IDBI Bank opened at Rs 190 this morning,taking off from the last few minutes surge last afternoon to Rs 187….Price could not be sustained and currently it’s trading below Rs 180 at 3.15 pm….just a coincidence perhaps that there is an analyst/broker meet organised this afternoon at IDBI Towers at Cuffe Parade,Mumbai to boast the second quarter results at September 30,2010…..Bank has reported PAT of Rs 429 crs for Q2 FY 11a jump of 69% from the Rs 254 crs recorded in Q 2FY 10 

The Bank aims to be the fifth largest Bank in India by 2012 in terms of Assets and Market Cap

As Investors we connect more to Market Cap !….so where does IDBI rank now in this parameter ? Have a look below (courtesy moneycontrol)…With Rs 17630 crs Market Cap as of now,it ranks 7th in the list of  Listed PSU Banks and 11th overall if Private banks too are considered,implying there are four private banks ahead of it in terms of Market cap

BANKS IN INDIA : SHARE PRICES AND MARKET CAP AT 3 pm ON FRIDAY,OCTOBER 29,2010

 Extracted from above : TOP BANKS IN INDIA BY MARKET CAP AT 3 pm ON FRIDAY,OCTOBER 29,2010

 Now IDBI Bank is aiming to become the 5th largest Bank by Market Cap by 2012

 How can the Market Cap ranking of IDBI Bank rise from 11th overall  to 5th ?

• Share Price of IDBI Bank moves relatively higher than those of other banks in contention or holding  top rankings
• IDBI Bank issues more Equity Shares without affecting its share price…other banks do not raise further equity or do so only marginally
• Share Prices of Other Banks move down while that of IDBI Bank goes up or atleast holds current price

You can observe that as it stands currently,IDBI Bank will have to negotiate  six banks to surge to overall 5th ranking of over Rs 40000 crs Market Cap…Five Leading PSU banks…Union Bank,Bank of India,Canara Bank,Bank of Baroda,PNB… and one Private Bank…. Kotak Mahindra….all these six banks have a current market cap of over IDBI Bank’s Rs 17631 crs with rankings in the 5th to 10th postions

It’s pretty challenging for IDBI Bank considering that other Banks too will not be mute spectators….they too will have targets 

Other scenarios being constant,IDBI Bank’s share price has to move up more than 100% from the current Rs 179 to cross Rs 350 in the next two years if the Market Cap has to reach Rs 40000 crs and give the Bank some chance of getting an overall  5th ranking….assuming that share prices of others banks too will move up in the next two years and therefore so will their market cap,then the share price of IDBI Bank has to move up even more smartly than 100% ! 

Perhaps it’s aim is less challenging to aim for 5th ranking within PSU Banks only…then it’s market cap has to cross merely Rs 25000 crs

If this is the aim is to be merely 5th within PSU banks then the target Market Cap would be initially Rs 25000 crs…that’s just 42% away from IDBI Bank’s current Market Cap of Rs 17631 crs.. here it needs to displace Union Bank and Bank of India only to occupy the fifth ranking…assuming these two banks too will surge ahead,the share price of IDBI Bank will have to surge even more in absolute and relative and  % terms  

Conclusion

Whichever criteria you look at…5th overall or 5th within PSU Banks alone,the share Price of IDBI Bank will have to move up smartly within two years by atleast 50%….if the aim is more challenging to be overall 5th then the surge in price will be by over 100% from the current Rs 179…additional issue of Equity too will aid the surge in market cap…… this is the more likely scenario to acheive a 5th ranking by Market Cap rather than do so by default because share prices of other banks are dropping  

When I recommended it strongly a month and a half ago IDBI Bank was in the Rs 130- Rs 135 range…my target is Rs 250 within 18 months….it’s surged to Rs 180 levels inside two months alone

Banks are conditioned to be conservative in Operations,Outlook and any Outpourings….Yet IDBI Bank surprises me by announcing that they are aiming to be ranked 5th by Market Cap….Our Markets have demonstrated that they have a mind of their own….my advice to IDBI bank is not be guided by the Share Price or make it a parameter to aim for…it’s not their job…their job is to run the bank superbly….the market will inevitably reflect this favourably by moving up the Share Price  

