Just 3 Seats left! Sat Aug 4 2018 Mumbai Fundamental Equity Workshop

Just 3 Seats left for the Saturday, August 4, 2018 Mumbai Fundamental Equity Workshop

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There’s a good mix of participants from seasoned market veterans to even novices & from independent investors to those from institutions

All coming to assess Value Vs Price & differentiate a Goldmine from an Explosive Mine in this jungle of Indian Equity & employ Compounding convincingly to create Wealth through Equity 

In the February 17,2018 Workshop just five months ago one of the Exercises was on Time Value of Money & the case study on HEG was put up to explain the practical aspect & the magic & miracle of Compounding .It had already become a huge multi-bagger in a year rising from Rs 150 levels in January 2017.Objective was to assess if HEG at even Rs 2695 on February 16,2018 could be considered if one sought 20% CAGR for three years in an Equity Investment…It involved Valuation of HEG on many traditional & contemporary basis…Today HEG closed the week at Rs 4122  already up 53% in just five months when the Nifty & Sensex have managed to hold their Highs but the Small & Mid Caps have corrected 20% to 50% & even more in many…a 20% CAGR over three years would have computed to a price of Rs 4657 by  February 2021 ! We shall of course re-assess HEG

This Workshop will continue,among other relevant valuation & wealth creation in equity concepts & market dynamics at play,to reiterate the Miracle & Magic of Compounding for serious Wealth Creation in Direct Equity & why Warren Buffett has become ‘the’ Warren Buffett because of this & his ‘Concentration’ of Stocks concept.

Will just gazing & being guided by the Nifty & Sensex add or subtract to your wealth?…how to not get seduced by explosive mines like Kwality,PC Jewellers & Vakrangee & even Subex or Suzlon !…how not to be drowned by the caco-phony in the media & market networks…phony alright especially in bull markets  

Like the Equity Coin has two sides of  a Buyer & a Seller,so are there two sides of Wealth Creation & Wealth Destruction…what’s the probability that you toss the Wealth Creation side always ?…for that you need to understand both Valuation & Market Dynamics & Forces at play   

Be there at the Workshop !

You shall enjoy not just the lunch !

Cheers !   

Sat Aug 4 2018~Mumbai Funda Equity Workshop~Spotting Gold Mines & Side Stepping Explosive Ones

Fundamental Equity Workshop in Mumbai
Stock Selection ~ Value Vs Price

Indian Equity ~ Goldmine to a Few & Explosive Mine to Many ~ Training Minds to be Minesweepers to differentiate

Saturday, August 4, 2018

Wealth of Mind & Monies must move in tandem.Click above or here to attend my next Mumbai workshop on  Saturday August 4,2018.It’s yet again at my Fort HO,above Starbucks & Croma & a hop step & jump from the BSE

Q’ attend karey? 

‘Q’uality’~how to focus on it~ Discipline of never Deviating~never? what about that potential multi-bagger turnaround or sapling that carries high risks ? Equity is all about Growing Wealth while Protecting it ~ taking & managing risk

The above Registration link also displays the Workshop Template outlining what shall be covered & why you should invest one Saturday with me

We’ve had real Fun at all the Equity Workshops in the last three years with some lovely entertaining interaction with & between participants from all over India & Overseas while playing the Corporate Tambola  or  even playing around with ‘Experts’ Views on our Sensex & Nifty or what Trump will do or not do next ! or whether any North Korea Missile is pointed at our Sensex ! or   explaining & evaluating practical applications of Investment & Financial Concepts through discussion & debate in Company Case Studies with focus on  assessing ‘Value vs Price’…we’ve seen the impact of FPI flows,Interest,Inflation & Exchange Rates,Fx Reserves,Oil Prices & Budget Deficits…we’ve discussed the importance of Corporate Earnings on Valuation & in many cases how it’s the Assets that give Value…we’ve examined the four legs of the Equity table ~ Valuation,Liquidity,Sentiment & Momentum & how to gauge rising risk when Markets run ahead of fundamentals…many of you have been rewarded too at the workshop for great lively answers & interaction

Here’s another Opportunity in August 2018 in Mumbai to Train & sharpen Minds to become more efficient MineSweepers to spot & differentiate between Wealth Creating Gold Mines & Wealth Destroying Explosive ones

