WTF ! JUST DON’T DIAL ! 

That’s My First Take on the ‘Just Dial’ IPO ! 

How can SEBI,Exchanges,MOF,Company Law Board even allow this IPO of just under Rs 1000 crs ! ~ there are no  real Objects to the Issue as  it is fully an Offer For Sale by Existing and Part Exiting Promoters and PE  Shareholders and the Company does not get any IPO Money

If you do subscribe in the IPO you’ll make these Existing and Part Exiting Promoters & Other PE Shareholders more very very very filthy rich in no time and making  yourself poor in time to come ! 

The Just Dial IPO opens on May 20,2013 in the book building band of Rs 470 to Rs 543 for a FV Rs 10 share ~ Shares on Offer for Sale by 9 Shareholders  total 17497458 with 75% amounting to 13123095 shares reserved for QIB Portion (normally it is 50%) ~ At top band Price of Rs 543 the Issue Size is Rs 950 crs with all the Monies going to the selling shareholders that include three Promoters,V S S Mani,Ramani Iyer and V Krishnan and 6 Funds that include Sequoia III,SAIF,Tiger Global Four JD Holdings,Tiger Global Five Indian Holdings ,EGCS and SAPV ~ All are Part Exits except for EGCS who exits in full

Plan to write a detailed note on this Obscene IPO but be forewarned now with these few details and perspectives

Am stunned simply at the gaul and audacity of the Company guided by it’s Lead Issue Managers Citigroup Global & Morgan Stanley  to come out with such an overvalued IPO that is totally an Offer for Sale providing part Exit to Promoters and some PE Players !

SEQUOIA’s Role Play as an Illustration 

SEQUOIA III (Yes,it also holds shares as Sequoia I and II) ,for example at the top band price of Rs 543,will make an obscene 836% Return inside four years on it’s initial Investment in July 2009 at an average Price of Rs 58 a share after  adjusting for a  crazy 55: 1 Bonus in 2010 ! ~ even this Initial Investment of  Rs 38.35 Crs was a Transfer of 118014 Shares on July 21,2009 from another Shareholder Clearmist Ltd at Rs 3250/share  The Liberal Bonus 55:1 on April 24,2010 took the holding to 6608784 shares ~ Of this they are offering 3207934 shares in this IPO and would stand to get Rs 174 crs at Rs 543 and yet be left with 3400850 shares  !

I mean they came in at Rs 50+ and want us to come in at Rs 500+ through their shares ! Whoa ! ~ all for a Company that they just pumped in Rs 250 crs again in  

Promoters exiting make even more ! as their holding cost is between Nil to just 64 paise per share !

Sequoia significantly lifts Just Dial Networth in July 2012 

Just Dial’s Networth was just over Rs 100 crs on March 31,2012 ~ It rose dramatically to over Rs 400 crs on December 31,2012 ! because Sequoia I & II each invested Rs 125.50 crs aggregating Rs 251 crs by subscribing for 2568243 shares each at  Rs 488.66/share on July 21,2012 ~ Also a fortnight later on August 8,2012 both picked up shares from the Promoters and other shareholders at the same Price of Rs 488.66/share  

So one can view it this way that Sequoia I & II Investment of Rs 251 crs directly in the Company less than a year ago on July 21,2012 will be returned to the extent of Rs 174 crs to Sequoia III in this Offer for Sale IPO !

Sequoia  I,II and III currently  hold an aggregate of  12842546 shares in Just Dial at an aggregate Investment of @ Rs 343 crs   averaging Rs 267/share ~ Sequoia III is offering 3207934 shares in the IPO ~ At top band Rs 543 it will receive Rs 174 crs ~ Post IPO it will then hold 9634612 shares at Net Investment of Rs 169 crs or Rs 175 per share

Interestingly in Q2 FY 12 the US Operations of Just Dial under Just Dial Global Pvt Ltd were demerged ~ The US Company is owned by the Promoters in their Personal Capacity alongwith Sequoia

Don’t Get Carried Away by…..

• And don’t get carried away with Crisil  giving a top 5 on 5 IPO grading  ! ~ IPO Grading has simply no connection to the IPO Pricing  which is over 50 Earnings Multiples and over 9 Book !

On February 6, 2013 I blogged on this too 

Are IPO Gradings Misleading in the Initial Public Offers (IPOs) ? ~ Yes !

Wednesday, February 6th, 2013

• Dont get comfortable by even the Safety Net that is now mandatory for Retail Segment upto a certain period and number of shares per allotee ~ this is restricted to a 180 days time period from date of Listing and the Safety Net Trigger Price will be the volume weighted 60 days trading price from the relevant date which is 60 days before close of the 180 days period.If such a Price falls below the IPO Price then a Tender Offer will be enforced for Eligible Retail Allottees and their Eligible Shares,both defined in detail in the Prospectus ~ Only 10% Retail Reservation is there in the IPO and my guestimate is that the liability if any of the three main promoters who are providing this Safety Net will not exceed Rs 25 crs ! ~ probably much less

• And dont say Wow ! just because Amitabh Bachchan holds 62794 Shares which at Rs 543 Top Band Price are worth Rs 3.4 crs ! ~ this Celebrity is Just Dial’s Face in their Media Advertsing Blitz and probably this Shareholding represents being paid for in part or full  by Shares….probably….wonder at what price!?