How a Company/Bank/Stock can breathe again and be reborn !…Years ago I had termed the DFI IDBI as ‘Instant Death By Investment’ when the IPO came out in 1995 at Rs 130 and reduced the Government stake to 72 %…Post 2000 after further restructuring the Government Stake came down further to 58.5%….then from 2003 to 2006 the process of conversion into a bank was done with the Amalgamation in 2005 of IDBI Bank into IDBI and renaming the Entity to IDBI Bank…….From 2007 till date It’s been Banking Operations…Now the renewed focus on Retail Banking to improce CASA ratio and lower the cost of Funds……….Never write off a Stock !….Here I am now recommending Investment in IDBI Bank !

Cheers !

Venky’s Share Price dropped 9% today from Rs 900 + levels to Rs 832 close……why?…..perhaps the market is skeptical that the Group’s just announced Investment of £ 46 Million or Rs 325 crs for the Price that the Pune based Rao Family owned Venky’s Hatchery Group will pay to pick up 100% of English Premier League Football Club,Blackburn Rovers…this will be applied to pay £ 25 m to the current owners,Walker Family Trust,£ 15 m to cover the club’s debt obligations and £ 6 m for an Investment Pool to strengthen the Team by buying/leasing new players….will come out from the Listed Company’s balance sheet…..highly unlikely…it should be through another group overseas company keeping in mind existing investment,cash flow,legal,domicile and tax stipulations,compliances and efficiencies

Just ten days ago another top English Club,Liverpool Football Club, was taken over by the American Group, New England Sports Ventures for £ 300 Million….so Venky’s Group are getting Blackburn relatively much cheaper…but then Blackburn always finishes mid table or at bottom of the table,except for that historic 1995 League Title win,while Liverpool have won the Premier League several times and start of as one of the Cup Contenders every single year…..India has growing legions of young Fans of top English Clubs like Manchester United,Chelsea,Liverpool,Arsenal…even Manchester City…but none for Blackburn Rovers…so in a sense Venky’s Group will become the first big Indian Fan of Blackburn Rovers by default and virtue of it becoming their Owner !  

However put in perspective,this takeover of Blackburn Rovers is literally Chicken Feed for the Venky’s Group….Clearly the Purchase of Blackburn Rovers has cost the Venky’s Group merely a month and half of Group Sales and less than a Year of Group Profits!….have a look at the Financials below….In fact media reports suggest the Group Sales and Profits last year were a Billion Pounds and 118 Million Pounds respectively….that’s Sales of over 7000 crs and Profits of over Rs 800 crs !…I’ve been conservative in my estimates as i reckon the media is talking EBIDTA and I’m talking PAT 

The Group’s listed Company is Venky’s…it was traded at Rs 910 + this morning but closed 9% lower at Rs 832…these are some of it’s financials as at March 31,2010 

The Networth of this Venky’s Group surely will run into several Thousand Crores if one includes the Value of the unlisted flagship Venkateshwara Hatcheries Pvt Ltd and the market value of all the Properties this Group owns across India….Set up over 30 years ago by the late Padmashri Dr B V Rao and now managed by his daughter Anuradha Desai and her two brothers,Venkatesh and Balaji Rao,this Group has demonstrated commendable philanthrophy too….an illustration of this is the Tirumala Temple that they have replicated at an hour’s drive from Pune City 

A few years ago the Group was hit by Global Fears of the Bird Flu…Chickens were not being sold but were being gifted away!…matter of expression really….Venky’s Profitability skydived as did it’s Share Price….In fact the 52 Week High/Low of Rs 1012/161 tells the story quite vividly….on regaining fortunes,the share price has skyrocketed in the past twelve months

Venky’s has been Sponsoring Tennis,Cricket and Football….It sponsored the Trinidad & Tobago T 20 Cricket in the Airtel Champions league recently in India….the Russian tennis Star,Elena Dementieva also sported the Venky’s logo on her dress at the US Open….Venky’s exports to Russia and the Caribbean Islands…so there is a clear business methodology in the sponsorships too…..recently Venky’s stepped in to sponsor the AIFF India National Football Team friendlies with Hong Kong,Vietnam and Yemen in Pune earlier this month …and now it will own all of a Premier English Football Club…ground too !

