Looooooooong Full House Saturday Equity Mumbai Workshop Sept 14 2019

It was a looooooooong,should have held it over two days,  Full House Equity Workshop in Mumbai on Saturday,September 14,2019 with a whole spectrum of smart participants that made for really invigorating interaction ~they came from Mumbai,Gurgaon & Pune ~ from young upwardly mobile grads & post grads from top ranked Management Institutes in India,UK (London) & USA(Harvard) to ‘ well tuned in’ professionals from the IT ,Consultancy,Broking,Corporate & Banking Sectors to veteran high networth investors . We commenced at 9.30 am & concluded well beyond 7.30 pm ~ 🙂 should have arranged dinner too

Thank you Guys !

Here are a few candid clicks from the Workshop :

The Coverage was expansive & the Interaction from Participants very intelligent & which opened out many threads that we examined with anecdotal support . When analysing a company ,they asked what is “Non Negotiable” &  “How to have Foresight as on Hindsight we are always right”

Really a lot was covered ,some of which is below  :

  • Macros through :
  1. Examining the Equity Table’s four legs of Valuation,Liquidity,Momentum & Sentiment & the Impact of FPI Flows ~ when Valuation,which should be the strongest leg,sometimes takes a back seat as Liquidity or even a lack of it drives the momentum & sentiment
  2.  Not getting Seduced by any Bounce at  Friday closing Sensex 37385 & Nifty 11076 Levels as Caution is strongly indicated by domestic & overseas economy & geo-political headwinds
  3. Negative Interest Rates Era vs the Magic of Compounding in such meltdowns
  4. Sensex & Earnings & Market Cap & low GDP growth Dynamics on Levels & Valuations ~ Past,Present & Forward & why downside risk remains wide open while the upside appears capped for now ~ we referred to 1991/92 abnormally high Sensex PE pre Harshad Mehta Scam exposure & the High PE in 2000 with Ketan Parekh was in action & where the markets were clearing running ahead of fundamentals by huge margins~ we referred to the Sensex PE of just 6 in the late 1980s when VP Singh was the PM 1988~ we covered Mkt Cap/GDP Highs pre Lehman collapse in 2007/8 & the levels now
  5. Fx Reserves  & Exchange Rate Risk &  the Risk of increasing Sovereign Debt as planned by Government ~ How our Rupee has always had a South trajectory,except when it soared from Rs 49 to the US $ to Rs 39 to the US $ creating havoc especially in the Diamond Sector
  6. Why Inversely co-related Gold & US $ are moving up together instead
  7. Turm-Oil & Impact on Fiscal Deficit & Rupee  like last happened in 2007/8( On Saturday at the workshop we were not yet clued in to the Drone Attack on the Oil Refinery in Saudi Arabia that saw Oil Prices dangerously soar 20% in spot) ~ India is hugely dependent on Oil Imports
  8. Interest & Inflation rates
  9. Trump ~ Not sure if he’s a macro or micro factor !
  • Micros through many companies  & sector dynamics covering :
  1. Checklist on how to Smartly & Effectively & thus Quickly Read a voluminous Annual Report
  2. Our Five Steps for Evaluating a Company for Investment
  3. Impact on the Financial Statements in Scenarios like Buy Back,Rights Issues,Fictitious Sales,RBI issuing a divergence on Provisioning for NPAs,non linear jump in Sales Realisations,5 G Spectrum Fees,Permanent Diminution in Investments,Monetising Assets & Depreciation of the Rupee
  4. Quick Brief on Absolute & Relative Valuation & how to prepare a quick Valuation Grid from the Annual Report, Market Price Trends & Shareholding
  5. Why Liquidity more than Profitability is the ‘Circle of Life’  for a Company as viewed through the lens of the Cash Flow Statement dervived from the Balance Sheet & Profit & Loss Ac & that distinguishes operating,financing & investing flows
  6. Corporate Governance Issues on inadequate Disclosure or Non Disclosure, Incorrect & questionable Accounting Treatment & Lack of Transparency &  irresponsible (deliberate?)  Management utterances  that give a leg to Insider Trading & huge Profits through  Derivatives Play
  7. Courage & Conviction Promoter or Institutional recent Buying in Vodafone,Yes Bank,I B Real Estate & Tata Motors & seeing more wealth destruction since in these   
  8. Basis for Disclaimer of Opinion by the Auditor of Reliance Infrastructure & what holds out some hope
  9. Intangibles,Investments & Impairments
  10. Reliance Industries’s Enterprise Value,Revenue Segments Potential,Spin offs of the Jio Telecom Infra into two trusts, Aramco’s 20% stake being negotiated in the Refining,Petroleum Retailing & Petrochemicals Business that should lead to further demerger & reviving & scaling the Gas Exploration Operations
  11. How Defaults & Corporate Governance Issues decimated into or near oblivion Eros,Cox & Kings,ManPasand,Tree House Education,Satyam,Jet Airways,Kingfisher & Talwalkars & is there any hope of operational & share price recovery with Asset values holding out some hope in a few ~ How Clearly the Statutory Auditors & Credit Rating Agencies were negligent or intentionally turned a blind eye in many cases
  12. Huge Potential Outlay of the ‘Nal sey Jal’ Scheme of the Government & the new Jal Shakti Ministry focus that should benefit many companies if the implementation & execution is as noteworthy as the intent
  13. How IndAs 115 continues to affect Bombay Dyeing
  14. How Exchanges continue to accept outright untrue or tepid clarifications from Companies
  15. Reference to Investment Gurus & Living Legends Warren Buffett & Peter Lynch Approaches & Success
  16.  Coverage of a few sectors like Defence, Hydrocarbons,Broking,Telecom,Real Estate,NBFCs,Banks & Automobiles & Disruption that’s in play in many
  17. Consolidation & Capitalisation of PSU Banks & the controversial Acquisition of Laxmi Vilas Bank by I B Housing Finance pending RBI approval
  18. Common Investor Mistakes