Don’t Fall for Such Plays Again & Again….
I smell a Stink here !~ A Premeditated Plan in Operation  for the past three to four years whose success depends on us having poor memories and therefore becoming suckers and of course the existence of friendly QIBs in an Obscene IPO Exit  ~ I,actually we all have, seen such ‘passing the parcel’ playouts before with PE Investments coming in and Liberal Bonus Issues being splashed before the IPO Exit at an Obscene Price at buoyant Sensex Levels of 20000 yet again ! ~ Don’t fall for such Plays again and again

If you see the Just Dial Capital Construction and Build Up of Shareholder Holdings you’ll be intrigued by Purchases and Sales and Buy Backs and Liberal 55: 1 Bonus in 2010 and Capital Reduction and Gifting and Optionally Convertible Preference Shares and Preference Shares A,B & C Series and…..Phew ! ~ for instance Main Promoter V.S .S Mani (can be pronounced as Money!) has purchases shares in 2006 from SBI ‘s Magnum Fund,Morgan Stanley Emerging Market Funds etc at Rs 440/share  and in December of the same year 2006 has sold shares back to his own Company in a buy back at Rs 2574/share and  two months later in February 2007 sold some more  at Rs 2651/share to his own Company in another buy back !   

~ worse than even Suzlon Pre IPO cornering manipulation by FIIs and Overseas PEs,one of who is also a Lead Manager to the Just Dial IPO

~ worse than even the SKS Microfinance IPO that I thrammed in July 2010 ~ Sequoia was offering for Sale in this Issue too ~ Just a Coincidence or have these guys mastered a Brazen Plan to repeat it again and again !? ~ and I was bloody right  in SKS ! 

I have an Issue…actually several…..with the SKS Microfinance Issue !….Intentions may be Noble but Actions are Profit Motivated and not singularly Selfless !

Thursday, July 29th, 2010

Of course the unholy nexus will ensure the Just Dial IPO is successful  ~ Am sure you guys out there are smart enough to know how ! as some friendly QIBs (75% of the Offer is reserved for them) will enter in  this obscene  higher IPO  Band !

Rational !? ~ who in their Right Mind would subscribe in the Just Dial IPO in this Price Band !?

A Raging Question that continues to Rage my Mind through years ~ Who will bell this ‘Substance over Form’  Equity Cat ~ SEBI,CRISIL,Stock Exchanges,Ministry of Finance,Ministry of Corporate Affairs? ~ because the Form may have been complied with for SEBI to have cleared it for an IPO  and the Exchanges to have cleared it for listing  ~ but what about the IPO Substance ! ~ because this is what influences,impacts,affects and makes or breaks Primary Market Investors

And Government and SEBI wants Retail and Small Investors to come back to Equity ! ~ Why !? ~ so that they become suckers again in Obscene  IPOs ! ~ after all there has to be buying by the Masses  for Insider Classes  to make obscene Monies on selling !

Watch out for some more as I scan the Prospectus even more vigorously…… 

Emkay Global @ Rs 17 in trouble as NSE rejects application to annul trades of October 5 2012

On October 5,2012 Emkay Global suffered a Loss of Rs 51 crs on squaring up trades that were executed from a Templeton order  punched in by a dealer erroneously in  more quantum than it should have been ~ the order was of a value of Rs 17 lakhs but the dealer instead punched in 17 lakhs nos  and the order value shot to nearly a Rs 1000 crs ! of which nearly Rs 700 crs was executed before the mistake was discovered and thus had to be squared off

NSE after an extensive investigation just rejected Emkay’s application to cancel all the relevant Trades of October 5,2012 early morning as there was material error in punching

Emkay has also send a notice to the BSE as below

“We are in receipt of NSE letter dated April 30, 2013 on May 01, 2013 late in the evening regarding the decision of the Relevant Authority of NSE on the application made by us for the annulment of the error trade of October 5, 2012. The Relevant Authority of NSE has denied our application for annulment of trades arising out of a clearly erroneous entry of sale order on October 05, 2012. The Company is considering various legal course of action including challenging the decision in exercise of its statutory right to appeal.”.’

Emkay is quoted at Rs 17 (FV Rs 10) giving a market cap of Rs 41 crs ~ Promoters hold 73.24%

In March/April 2006 it came out with a Rs 75 crs IPO offerring 62.50 lakhs shares in the price bad of Rs 100 to Rs 120 ~ and the following year 2007/8 was their best with Profit of Rs 23.50 crs ~ since then the next four Financial Years  dragged down a loss in 2008/9 followed by Rs 8 crs each profit in the following years and again drifted to a marginal loss in FY 11/12

Current Book Value is Rs 50+ with Networth at Rs 134 crs of which Equity is Rs 24+ crs

Clearly Rs 51 crs loss will be a huge setback to Emkay ~ destabilising their operations big time in very competitive times ~ Emkay will surely appeal

Several years ago the Emkay Promoters had sought a meeting with me as one of their Broking Clients and my Advisory one had made a 600% + gains on his Portfolio inside a year and they wanted to meet with the guy whose advice did this ! ~ they had only recently set up a Research Team taking several analysts from a leading stock market media  house  and they wanted to tie up with me  ~ did not work out as I must have quoted too high I suppose !