Last Bonus of listed Venky’s was way back in 2001 in a 1:3 ratio….With already strong reserves of Rs 197 crs at 31/3/2010 expected now to cross Rs 250 crs at 31/3/2011 and with a small Equity of just Rs 9.39 crs,a Bonus is surely due……Despite an EPS of Rs 58 in FY 10,the Dividend was just 40% or Rs 4/share…that’s less than 7% dividend payout…..so look out for a better dividend payout and even a Bonus this year !

The Shareholding pattern shows 56.12 % Promoter stake holding through 21 shareholders at September 30,2010 ….Venkateshwara Hatcheries Pvt Ltd itself holds 50.06% or 4701276 Equity Shares,just short of the 51% that would require consolidation of accounts of Venkys in it’s books….IDFC Small & Midcap Fund owns 3.19% or 299985 shares…..Being a Hatchery Group,you will not find Jains and Marwaris,that largely constitute the Broking Community,either holding shares of Venky’s or even recommending it to their clients..there may be a few exceptions though in the near 20000 shareholders of Venky’s 

If Business Fortunes Continue to dazzle for the next few years this already strong Group will have extremely high Networth Ammunition to go in for even bigger acquisitions for Investments…so far it’s profits have come from it’s domain poultry monopoly of breeders and broilers…it’s buyout of Blackburn Rovers should be viewed as a Investment with a long term gestation…its more a Branding exercise than seeking return on Investment….what next ?…Manchester United maybe !? 

Venky’s Group has hatched a tremendous success story in India…by buying out a Premier Football Club it has now laid an egg in England….hoping it will hatch and grow to become a tremendous success story too

A last thought….just imagine this…. if the Group wants to pursue bigger and more famous targets,it will need a war chest of atleast a billion dollars….as a de-risk measure it would then surely be tempted to consider listing it’s wealthy flagship Venkateshwara Hatcheries Pvt Ltd ….this may happen through an IPO or a reverse merger with already listed company Venky’s…..just a thought

So should you be buying Venky’s at Rs 830+ for your Equity Portfolio ?….understand the risks associated with the Broiler and Hatchery Industry before you do so….Operations and Revenues and Profitability look great now…but they were not always so….Industry has been showing cyclical trends with good and great years followed by slowdown years…and the great years are on currently…..if you yet want to lay an Investment egg with Venky’s then look out for a further drop in the Share Price…a Lower Price to enter at will mean a Lower Risk too

Cheers !      

ITC (FV Rs 1) and IDBI Bank (FV Rs 10)…both at Rs 171

‘Eyes’ on the Future with these two ‘I’s’ in your Equity Portfolio

Cheers !

Two weeks ago on October 11,2010 I had briefed a blog on six interesting stocks

Six Interesting Stocks in the Rs 70 to Rs 80 range………

Delta was Rs 79 then …shot up circuit yesterday to Rs 87 and is Rs 94 this morning….yet looks interesting
S Kumars Nationwide was at Rs 74 then….is now Rs 80 and will now be in the F & O segment too….

Hope some of you out there are making monies on these

Cheers !

……..Must have got up on the wrong side of bed this morning!…actually bed is against the wall so there’s only one side I can get up to……

……cursing having received the McDelivery Breaksfast Pamphlet with my morning papers…decided to try it….the Mc Mug was Free as was the Hash Potato…but what I paid for was terrible…Veg McMuffin !….even a cur would not eat this cud!….also was annoyed that they called twice to ask for directions to where I live !..a ploy used when they are running late for delivery !

……Refrigerator hired a few days back for a month,conked out yet again…the technician had come yesterday and said he had repaired it…..wasted ,for the second time, the chocolates made  and that were waiting to be wrapped for a Diwali Order for Nagschocs,our brand….the rental guy profusely aplogised and said he will replace it right away….full rent advance has been paid to him

…..an old office hand can’t stand the competition from the relatively new recruit and has threatened to resign…ironically he had recommended this guy too….wondering should I let him go……amicably…..