The next Equity Workshop is scheduled  pre-Diwali for Saturday ,October 19,2019 & will be announced soon on www.jsalphaa.com & social media

Touched by some warm & constructive feedback from participants :

  • thanks for a lovely interactive session…”
  • “enjoyed your session yday”
  • “it was great to meet again & reskill to be better prepared for opportunities which would arise”
  • “Thanks for being the Enabler,the last few days have been very encouraging”
  • “Cover the Scenarios Exercise more with Investor focus than just on Accounting Impact & take in a few Annual Reports before Lunch”  

😆 & I swear I did not pay for these ones !

  • ” You are very good at what you do,comes naturally to you,with a vastness of the subject to cover you did justice to cover the best you could with your insights and experience of all the treasures of knowledge,you are an encyclopedia of the subject with case studies,which is the best way of teaching, sharing & learning according to me,the various industries that you know of,the processes & the products,the promoters & the pitfalls,the auditors & the audited,you can understand in the readings the stated & the unstated,intention & intended,you truly personify_the integration of intellect with instinct_”   
  • “Whoever missed this one, missed learning a radical way to look at balance sheets. Very practically in a few minutes you can strip away the padding and bullshit that promoters hide their sins behind. If the stock market’s motto or rather rider has always been caveat emptor or buyer beware, Gaurav’s lessons in Analysis would ensure that a “fool and his money are not soon parted” for when emotions like fear and greed coupled with ignorance seize us even the wisest are prone to behave like fools. Especially the wisest!”
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    Wealth Destroyers as Potential Multibaggers~ Mumbai Equity Workshop Sat June 17 2017

    Wealth Destroyers as Potential Multibaggers~ Announcing a Full Day Mumbai Fundamental Equity Workshop on Saturday, June 17 2017 

    🙂 This time in this Stock Selection ~Value Vs Price Workshop have kept an exciting Theme :

    WEALTH DESTROYERS : POTENTIAL MULTIGAGGERS

    As Limited Seats would advice to Book Your Seat right away here => http://www.jsalphaa.com/register.php

    Plan to cover over 25 Wealth Destroyers to assess any Turnaround Value vs Price & thus a chance to redeem themselves and become Wealth Creators from here… or should just one move on in many of such Wealth Destroyers that are now beyond redemption

    Here’s what some participants said of the December 2016 Mumbai Fundamental Workshop on Stock Selection : Value Vs Price…and this was before IB Ventures zoomed 7 x in months from Rs 20 to Rs 140 & HOV doubled in the same time to cross Rs 300… we had covered both these & more in Earnings & Asset Basis Valuation exercises