…and it’s sad luck that Emkay did this deal on NSE and not BSE for BSE may just have helped them out given it’s past track record for doing so when during Broker Dominated Boards, EDs and Presidents have had to resign for malpractices ~ like opening the Exchange in the middle of the night to insert trades ! or else some brokers would have gone bankrupt on their positions !

In 1996 even I faced such a situation with BSE ~ I was deprived of Rs 3 lakhs in early morning intra day trading profits on the newly listed Bank of Baroda when despite a clear notice that partly paid up shares trading and fully paid up shares trading have do be done in separate Codes,many brokers traded in just one code and suffered losses~ they quickly approached BSE Authorities to cancel the trades ~Mr R C Mathur was the ED at the time  and he took a unilateral decision to do so without even talking with the counter party Brokers whose clients,me being one of them,had made the profits ~ I was livid and spoke directly to Mr Mathur as my Broker was unwilling to take an aggressive stand ~ Mr Mathur had the arrogance and audacity to say he need not have to talk or consult with Brokers before making any decision ! ~ I told him with such an attitude he would not last long  as ED and God help BSE while he was there ! ~But he did last another two years before  He had to take the fall for the 1998 fiasco for Harshad Mehta’s trading and payment crisis on BSE in BPL,Sterlite and Videocon

Given their Closeness with Brokers and past precedence of going out of their way to help them, BSE certainly would have had a soft approach with Emkay

Emkay Bad Luck it had to happen on NSE  and not BSE ~ BSE did not have depth for such Nifty basket Shorts at the time !

Suzlon Energy @ Rs 14 ~ Gone with the Wind ! Now back with CDR !?

Market Cap & Networth are now both @ Rs 2500 crs levels with Share Price and Book Value @ Rs 14

Post IPO  some years ago the Market Cap had surged to Rs 50000 crs ! making Billions for Citibank & Chrys Capital and the Government of Singapore who had cornered Shares a year or two Pre IPO and issued two liberal Bonus Issues before  Citigroup  guided  an obscene IPO Pricing of over Rs 500 with vague Objects to the Issue  to leverage on the bullish craze at the time

Check out Scrip Watch Coverage on

Suzlon @ Rs 14~Gone With the Wind ! Now back with CDR ? ~ 25-Apr-2013

Anyone for going Long on SuzLon !?

Cheers !

Geodesic @ Rs 9.97 ~ Incredulous this yet Incredible Faith  in a Company that is completely undeserving !

Till late last year @ 30000  Shareholders,including 45 FIIs, were unaware they were sitting on the edge of the cliff ~ the cliff cracked and it’s been a horrific downward spiral from near Rs 60 to under Rs 10 inside months !

Wealth Nearly Exterminated ~ √

Shareholders Nearly  Exterminated ~ √

Perhaps Shareholders deserve this state and fate as only 110 of them attended the recent  AGM on February 11,2013 in Mumbai !

So what’s with so many recommending Geodesic last year  that’s it a great Buy ~ perhaps even a multibagger ! ~ and Shareholders climbing from 7500 levels in 2006 to 30000+ at December 31,2012 !~In fact 3000 +shareholders were added in the Quarter October to December 2012  ~ What were they excited about and what did they miss !? ~ Let’s examine

Who are the Promoters and what does the Company do

It’s a Troika that promoted Geodesic Ltd to offer software and software related products and services~ Pankaj Kumar is the Chairman while Kiran Kulkarni is the MD and Prashant Mulekar is the ED ~ At December 31,2012 they collectively held 14.90 % of the Equity of Rs 18 crs down from the 25% + held a quarter earlier ~ clearly pledged shares were being offloaded on share price beginning to drop in December  ~ The situation now may be even be a much lower stake  in terms of their holdings in the company on further offloading

Buyback Announced of upto 25% of the equity upto Rs 75  

November 27,2012

Geodesic Ltd has informed BSE that in continuation with the decision to buyback Equity Shares of the Company through stock exchange mechanism, the Board of Directors of the Company at their Meeting held on November 27, 2012 have discussed and approved to buy back upto 25% of the Equity Shares of the Company at a maximum buyback price of Rs. 75/- per share subject to the approval of the shareholders through Postal Ballot

Financials for FY 12, 15 months ended June 30,2012 

December 4,2012

Geodesic Ltd has informed BSE about the Audited Financial Results for the Financial Year ended June 30, 2012

Earnings ~ Standalone Profit is Rs 230 crs on Sales of  Rs 869 crs giving an EPS of Rs 25+ on an Equity of Rs 18 crs (FV Rs 2)

Assets ~ Standalone Networth is Rs 1266 crs with Reserves at Rs 1248 crs giving a Book Value of Rs 141

Consolidated Financials show EPS at just under Rs 29 with PAT at Rs 260 crs and Book Value at Rs 191 with the Networth at Rs 1721 crs ~ Also shows Cash & Cash Equivalents at Rs Rs 1139 crs ~ while the standalone shows this below Rs 1.5 crs !