…..and now my trusted Printer Guy for over twenty years called…..messed up the printing on the Diwali Cards by printing the old address !….he was really feeling low about this…….told him mistakes do happen….he should have arranged for the printing proof like he was told to do…instead he fell back on complacency…..now am arranging for a new set of cards…..one should not mess up good relationships that have stood the test of time for such mess ups that can be resolved

……going back to my earlier Opticians….these Opticians are minting Money !….tried out one which runs a Chain all over Mumbai and  recommended strongly my by Wife and Son…..Rs 11000 for the top end Progressive Lens that’s equivalent to High Definition viewing !….extra for ‘anti this and that’ !….Rs 3200 for a rimless frame I liked !…..that’s Rs 15000 + for a new pair of Spectacles !…..Good Heavens !…..I could enjoy Heaven in  a 3N/4D all expenses ,including Airfare, trip to Bangkok and back for less !

…..25 years ago,I was being paid the princely sum of Rs 150 every month for doing my Articles with India’s leading firm of Chartered Accountants….I proudly stopped taking Pocket Money from my parents…..and not only survived the month but had some left over too at the end of it !……my son tells me “Dad, which world are you living in !” 

……this Saturday has got to get better !……maybe India’s top Rock Band, ‘Indian Ocean’ playing at the Club this evening will rev me up !….it’s free for members…. and, as I stated earlier on this blog that what’s free is really good !…..does not generally hold for stock advice though ! 

Cheers !…have a better weekend than I’m having so far !

Slept nice and warm after a superb Indian run chase of 290 against Australia in the Vizag Cricket ODI last evening….got up at 5.45 am to a lovely rain swept early Sai Baba Thursday morning in South Mumbai…..unseasonal showers…..cleansed everything…I mean everything….Sense the Sensex will rise today !…..believe me there is a positive corelation !

Just like there is positive corelation between Rain and Hunger !…so it seems…my squirrels,sparrows,pigeons and crows cleaned the platform faster than normal…..just put out some additional grain

So by this Logic there is positive corelation then between Sensex and Hunger !…Cheers ! 

Just returned after daughter’s football pool…..clicked the soothing and inspiring Marine Drive Sea and Malabar Hill Skyline View before 7 am this morning

….and it’s Diwali time again…and this is serious Chocolate Making Time for my wife….a passion that turned into a business…..up early and till late night everyday..for days…creating chocolate wonders with Real whole Roasted Almonds and Flavours of Rasperry,Strawberry,Orange,Butterscotch,Mint and Coffee…check out her site www.nagschocs.com

Rain and hot ‘Bhajias’ and ‘Pakoras’ go together…wondering if the Stock Markets will offer me some ‘Bhajias’ today !…yesterday they gave me IDBI Bank !….for those unfamiliar with this local market lingo,it means quick and fast and very short term,even intra day, trading in and out for quick gains…normally harmless as one does it in small lots for the ‘bhajias’ or ‘gains’…..get the drift !  

…and now the Sun is out…..

Cheers !

Coal India IPO has been marketed and analysed for months now…so I’m not really going to deep underground to check it out….there’s enough evidence above ground to assess this IPO

You don’t need to go deep into the Coal Mines to Invest in this Mining Giant’s Equity…The Government of India itself has surfaced to offer for sale Equity Shares of it’s Mining ‘Megapoly’ Coal India

The Mega IPO fo Rs 15000 crs + opened with a flourish yesterday in the price band of Rs 225 to Rs 245 with 5% discount offered for retail Investors….assuming it will be priced at the top end of Rs 245,retail Investors will get the shares at Rs 233…they can apply for upto 400 shares and with a likely oversubscription of two to three times in the retail segment,they should be alloted @ 150 shares…the grey market premium that was hovering at Rs 15 has moved up to Rs 30…so with Listing scheduled for November 4,2010,just a day before Diwali it is likely that retail Investors should get atleast Rs 4000 gains on allotment of 150 shares from a maximum application of 400 shares for Rs 98000…that’s a return of over 4% in just 15 days….nows that’s cool !…so even the short term may offer you an opportunity here…some Diwali Bonus……