    “Amazing… Awesome Session about Fundamental Stock Selection & Wealth Creation ”

    “Full of Inspiration, filled with wisdom…. am really proud to be a part of this wonderful session”

     & from a repeat participant “recreated the same old magic of Bangalore in Mumbai… great Saturday”  

    Would love to interact with you ~ So do invest one Saturday ,June 17, 2017 with me in my Mumbai Fort Office near BSE and above Starbucks & Croma

    Register here => http://www.jsalphaa.com/register.php

    Here’s the Detailed Template of this Workshop if you want more details on coverage

    gap-master-class-mumbai-17june2017

    🙂 See you Saturday, June 17, 2017 at my Mumbai Fort Office Conference Room… we’ll figure out if Suzlon will continue to be ZZZZZlon!  & dissect many such Wealth Destroyers!

    Cheers !

    A Dose of Rakesh Jhunjhunwala

    Rakesh Jhunjhunwala on Future of Equity Market

    Methinks every Indian Equity Investor needs a dose of Rakesh Jhunjhunwala (RJ) every few years! ~ any sooner it could be an Overdose !  😆 ~ just kidding !

    I like the guy ! ~ right since I interacted with him when I invited him around 15 years ago at the turn of this century for interacting in an evening  Q & A session with my packed class of @ 90 participants in my Equity Portfolio Structuring and Stock Analysis Workshop at the BSE Training Institute as I thought he would add practical value & he did

    “Boss ! I’m a Sadak Chaap ! ”  he had told us then as also how he had reconstructed his equity portfolio to concentrate only in a few stocks after the 2000 ICE debacle…so in a sense most of his Wealth has grown only in this Millennium in the past 15 years ~ and to his credit in Selections that were not really Blue Chip or Core

    Yesterday had gone for an  IMC interactive meet in Mumbai to check out if RJ has sobered & matured in his ‘manner of speak’ over the years ~ I rarely watch Stock Channels ~ don’t even have a TV in office~  so was not really conversant with how & what he delivered in his appearances though knew of his initiating big stakes in companies

    I am delighted to blog he has not changed ! ~ shot straight from the hip & mouth again as he always does ” I’m a satodia(translated to mean speculator)  & investor & not an economist” ~ his investment portfolio has spread into the Alternatives of  Bollywood Movie Production too with Kareena & Arjun starrer ‘Ki & Ka’ being his latest co production~ is into horse racing too and owns a few horses ~ passions perhaps where return on investments need not be measured in monies !?

    Many perceive him as Dehati or Crude Dude for his rustic loud boorish way of speech~ but don’t let it fool you ! & he does not make any pretenses ~ he’s a CA by training & wears a fairly sharp mind

    Money Talks & Crowd Laps it up all !~ many vigorously & ‘knowledgeably’ nodding in agreement

    These RJ’s views & responses to questions posed should interest you :

    On The Future of Equity Markets ~ Reiterates this is only the Trailer & we are going to witness a Mother of all Bull Runs.India is a thriving young Democracy with US $ 600 b in Savings every year.Equity Markets receive just US $ 50 b from this.This has to improve and it will ~ anyone ,any  doubt!?   

    On Returns from Equity  ~ Ironically while his riches have been through multibagger 1000% + equity gains in concentrated high weightage stocks like Titan & Crisil he asserts that one should be happy with 18% CAGR gains and if it goes to 24% one should be really happy read more

    Kingfisher Airlines NPA~Exposes Political & PSU Banks Nexus to Lend against Brand!

    Kingfisher Airlines NPA~Exposes Political & PSU Banks Nexus to Lend against Brand

    It was clear to me right in 2009 itself of the danger of lending against the Kingfisher Airlines Brand 

    This was my Warning on July 23,2009 

    Borrowing against Brands !…Interesting,but Risky area opening out !

    Thursday, July 23rd, 2009

    Multiple Posts on my views on the KFA Debacle &  Vijay Mallya have been categorised above under Kingfisher Airlines ~Machiavellian Mallyas

    KFA was my case study at several Seminars & Workshops where I warned  that it was on it’s way to becoming like Global Trust Bank that vapourised and the over 2 lakh shareholders should exit immediately and potential aggressive investors should not get seduced to buy into it !