Thus with such High EPS and Book Value the Relative Price Multiples are crazily seductive despite Company showing Net Loss in the FY 13 till date

Dividend for FY 12,15 months ended June 30,2012

December 4,2012

Geodesic Ltd has informed BSE that the Board of Directors of the Company at its meeting held on December 03, 2012, inter alia, have Considered and recommended final dividend @ Rs. 2/- per share on the face value of Rs. 2/- each on equity shares of the Company to be paid after approval of shareholders in the AGM

Plan to Redeem the FCCBs in Full 

In December 2008 the Company raised @ Rs 500 crs by issuing  US $ 125 Million FCCBs that carried 6.6% pa maturity premium ~ this was ,as specifically stated in the Issue Terms,for investment in Overseas subsidiaries and acquisitions only

The FCCBs are quoted in Singapore and the Company has brought back US $ 11.5 million face value and outstanding nominal remains at US $ 113.5 million

The Repayment was to be after 5 years Maturity in January 2013 for US $ 150 million or Rs 827 crs ~ They remain outstanding and were shown at June 30,2012  in Other Current Liabilities as Zero Coupon Bonds ~ Company has repeatedly stated they plan to redeem the FCCBs in full ~ the Conversion option will not be exercised as it yet stands at the original Rs 307 !

Risks that probably Shareholders missed seeing or underplayed them  

• Two Independent Directors resigned in 2013 ~ both well known in the judicial field and from leading law firms ~Mr Nitin Potdar ~ noted and accepted in the Board Meeting  on January 17,2013 ~and Mrs Radhika Pereira ~ noted and accepted in the Board Meeting on February 22,2013 ~ Mrs Pereira joined the Board only in the last FY on September 30, 2011 and ironically was confirmed as a Director only in the Feb 11,2013 AGM ! ~ she resigned within days thereafter ! ~ They need to tell us what they know that made them resign !
• Geodesic Ltd itself  had little  cash at June 30,2012 but consolidated shows Rs 1139 crs cash and cash equivalents but with Rs 1129 crs of this in Bank Deposits with over 12 months maturity at June 30,2012 !!! ~ A Review of the FY 12 Annual Report reveals that the Standalone Networth of Rs 1266 crs + Initial FCCB Borrowings of Rs 500 crs are largely invested in Subsidiaries for Rs 904 crs of which main is Rs 813 crs in the 100% owned Geodesic Holding Ltd, Mauritius and in Long term & Short Term Loans & Advances  to related parties of Rs 78 crs and Rs 611 crs respectively of which nearly all at Rs 685 crs  is in 100% owned Geodesic Technology Solutions Ltd,Hong Kong  ~ The Hong Kong subsidiary in fact also had Product Income transactions of Rs 816 crs in FY 12 with Geodesic ! ~ So Geodesic also Sells all to it’s Hong Kong sub and even advances huge amounts to it ! ~ This is rather suspicious ! ~ Is the Hong Kong sub remitting funds back as Billing Dues from the Loans and Advances being extended to it by India itself !?
• This Essentially means the Funds all lie outside India ~ over Rs 800 crs as Equity in the Mauritius subsidiary and over Rs 700 crs ,largely as Loans in the Hong Kong Subsidiary ~ yet the FY 12 Accounts state that Segment Assets of @ Rs 2400  crs are in India !
• FY 12 Accounts show Rs 64 + crs as Bad Debts and Sundry write offs  
• The AGM first announced for December 31,2012 was pushed to February 11,2013 due to unforseen circumstances and only 110 shareholders attended ~ perhaps the rest of the 30000 were in ICU ! 
• Accepting the explanation at Face Value from Promoters that the Inventory Levels were high due to increased demand from overseas markets and advance buying and stocking before the Rupee weakened further ! ~ they overlooked what was also stated that Governments had delayed implementation plans
• There is delay in receiving payment for Trade Receivables ~ company says as they deal in government and telecom sectors the normal payment cycle is 120 to 180 days 
• The last Five Financial Periods show EPS levels between Rs 16 to Rs 30 ~ Yet Dividend has never crossed Rs 2 ! indicating a poor dividend payout of profits ~ clearly there was a cash tightness for a long time
• The Cash Tightness should never have been there given the super profitability through the years ~ this sparks of suspicion that the FCCB route was merely a circular fund route ~ Monies received and Monies invested in overseas subsidiaries ~ Who subscribed to these FCCBs ?
• The Company has opted to hide behind Sec 212(8) of the Companies Act 1956 which permit it to apply for permission not to attach the full Financial Statements of it’s subsidiaries which it consolidates in it’s accounts ~ It has three domestic subs and ten overseas subs of which 8 are step down ~ the overseas subs are all over the tax havens ~ British Virgin Islands,Mauritius,Uruguay,Singapore,Panama,Dubai ~ To me this is not evidence of  Global Expansion but purely an exercise in Obfuscation     
• Company keeps stating they will be in a position to repay FCCBs in full once they have restructured their step down subsidiaries and are close to doing so (stated a few days ago on March 22,2013) ~ did they not know the repayment was due in january 2013 so why did they put Overseas Cash in Bank Deposits with maturity beyond January 2013 and why did they not commence corporate restructuring in time. 
• The AGM of Feb 11,2013 has passed a resolution that FY 12 Dividend of Rs 18 crs (Rs 2 for 9 cr shares) cannot be paid to shareholders unless the Company receives a written approval from plaintiff to the suit,or are given a green signal by the lenders or on full payment of loan they receive a court order to go ahead
• Promoters Equity Stake is just 1.35 crs shares or 14.90% of Total Equity at December 31,2012 ~ of this holding only under 19 lakh shares are pledged ~ However a quarter earlier at September 30,2012 the Promoters held a 25.35 % stake with over 60% of this pledged ~ Clearly there has been selling of the pledged shares as margins played up on the financing on share price beginning to drop in December 2012    