However,Coal India Pricing of Rs 225 to Rs 245 is not exactly a bargain nor is it expensive…it’s fair pricing…The Government has learnt from it’s past mistake in pricing NHPC high at Rs 36……in fact Coal India looks cheap if you consider a few years down the road….There is no Equity dilution as all shares are an Offer for Sale….The Company has spruced up it’s bottomline for this IPO to show an EPS of over Rs 15….that’s a 16 Multiple at top end Rs 245 IPO pricing…if it can sustain this growth in earnings to a 20% CAGR one can expect EPS of over  Rs 18 and near Rs 22 in FY 11 and FY 12 going forward…so you are getting Coal India at 10 to 11 times FY 12 assumed EPS…..Rs 300 Price looks likely next year…so thats 20% to 30% likely returns inside 18 months

What’s the potential downside  ?….Coal India may show lower earnings growth and even lower profits in the next two years…..Unlikely…also PE Multiple allowances may get measured…Likely if there is an Earnings Growth downturn in Corporate India

Bottomline is would you need to be rescued anytime in the future if you Invest in Coal India at Rs 245 !?…..Unlikely…even if the Secondary Market Price drops below IPO Pricing ,it will not be a permanent diminution

Ignore the IPO Hype and Grey Market Premiums…it will eliminate any expectations for Gains in the Short Term…remember the early 2008 Reliance Power IPO Hype,Record Oversubscription and Grey market Premiums and the Post IPO Listing Disaster…not really an apple for apple comparison…different sectors and Coal India is an existing Giant Monopoly with Navratna Status and Good profitability….go back a decade and you will recollect Cinevista IPO at Rs 300…record Oversubscription of over 160 times with Grey Markets offering Rs 1500!…crashed on listing …was below Rs 10 for years……

So Go ahead and be Patriotic and Invest in Coal India for the Long Term….You will not need to be rescued….Make it a part of your Core Segment….It’s not everyday that you get a piece of a Navratna IPO Cake at Fair Pricing…You made decent money from Oil India and NTPC…. you will benefit from Investment in Coal India too

Employees are not supporting the Coal India IPO as they are protesting against the Company going public…so some part of their quota too will be rolled over for public allotment….just a last thought….many years ago I was reviewing the World’s Biggest Companies ranked on many parameters…Coal India had the dubious distinction of being No 1 in the world…for the largest Employee force in the world !…over 5 lakh employees at the time…it was seen as affecting company productivity and efficiency…..no wonder the Employees are objecting to the IPO…it will bring in better Corporate Governance with more transperancy and accountability…….years ago even employees of our Oil majors had opposed IPOs of their Companies

So just a  day before Diwali,our Market Cap is going to shoot up dramatically by over US  $ 35 Billion when Coal India gets listed on November 4,2010…..Big Deal,Mukesh Ambani would say…”I’m personally worth much more….I can buy out 100% of Coal India !”….Now ,wouldn’t he love too !…but then he would have to dilute his Reliance holdings to do so….just a thought !      

Cheers !   

Other Days may be different…but today India celebrates Dussehra…when Lord Rama vanquished the arrogant Sri Lankan King,Ravana……and this is traditional….get up early…bathe early…Adorn Car and House with fresh Marigold ‘Torans’….Pray….Arrange for Breakfast of Hot ‘Jalebis’,'Fafda’ or Papdi with Raw Pumpkin Chutney for eight houses in my extended Family….most had yet to awake on this lazy Sunday…..there are huge lines that form from early morning at famous Indian Sweetmeat Shops to buy fresh Hot Jalebis……I got mine from ‘Sangeeta’ at Neapean Sea Road in South Mumbai….had to wait my turn….fortunately the line in front of me was shorter than the one that formed behind me at 8 am…..managed to do all this by 9 am this morning !  