We’ve tackled Valuations & Risks of Bombay Dyeing,I B Ventures,HEG ,Yuken,Ruby Mills & HOV among many others in the recent past & discussed the serious Corporate Governance Issues in the Essar Oil Delisting,Kwality,JBF & Vakrangee among others & the huge Risks associated with  wealth destroyed companies GTL Infra,ESL,Suzlon,Subex & Uttam Galva that yet keep offering hopes of a turnaround

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Nah ! for Nakoda 46 paise ~ warning was issued three years ago

On December 6,2013 following on a blog reader Dinesh Sampat’s request I had posted the warning below with elaborate reasoning:

Nah ! or Wah ! for Nakoda Ltd at Rs 10.50!? ~ This is for you Dinesh Sampat 🙂

Posted on

This Tuesday morning the Times of India edition carried a brief coverage of CBI arresting the Promoters of Nakoda for forging papers and manipulating accounts to avail of Bank Loans of over Rs 2000 crs which were siphoned off

Here’s the coverage & here’s BSE asking for clarification from the company  on the same

The Share Price is 46 paise on BSE …yes it’s still quoted

 

Planning a Training Workshop that has a classic Theme for such low priced Wealth Destroyers & how & when to spot a turnaround & take the risk,if indicated  ….should announce it shortly

Do not get seduced by low below par quotes & a mindset as “what could go wrong…the down side is limited !”….you’ve already been foolish in Global Trust Bank  (vapourised) & Kingfisher Airlines(suspended but as good as vapourised) just to mention a few black sheep

 

Sterlite Tech Shareholders short circuited in the Demerger ! ?

Sterlite Technologies (STL) Shareholders short circuited in the Demerger ! ?

I was approached to buy some unlisted shares of Sterlite Power Transmission Ltd (SPTL) & then was astounded when told an offer had already come in for Rs 270 already !

So what’s the Big Issue ? ~ How Can the Value of unlisted SPTL change dramatically upward by over 300% from Rs 112.30( as on March 31,2015 cut off date) that the company offered for in the demerger of STL  and paid in August 2016 & just eight months later value the same atR s 464.46 ! on March 2,2017 when they announced an EGM for March 29,2017 to issue new shares !(Details Below)

It’s thus  to do with the low Valuation of unlisted SPTL as on cut off date March 31,2015 that was the subsidiary of listed STL that got the Power Division of  STL in the Demerger & then ceased to be a subsidiary post demerger.

Haribhakti & Co LLC did the valuation on a NAV (for Holding Co) & Income DCF Approach (for Operations) at a maximum of  Rs 111.50 /share.Price Waterhouse & Co LLC also used similar Valuation approach and got  mariginally higher Maximum Valuation of Rs 112.30.Both had valued SPTL below Rs 900 crs only ! despite Income Approach having to consider Potential of Scale Operations in coming years.Both Valuation Reports are dated May 18,2015 in sync with STL Board Meeting Date as below.STL has gone with PWC

These are the relevant Dates  & all relevant documents for Shareholder/Court/Exchanges Permissions & Approvals can be found here :

May 18,2015 ~ Board of STL in a corporate restructuring decision approves the Scheme of Arrangement between the Demerged Company STL & Resulting Company SPTL (then subsidiary of STL)effective date April 1,2015.Decides to keep SPTL unlisted unlike the Adani Group that listed Adani Transmission after their restructuring exercise

December 15,2015~ Court Convened Meeting of STL Shareholders passes the Scheme

April 22,2016 ~ Mumbai High Court issues an Order approving the Scheme

May 23,2016 ~ Order becomes effective on date of filing with Registrar of Companies

June 15 & 16,2016 ~ STL begins ex demerger quote on June 15,2016 as Company has set June 16,2016 as record date for STL shareholders entitled to receive Demerger benefits of SPTL.SPTL ceased to be a subsidiary of STL on this Demerger & it was decided to keep it unlisted unlike the Adani Group which demerged & listed Adani Transmission.

June 27, 2016 to August 8,2016 ~ Election Date Range for @ 122000 shareholders in STL up from under 120000 shareholders at June 30,2015 when the Demerger plans were announced in May 2015 and I wrote a detailed blogpost in July 2015 (see later below) .There were two options for Resident Shareholders ~ receive Equity Shares of  SPTL at Rs 112.30 (FV Rs 2) in a 1: 5 ratio for shares held in STL or go for the 8% Preference reedeemable shares of Rs 112.30 in the same 1: 5 ratio that would be reedeemed at Rs 125.55 in eighteen months from allottment.FPI/FIIs?Non Resident shareholders had to sell their shares back to the Promoters or their affiliates.