Union Budget 2013 ~ India is a BLESsed Economy

Felt like a stand up comedian as had the house of 400 well informed investors in splits !  when I address and interacted with them on Budget Day Feb 28 evening itself at a Budget Review Event jointly hosted by AIVF,JITO and the BSE Brokers Forum at KC College Auditorium

Gaurav Parikh on Dias before his Humorous Address to 400 in the audience On Budget Day Feb 28,2013

Covered this on our Company website as below :

SCRIP STANDPOINT ~ A View

Slide Share ~ The Presentation at the Event to support the Address & Interaction

MCX-SX launched their Equity & Derivatives Segment today with 700 members and 1116 Listed Stocks and their SX 40 Index

The Launch Equity & Derivatives Segment of  MCX-SX ~India’s Newest Stock Exchange

Just returned from the launch of the Equity & Derivatives Segment of  MCX-SX,India’s New Stock Exchange at Hotel Trident in Mumbai ~ packed Regal Room and live launch functions in four cities beamed on the screens as were also the Live Proccedings

Met up with many,including Joseph Massey the MD and CEO of MCX-SX and Dr Bandi Prasad,President of FTKMC the knowledge arm of MCX, in our Capital Markets

Met two ex BSE CEOs but did not see any from the current top management of  BSE and NSE ! ~ MCX-SX is now their competitor ~Even the Invite Cover ,if you observe above, does not show BSE with a history of 138 years or NSE with a history of 20 years !  

A 5 Minute AV was shown highlighting  moments of Capital Market History and MCX-SX ~ A few  Short Speeches later  Finance Minister, P Chidambaram rang the Gong @ 4.15 pm to launch the Equity & Derivatives Segment of MCX -SX  and also launced the New SX 40 Index and even punched in a symbolic Trade ~ quite ironically it was a Derivatives Trade and he had just sounded an alarm in his speech of how concerned he is of the high level of Non Delivery Trades !

MCX-SX begins Trading on Monday

SX 40 ~ The Index of India 

The SX 40 is tagged as the Index of India by MCX-SX~ It is a free float based index with a starting base of 10000 as on March 31,2010.It has 40 top large cap Consitituents ~ all the 30 of the BSE Sensex except for the two S’s ,State Bank of India and Sterlite ! ~ Although  Wonder Why these have been excluded though it should meet their stated criteria of positive networth,free float of at least 105 and within top 100 liquid companies~ they also have  Industry capping at 20%( +/-) 2% band  ~ and with HDFC Bank and ICICI Bank the current weightage is already 22% for Financials (it’s 29.4% for Nifty and 26.4% for Sensex) and thus State Bank could not be accommodated ~ or probably not in the 1116 Companies that are listed and will begin trading on Monday ! ~ we’ll know Monday!

Interestingly SX 40 has Zee Entertainment as a constituent which neither the Nifty nor the Sensex has got !

Some noteworthy speech bytes…..largely verbatim but definitely in context

Ashok Jha ~ Chairman MCX-SX

“I am often asked why another Exchange when two already exist!? and my simple answer to that is because Competition benefits the Consumer” 

Jignesh Shah ~ Vice Chairman MCX-SX

” Today is a very auspicious day to launch the MCX-SX ~ It is a very holy day in the Maha Kumbh Mela and also from tomorrow the Chinese launch their New Year” 

“India has never given enough respect to Capital Markets as they have to the Banking and Insurance Industries”

” No Finance Minister of any country at anytime has respected Capital markets and launched several Initiatives to boost it like our FM Mr P Chidambaram has done!”

“Corporate Bonds Market Capitalisation is just 6% of GDP while even in a country like Malaysia it is 57%”

” Launched MCX-SX because when observing the existing two Exchanges there was simply no Competition from one of them”

” For Financial Inclusion and Financial Literacy,MCX has tied up with IGNOU for  a MBA in Financial Markets Post Graduate Diploma Programme and offered across hundreds of Universities and Colleges in 27 States” 

U K Sinha ~ Chairman,SEBI

” There are 21 Registered Exchanges of  17 have not traded for the past 5 years,in fact 13 of them for the last 10 Years !”

” My serious advice to Stock Exchanges is that when you have to choose between Maximisation of  Profit and Risk Mitigation,please choose Risk Mitigation.You are the First Stage Regulator before us”

P Chidambaram ~ Finance Minister of India

” If the Stock Exchange hires two Nerds,SEBI should hire three Nerds !”

” To Bring back Retail Investors keep the Products simple,demystify operations and inject trust back “

“There are many malpractices ~ few are spotted~ but virtually none are punished”

“Worried about Insider Trading and the High Level of Non Delivery or Speculative Trade ~ we must do something to increase the level of Delivery Trade”  

“Aware that Option Trading has shifted Overseas and we shall bring it back”

“GDP will be 5.5% and only among the large countries,Phillipines,Indonesia and China have a higher rate ~ yet this is not enough and we must bring it back to 8% and Government is taking measures to do so”

” In my recent visit overseas to Hong Kong,Singapore,Frankfurt and London I found the Foreigners are more confident of India than we Indians ! ~ FIIs are investing heavily even though DIIs are selling !~ We must have more belief in ourselves!”

