80-plus directly held equities.

The catalyst is the 1 February 2026 Union Budget, which reclassified buyback proceeds as capital gains taxed at 12.5% for long-term holders rather than as deemed dividend. SEBI has separately proposed reviving open-market buybacks. Amey expects buyback announcements to proliferate across cash-rich, low-debt Indian companies over the next several quarters as promoter incentives re-align. Promoter shareholding sits at the 75% regulatory maximum, though certain family members have applied to be declassified as promoters.

On valuation, Amey’s thought experiment of deploying 75% of cash (~₹2,400 Cr) to retire 75% of shares would 4x the share price at constant market cap, or 2x it if market cap halved. Execution is not required for the thesis to pay — an announced $50 million buyback (~15% of cash) could move the stock 50%+. Amey sizes downside against a 50% market drawdown impairing the investment portfolio, and will exit if no substantial buyback is announced by the September 2027 AGM.

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About the instructor:

Amey Kulkarni operates a boutique investment advisory that partners with select individuals and family offices in their journey of wealth creation through investments in the Indian equity markets. Amey worked in the corporate sector for a decade with experience spanning across India, Europe and African markets. Amey has also worked closely with the top management of L&T (Chairman’s office) and the MD&CEO office at Jindal Steel & Power handling responsibilities of corporate strategy and business planning. Having gained unique insights into the internal workings of large diversified businesses from close quarters, Amey now applies the learnings to run an investment fund at Candor Investing. At Candor Investing, Amey invests in companies that don’t require external capital, have the ability to grow for a long time and are run by honest and hungry management. Being passionate about sharing the learnings and insights gained out of his investment experience, Amey occasionally takes up visiting faculty assignments at various Indian business schools. He is also a contributing author to the Moneylife Magazine which is renowned for pointing out corporate governance issues and championing investor awareness campaigns.