Dussehra is being celebrated today with great faith,passion and vigour all over India…Its been nine nights of Navratri Celebrations that culminates in Dussehra…..Mysore,Kolkata,Varanasi,Delhi,Mumbai

…..Gujarat especially comes alive during Navratri with the famous folk dances of ‘Dandiya Raas and Garba’ Programmes dotting the landscape in it’s villages,towns and cities….children,youngsters and old alike draped in vibrant colourful kurtas,chanya cholis,turbans and badhinis with matching jewellery and other accessories dancing in fabulous rhythm,some even possessed by it,to traditional Gujarati songs and even hit Bollywood remixes either belted out live by singers,some famous like Falguni at Ankleshwar in Gujarat or Rahul at Goregaon in Mumbai or played out as recorded music…these celebrations are beamed out live on various channels

…..Kolkata celebrations of Goddess Durga Mata are legendary and one has to experience them….Goddess Amabaji Mata,Lord Ram and his consort Sita and brother Lakshman and even his disciple,Lord Hanuman  have also been worhipped with greater fervour for ten days now……’Ramayana’ has been read out and even enacted in spirited fashion at congregations all over India……. Idols of Goddess Durga Mata are now being immersed in Waters

……Mysore is celebrating 400 years of the famous Elephant Parade that is the hallmark of Dusshera festivities in the southern state of Karnataka 

To signify the Triumph of Good over Evil and to Destroy and Kill Arrogance and Evil ,Effigies of Meghnatha,Kumkarna and the ten headed Ravana are being set alight in this order at Maidans all over India ….captured some of this on my mobile camera from Live TV….at Subhash Maidan in New Delhi at 6 pm where all our governing Political bigwigs of the Capital were present…President,Vice President,Prime Minister,CM of New Delhi,Chairman of the Congress Advisory Council…..they set Doves and tricolour ballons into the air to express peace and solidarity and joy…soon after the Effigies were set alight….some of these bigwigs then drove to the famous Ramlila Maidan where at 7 pm the effigies were set alight…In Mumbai at Chowpatty beach the effigy of Ravana was set alight at the same time   

Now we’re all set for the Big Festival of Lights,Diwali and the Hindu New Year in the first week of November

Good Always Triumphs over Evil…Always

Just witnessed Live on TV a brilliant Commonwealth Games 2010 Gold Medal Womens Finals in Badminton between Indian Ace Shuttler and World No 3,Saina Nehwal and Malaysian Mew Choo Wong …..Saina won after being a game and matchpoint down !..19/21,23/21 and 21/13

The Rallies were long and all shots in the book were being played….pushes,drives,tosses,cross courts drops and smashes…Phew !…heart and breath stopped when Saina was down Matchpoint in the second !

Saina has now played Wong five times now…and beaten her everytime…this was the closest and tightest finish….her Gold is India’s 38th at these Commonwealth Games in New Delhi…helps India shunts England down to third spot in Final Medals Tally….last evening England were leading with 37 Gold medals to India’s 36….Earlier this morning,again in badminton,our Womens Doubles pair of Jwala and Ashwini created history by getting Gold to give India her 37th Gold and Equal England..Saina’s Gold decided the Medals Tally …India with 38 Gold to England’s 37 is second behind Australia

Clicked the above photo of Saina with my mobile camera from Live TV after shewas presented the Gold Medal and our National Anthem  (Instrumental version)was being played

…sets up the finale of the Closing Ceremony this evening quite nicely   

Cheers !  

Life Cheats Death !…..33 Miners who have been trapped for 69 days and 700 meters underground in a Chilean Mine in the Northern Part of Chile in the Atacama Desert near Copiaco are now surfacing one by one every hour…crossed the halfway mark just now at 10.15 pm Mumbai time…..more than 17 out so far….. in one of the most uplifting rescue acts in recent times….amazing…..watching it live on CNN……

…….the Wheel of Good Luck ,as it is lovingly now referred to as,on the Rescue equipment controlling the special Phoenix capsule,when it moves clockwise indicates that the capsule with a miner is on it’s journey up….the capsule is 4 meters in height and just 54 cms in diameter…and when the miner surfaces it is amazing to see the lively spirit and the huge smile…..breathing fresh air and in sunshine for the first time in 69 days ! 

…….Familes of the trapped miners have been camping at the disaster site for these 69 days and are now rejoicing….Thumbs Up for Hope and Human Spirit….for Faith and Family…….the 33 Miners have already become a case study for a host of Emotions….but am sure the it was the Team Work that has worked wonders and created this rescue miracle…..Miners are aged from 18 to 56 years….Individual role plays organised within the team spread from being an Electrician to a Paramedic and even singing Elvis Presly Songs  !

God is omnipresent….definitely sighted in Chile !