Pune,Lucknow,Bangalore,Mangalore,Delhi,Rajkot,Nadiad,Chandigarh,Ludhiana……have been receiving requests from interested people from all these cities and more for Practical One Day and Two Days Equity Portfolio Structuring and Stock Selection Training Workshops in these cities

Most are optimistic about 2013 and beyond for our Stock Markets and the Indian Economy going forward and want to be positioned to make Monies from this Optimism   

To make this happen NOW , as it would be ideal at the beginning of 2013 to position your Equity Portfolio well, would like all your support ~ I shall personally conduct the Workshop along with my Training Team 

If  you can muster up  at least 15  interested people your town or city to attend the workshop ,we shall have it arranged immediately at a good venue in your city ~ you can guide us too for this and even be our local coordinator ~ of course you will be compensated  with free participation and a coordinating Fee too ! 

Some Guiding Criteria :

Minimum Number of Participants :15  ~ Of course 50 and more would be great

Fees per Participant : Rs 4500 for a one day workshop and Rs 7500 for a Two Day Workshop.Fees are inclusive of  all Taxes,Tea, Lunch and Kit ~ we can bring this down to Rs 3500 for one day and Rs 6000 for two days if you can assure a minimum of 30 participants

Ideal Days to hold Workshop : Saturday and Sunday as working people too can attend  ~ however even weekdays are fine

Who should Attend : Such an intensive workshop will be ideal for all who themselves invest or want to in Indian Stocks or who advise or want to advise others to do so ~would be a practical experience for Retail and High Networth Investors,IFAs of Mutual Funds, Brokers ,Sub Brokers and their associates and clients and students at any level studying Commerce,Finance,Management and Capital Markets

What will the  One Day Workshop Cover among many other facets :  

• Global & Indian Macro & Micro Investment Environment & Trends
• Market Dynamics ~ FII Impact & Where is the Sensex heading in 2013 and why ~ was on track last year in Jan 2012 at 15500 levels when predicted  a 2012 close @18750 …it closed higher
• Stock Experts & Stock Anchors on TV & Brokers ~ Bane or a Boon !? ~ Sources to Trust
• Your Risk Profiling
• Investing  & Trading Approach & Strategy for the Short Term  & Long Term
• Protection of  Equity Wealth while Growing It ~ Asset Allocation ~Portfolio Review and Rebalancing,Hedging
• Investor Mistakes that you can and should Avoid Making
• Key Data to Note  when Reading the Annual Report of the Company for an Investment Perspective
• How to Assess & Select Stocks to Buy,Hold or Sell ~ on Sentiment,Momentum,Valuation and Liquidity
• Positioning your Equity Portfolio with the Right Selection of Stocks that suit your Risk Profile

What will the Two Day Workshop Cover among many other facets :  

• All that is covered in the One Day Workshop as above
• Interpretation of the Union Budget
• Logical Thinking Game Play
• IPO Analysis ~ A Case Study
• When to Use Derivatives to your Advantage to leverage on great Returns
• Aiming for Gold as an Investment ~ many ways to go about this
• Investor Gurus & their Approach ~ Warren Buffett and Peter Lynch
• Basics of  Valuation ~ Relative,Absolute and Contemporary
• Integrity & Insider Trading

You can suggest Stocks that you wish to cover too in the Workshop as well as  decide and mix and match the coverage you want in a one day workshop  from that outlined above in both one day and two day workshops

Those who interact well in the workshop will be pleasantly surprised with Interesting Prizes ! 

PowerPoint Presentations,Quiz,Case Studies,Game Play and Text will be the Pedagogy and the way the Workshop will be conducted

You can get a better sense of the Standard and Customised and Career Workshops that we conduct on my company website www.jsalphaa.com  ~ Look under Training

One quick way is for you to suggest to your local Broker to host this workshop for his employees ,associates and clients ~ a Suitable discount can be worked out with him as he will be ensuring the Participants

Call me directly on 9820162597  or email me at gaurav@jsalphaa.com  to take this forward fast 

Cheers !

BSE plans an IPO next year ~ appoints 14 Investment Bankers for the Issue ! Phew ! 

Valuation of BSE Shares has been a pet subject of mine right from 2008  when I actually began this Blog and I have updated my valuation views several times on my blog since then

I fact  few years ago a High Networth Friend & Client was approached by a Leading Broking House and was being strongly propositioned to buy BSE Shares from them at a high Price ~ He simply confronted them with my Valuation which was at half the price they were asking for !  My Friend tells me this broking house admired me at the same time while cursing me !