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Bangalore Fundamental Stock Selection Workshop~Sat Sept 10

Bangalore Fundamental Stock Selection~ Value Vs Price Workshop~Sat Sept 10

Grab Your Seat Now ! ~ Just 10 Days left for this exclusive Serious Life Changing Wealth Creation through Direct Equity Workshop

It will be a great Saturday Investment for only an all inclusive(Lunch,Tea,Service Tax etc) Rs 7700 pp or Rs 7000 pp for Group of 3 & more Registrations

Register & Pay Online Immediately here or here 

We’ll be fundamentally discussing a lot of listed Companies & how to get & strengthen conviction on huge potential winners & stay away from Wealth Destroyers & create a Wealthy Equity Portfolio ~ will pitch Value vs Price ~ We’ll also examine Companies you may request

Have covered this workshop on my blog earlier too as below

GST for Wealth Creation~Gauravs Stock Training~Bangalore Saturday September 10 2016

&

Stock Selection-Value vs Price~Bangalore Fundamental Equity Workshop on Sat Sept 10

The Workshop Detailed Template is as below 

Fundamental-Equity-Workshop-Bangalore-10Sept16-JSAA

 

Subex @ Rs 11 ~ Five Questions that come to Mind

Subex @ Rs 11  & thus available around par of FV Rs 10~ Five Questions that come to mind?

First a bit of background of Subex that got grounded bad from a high of Rs 887 in 2005 to a low of Rs 4 in 2013 before sputtering to show some life crossing Rs 18 in 2015 & again correcting sharply to below Rs 10….It’s showing some life again with Market Cap moving up to @ Rs 550 crs & huge Volumes .It’s in the Telecom Software Products space providing Business and Operations Support Systems (B/OSS) to Communication Service Providers (CSPs) across the Globe.

If you’re training with me you’d know how to look at it now….just listing in brief the five points I’m looking at :

  1. Management ~ Its now 48 year old Surjeet Singh ,ex CFO of Patni Computers managing Subex.He’s the CEO & MD & has a Cost to Subex Group Package of over Rs 5 crs.Till September 2012 it was the 1992 Founder Subhash Menon who ran the Show and even remained Director till 2015.Menon’s Rise & Fall Story has been covered in some interesting detail by Forbes in November 2012 .Do even read the Readers Feedback to the Forbes Article. The Board also has Sanjeev Aga,ex MD of Aditya Nuvo & Birla ATT (Idea) & Anil Singhvi of Ican & earlier known for his long tenure with Ambuja Cement.He also was an advisor for two years with the Reliance ADA Group & advised on the Enam Axis Bank Merger .The Promoter Category shows a few investors with a very low stake.In fact many  others especially FPIs have much larger stakes & a few were allegedly instrumental in Founder Menon’s ouster because of the Syndesis Acquisition debacle that crippled Subex.The suspicion was that there was more than meets the eye in this US $ 165 m acquisition & it’s funding by US $ 180 m FCCB 1(See below) ~ Question : What’s Surjeet Singh’s strategy going forward to address the challenges that yet remain & scale the Topline & Bottomline significantly ?       
  2. Networth Jump with FCCB Conversion~ Networth has jumped from Rs 209 crs at March 31,2015 to Rs 727 crs at March 31,2016 as Company revised FCCB III Conversion price downward yet again from Rs 22.79  to Rs 13 on May 14 2015.This attracted near full conversion of the FCCBs taking the Equity from Rs 182.92 crs to Rs 502.81 crs in FY 16….These FCCBs were the huge Debt overhang in the Balance Sheet.The Book Value thus became Rs 14.46 on March 31,2016 with the Balance Sheet showing very little Debt with just US $ 6.95 m o/s on all FCCBs I ,II & III .The FCCB Story commenced 10 years ago in 2006/7 when 2%  FCCB I for US $ 180 m was issued with Exchange rate fixed at Rs 44.08 & Conversion at Rs 656.20.In 2009/10 a restructuring proposal of FCCB 1 was offered at a 30% discount to Face Value.Those who held US $ 141 m face value FCCB I accepted & were issued 5% interest per annum, payable half yearly US $ 98.7 m FCCB II with exchange rate fixed at Rs 48.17  & Conversion at Rs 80.31.Redemption date was the same at March 9,2012 which RBI extended to July 9,2012.However another restructuring offer was made in June 2012 to FCCB I & II Holders & most (US $ 38m of the 39 m FCCB I o/s & US $ 53.4 m of the 54m FCCB II o/s) accepted it in July 2012 & were issued 5.7% interest per annum payable half yearly FCCB III for US $ 127.72 m with exchange rate fixed at Rs 56.0545 & Conversion Price at Rs 22.79 with maturity date of July  7,2017.On May 14,2015 the Conversion price was reset on these FCCB III to Rs 13  ~ Question : Though the FCCB Mess has been resolved where lies this High Networth & how is it going to be serviced?
  3. Goodwill on Consolidation ~ The Networth lies in the Carrying Values as on March 31,2016 of the Investments of Rs 647.39 crs made in Subex(UK) which contributes nearly all of topline & of Rs 124.96 crs(lower by Rs 54.90 crs) in Subex Americas Inc.Consolidated Accounts throws up these Investments in the Goodwill on Consolidation.Company has,and new auditors,S R Batliboi & Associates(Previous was Deloitte Haskins & Sells) have accepted the continuing Goodwill Value of Rs 670.36 crs for UK & the fresh assessed Rs 97.26 crs for Americas(down by Rs 88.70 crs from the Rs 186.06 crs carried till FY 15).Company views this as fair based on their assessment of operations  & cash flows going forward & even external valuations.~ Question : These are Intangible & carry risk of Impairment going forward & thus are they yet being overstated even now ?
  4. Topline ~ Sales continue to hover in the Rs 320 crs to Rs 360 crs range last four years despite regular annual report noises on the potential of  mobile telephony going forward.Bottomline remains relatively insignificant even as FY 16 generates Rs 50+ crs and an EPS of Rs 1…maybe enough to service stakeholders like Employees & Working Capital Lenders but what about Shareholders~ Question :Even assuming lower Interest Burden with the FCCB Conversions & less risk of Exchange Fluctuations how would such a flat growth topline generate enough bottomline to service the Equity of over Rs 500 crs now?
  5. Subsidiaries Outstandings set off sought from RBI ~ Standalone Financials as on March 31,2016 reveal Trade Receivables,net of Doubtful Debt) from Subsidiaries  at Rs 412.73 crs &  Payables at Rs 441.28 crs.Company plans to apply to RBI to allow them to set these off. No Accounting adjustment has been made for these & neither have Auditors qualified their Report on the Standalone Accounts though they have drawn attention to it as an Emphasis of Matter ~ Question : That these have grown so huge on either side over the years without being settled does it signal at least a part being accommodation entries?