Have a look at my earlier BSE Shares Valuation blogs

George Soros Bets on BSE…Picks up 4% of its Equity for US $ 35 M => Rs 380/share…Let’s Update BSE Value

Sunday, August 22nd, 2010

Updated Valuation of BSE Ltd

Tuesday, December 8th, 2009

SHARES OF BSE LTD LOSING VALUE

Tuesday, August 5th, 2008

The latest Consolidated Results of BSE Ltd as on September 30,2012 show a  worrying picture of falling profits and contingent liabilities

• The Networth is marginally gone up to Rs 2265 crs with Equity Component at Rs 10.37 crs (FV Rs 1) giving a Book Value of Rs 218 per share
• The Profit has dropped to just under Rs 35 crs for the hy FY 13 while the full year FY 12 the profit was Rs 178 crs
• Thus the EPS for the half year is Rs 3.35 and for the full year should be a simple extrapolation to Rs 7.It was Rs 17 for FY 12
• The Half Year Profit has been impacted  significantly by the reversal of Rs 10.27 crs Prior Period Items of  Net Income and the Rs 65.28 crs for Liquidity Enhancement Incentive Programmes (LEIPS) for the revival  of  the Derivatives Segment.LEIP was  launched in September end 2011 and  the Full Year FY 12 debit was Rs 60.49 crs though the effective period was second half
• Rs 134.50 crs has been treated as Contingent Liabilities for the demand raised by the Department of Telecommunication ,Government of India for revised VSAT Network License Fees and Royalty etc.BSE is challenging this claim 
• The Consolidated Results include the performance of BSE Ltd and it’s seven subsidiaries ,one jv and one associate
• The Operating Segments are Stock Exchange Activity and Depository Activity 
• The Depository Activity contributed nearly Rs 120 crs Revenue in FY 12 in an Operating Income of Rs 538 crs ~ that’s a strong over 22% contribution
• The Segment Profit shown in FY 12 from Depository Activity is a strong Rs 95 crs from an overall Rs 285 crs ~that’s a huge 33%

If SEBI has it’s way then BSE may lose control of the Investor Protection Funds and the Depository and therefore also Profitability from this~ This will affect Earnings and therefore Valuation !

A Voluntary Retirement Scheme has been implemented.

What does catch my eye in the FY 12 Annual Report is three Interesting facts:

1. At March 31,2012 there were 6367 shareholders of which 431 held 50001 and more shares each comprising nearly 91% of the Equity of Rs 10.35 crs
2. The high proportion of Top Management Salary & Perquisites level to  the Total Employee Expenses ~Just 7 of Top Management from an Employee Strength of 500 + earned a Total Remuneration of nearly Rs 9 crs ~ that’s nearly 12% of Total Employee Expenses Debit of Rs 77 crs
3. BSE Training Institute or BTI Ltd contributed Rs 8 crs ~ This was a result of launching MBA Programs in Financial Markets at Rs 4 to Rs 6 lakhs per student ~ The First Batch has  a strength of 140 while the second has dramatically dropped to just 70 and I believe this  Program is no longer being extended  ~ There have been some operational hurdles with IGNOU ~ Thus there is a question mark on sustainability of such quantum of fees        

The Competition from the soon to commence equity trading operations,MCX Stock Exchange and the boost it  will give to it’s  Training Wing FTKMC will only compound the  operational challenges that BSE faces

In light of all this ,that many believe ,threatens the very survival of BSE, it would be interesting to see what the IPO Pricing will be as to be decided by the Investment Bankers just appointed,states BSE

Cannot be less than Book of Rs 218 as on September 30,2012 !~ and remember George Soros paid Rs 380 two years ago in 2010 for 4015544 shares  ! for a 3.88% stake

Hi Rahul ~ Your Question is quite interesting and I’m sure over 80000 shareholders of City Union Bank would like to know too !

On November 12,2012 I had blogged on a surging L & T Finance and it’s stake in CUB

Yo! L & T Finance Holdings Zooms 12.7 % To Close At Rs 72.40 Today ~ It Holds 4.68% Of City Union Bank (CUB) Which Is Cum Rights Rs 59.75

“Should you retain CUB ex rights for 3 months?”  is what you ask

The Answer depends on the Shareholder’s Risk Profile and whether the shareholder is comfortable with a Long Term Outlook on CUB

Of Course your Question is specific on the time Period ~ 3 Months

There are  Two Approaches to Consider here and assess their weightage in your decision making to immediately sell or hold CUB ex rights

1. Immediate to two to three  months ex rights Impact on  Share Price  and  Traded Volumes because of the Rights Issue  ~ There will be some price pressure ex rights
2. Assets and Earnings Valuation of  CUB and Interesting Shareholding Developments  going into 2013 ~ I will give more weightage to this  

Rational Thinking  and Maintaining Same Scrip Weightage Exposure in the Portfolio would guide you to adopt a strategy of  replacing existing original CUB holdings with  Cheaper Rights at Rs 20 ~ However the Rights Ratio is only  1: 4 and the Rights Pricing is attractive at Rs 20 and therefore it will not be possible to replace entire original holding as you may not get more shares than entitled even if you do apply for them ~ so you could adopt the strategy of selling 25% of your original holding now ex rights @ Rs 50 knowing you will be getting the same quantity in the Rights at Rs 20 ~ this will serve two objectives ~ Reduce your Holding Cost while maintaining  CUB weightage in your Portfolio 

The Risk you take here is that the Share Price of CUB actually will move up in 2013 from ex rights Rs 50 levels ~ This brings us to the Assets and Earnings Valuation  Assessment of CUB ~ Ex Right the Book Value drops to Rs 30 +and the FY 13 Projected EPS to Rs 5+ giving us relatives of P/BV of 1.6 and P/E of 10 ~Despite the Pressures on Margins and rising NPAs with such a huge FII Shareholding of over 21% of the Equity as well as L & T Finance  being the largest shareholder holding just under 5% in CUB,my sense is that 2013 will be a very interesting year

I would take a longer term view and give more weightage to continuing and sustainable valuations and the  interesting  shareholding developments that may take place in 2013 and beyond in CUB and would not sell CUB ex rights ~ Of course this would mean I’m increasing my shareholding in CUB through subscribing for the Rights and therefore also increasing the CUB weightage in my Portfolio

I suspect what most will do is to sell 1/4 th original holding right away ex rights at Rs 50 and replace these with the Rights Shares at Rs 20 ~ I also noticed heavy buying cum Rights at Rs 60 by those who are playing the Rights Game with  a  Financing and Fixed Return and Stag Mindset !  Their holding cost  will be Rs 52 /share => 4* 60 + 1*20 => 260/5=> Rs 52 ~ Therefore they may sell  when CUB moves to just Rs 55 and beyond to capture their  5 % absolute Interest Returns in the next  two to three months ~ Therefore in the Short Term there will be some Pressure on the CUB  Share Price ~ but will it drop towards Rs 40 ! ? I think one should take the risk it will not given the Valuations and Shareholding Situations that I’ve specified above

Yesterday CUB  became ex rights at as I had stated in my earlier blog will trade ex rights around Rs 52 ~ Today is the Rights Record date

Volumes have been quite strong  on the last two days of CUB being cum rights and then again yesterday on the first day of CUB going ex rights !  Even today as we approach 1.30 pm the BSE Volume is approaching 100000

What I also suspect should happen is some selling by over 3000 employees who may want to book profits ~ Employees are getting a bonanza quota of shares at Rs 20 and may want to cash in when allotted in December 2012

So CUB Price may remain subdued in the next Few Months~ However my sense is that for the Longer term CUB needs to be retained unless you want to risk and play a strategy of sell now ex rights @ Rs 50 ,take the rights at Rs 20 and then consider to buy in yet again if Price drops to Rs 40 ~ this price drop may not happen though ~ moreover experience tells me that one rarely buys back what one sells ! ~ and CUB  shareholders are Investors ~not  traders or jobbers who try to make a living getting in and out of CUB ! ~ Right !?

Hope Rahul,I have outlined my view clearly as also outlined the  strategy that I suspect will be adopted by shareholders and employees

Come on CUB ! Don’t let me down ! ~ Lets Hope CUB moves up strongly past Rs 70 in 2013 ! ~ perhaps courtesy L & T Finance !

Another way of Looking at it is this way ,Rahul ~ If I have been a Shareholder of CUB for awhile now it means I have conviction in CUB ~ Now if I’m entitled to Attractive Rights at Rs 20,of course I shall add to my Holding ~ Why would I think to sell unless my conviction in CUB is shaken ! ~ On the Contrary the developments in CUB should interest me even more !

Disclaimer: Neither my Family nor me  hold CUB Shares. However a few I know well,do  though not held under my advice~ However they too have asked me the same Question that Rahul has posed and that led to this Blog   

Yo! L & T Finance Holdings zooms 12.7 % to close at Rs 72.40 today ~ It holds 4.68% of City Union Bank (CUB) which is cum rights Rs 59.75

The market air swirling around to justify this surge is that very soon L & T Finance will get the RBI and government go ahead to increase it’s stake in CUB ~ It holds 19195012 shares or 4.68% of the FV Rs 1 Equity Capital of Rs 40.99 crs as on September 30,2012~CUB has over 80000 shareholders

Interestingly 49 FIIs held 21.86% of the CUB Equity on September 30,2012

CUB is coming out with a rights and employee issue not exceeding Rs 400 crs with record date set at November 23,2012~ The Rights Terms are 1:4 at Rs 20 with 102487972 shares reserved for shareholders with no renunciation right but they could apply for more.The Employee Issue is for a whopping 26500000 shares.The Fresh Issue size is Rs 258 crs

As on 31st March, 2012, CUB had 3347 employees comprising of 47 executives, 1006 officers, 1906 clerks and 388 sub-ordinate staff.

Assuming 3500 employees now,it would mean an average of fresh 7500 shares each in the new issue at Rs 20=> this computes to a gain of @ Rs 32 on the ex rights price of  @ Rs 52 => that’s a cool average gains of Rs 2.40 lakhs per employee

Have a Look at CUB’s Financials ~ it shows a limited downside ~ in fact the 52 week High/Low has been quite robust at Rs 61/39 on BSE

So if L & T Finance is allowed to increase it’s stake in CUB beyond the current ceiling of 5% with an ultimate objective of taking over the Bank,when the RBI Regulation Act is amended and the fresh banking guidelines allows such a takeover,what do you think will be the share price of CUB ex rights !

Interestingly a Broker has downgraded CUB to a Sell from a Buy in it’s November 5,2012 Report ~ Really ! ~ I may just connect with their Director of Research to request them to relook,review and rethink this call ~ they make it at Rs 59 with a target price of Rs 58!