Remember how I had analysed & exposed Geodesic in 2012/13 at @ Rs 10 & with huge FCCBs too when many were floating it as multi-bagger potential to cross Rs 100.It dropped to under Rs 2 & has since been suspended from trading         

Over 600 Employees yet believe that Subex will Turnaround under Surjeet Singh…Question is do you as a Potential Investor ….or is the risk a bit too adventurous for your profile….Subex has little long term debt & is showing a positive bottomline now ….well the FCCB Mess certainly has been cleared up but at the cost of FY 16 creating an additional 32 cr shares which already created a selling momentum after the conversion…some yet may have to be sold off.

This is anybody’s & everybody’s share now with insignificant Promoter Holding….There are many who jumped in excitedly at Rs 18 last year & saw their Investment halve in quick time on selling pressure created by additional 32 crs created from August 2015, earliest effective conversion date was in this month ,on the FCCB III.Remember these FCCB Holders had already faced 30% Face Value Loss on FCCB II issue  + Exchange Loss from original Rs 44 & then Rs 48 & then Rs 56 when current rate is @ Rs 67 ….and shares converted at Rs 13 would surely have been crying to sell at Rs 18 to recover some loss for the holders!…. Now there are many yet aggressively buying in at Rs 9.50 to Rs 11…Volumes & Price Trends are telling some story…Selling Pressure seems to be ebbing

🙂 Anybody interested in acquiring  majority stake in Subex ? will cost you under just US $ 45 m or under  Rs 300 crs (@ Rs 67 ex rate)  for a 51% stake & you’ll get a Rs 350 crs topline company with little debt & in profits & servicing  most of the leading Telecom Operators & Communication Service Providers worldwide…and the Book is near Rs 15 with very little equity dilution remaining on account of remaining FCCB conversion….you of course need to believe the carrying worth of Investments in Subex (UK) & Goodwill on Consolidation shown because of it…you would also need to believe in Surjeet Singh’s exclamation in his statement in the FY 15 Annual Report that it’s Inflection Point & all at Subex are very excited about the road ahead

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