    Who will now bell the Cat and reveal why the PSU Banks actually lend to KFA,especially under the intangible Brand which Grant Thornton had valued at ,I believe US $ 750 m! ….. the Banks were unable to monetise this to recover their dues !….no surprise here at all !….makes to recall how E & Y had valued in just One Day(Company Law Board had pulled them up for this) the Properties at a value in the Satyam-Maytas Deal to fill the hole in Satyam Balance Sheet ! ….in fact the Banks even converted Part Loan to Equity at Rs 64 !  

    Clearly Vijay Mallya’s Proximity to Political Leaders had a hand when the Loans were given & even till date this Proximity is the reason for his continuing arrogance and brazenness ! …. his Rajya Sabha MP Candidature from Karnataka as an Independent was supported by a few Political Parties just to defeat the Nominee of another !

    I can only surmise that the Glitterrati,especially those who celebrated with him his 60th Birthday in Granduer, & continue to fawn over him and defend him and his son ad nauseum in columns and  on debate panels on TV News Shows have been and/or continue to be beneficiaries of his largesse with public funds,if i daresay ! ~ Nothing is Free !

    Shame !!! ~on these 17 Banks & the many years it has taken them to declare KFA & Mallya as a wilful defaulter  & seek his arrest….investigate who in the Banks was responsible to lend in the first place !…the truth will be revealed then as to why they lend & who made them !

    Shame !!! ~ on those defending Vijay Mallya…a lawyer on a panel says to follow due process of law….another says he will pay !….if the due process of law was followed  in time then Vijay Mallya would have been history by now !….the irony is that the victims,the KFA Employees ( a captain on a panel voiced this) want him free so he’s able to pay them their dues….for if he goes behind bars so goes their hopes!….a stock market scamster comes to mind who was arrested & convicted as he owed the  banks heavily but has been on bail  on an Apex Court Appeal now pending for years and has been able to repay the Banks despite his accounts being frozen ! ~ tacit!? …think about it !….manipulated & rigged stocks & got into trouble….then manipulated & rigged stocks again to repay !….the World is round indeed ! read more

    Spicejet Up & Indigo Down this morning !

    Spicejet Up & Indigo Down this morning !

    As expected both airlines have had a stellar record Q 3 FY 16 profit on the back of  favourable lower cost of Aviation Turbine Fuel that constitutes over 50% of Expenses

    However Indigo declared their Q 3  post market on Thursday,January 21,2016 revealing Rs 657 crs PAT in the December 2015 Quarter.On Friday,January 22,2016 the Interglobe Aviation (Indigo) Share Price crashed 20% before recovering slightly to close at Rs 968.75 on BSE

    This Monday Morning,January 25,2016  it has sunk further by over 7% in the first 20 minutes of trading to drop below Rs 900 !

    In contrast Spicejet declared a record  Rs 238 crs Q 3 FY 16 PAT postmarket hours on Friday,January 22,2016 and had held steadier @ Rs 70 levels after recovering from Rs 63 on the back of Indigo’s collapse

    This morning Spicejet opened strong up 10%  @ Rs 77 in contrast to Indigo’s continued fall and touched Rs 80 before correcting to @ Rs 75/76 levels,yet up over 7% over Friday closing inside first half an hour of trading

    Spicejet has made Rs 334 crs profit for the nine months at December 31,2015.Thus Full Year FY 16  EPS is likely to be @ Rs 10 on current Equity of @ Rs 600 crs (Face Value is Rs 10)

    However the Auditors ,while not qualifying their report, have directed attention to the huge net liabilities over assets of Rs 882 crs ,being accumulated loss of Rs 2877 crs against shareholder funds of Rs 1995 crs that could materially impact company’s survival going forward

    However,as Spicejet is on a recovery turnaround path,with Ajay Singh,it’s co founder in 2005 back at the helm & aided by lower & therefore favourable Aviation Turbine Fuel Prices,it should be able to meet operating and financial challenges

    Market Cap of Indigo presently  this morning at 9.45 am is just under Rs 33000 crs at Rs 910 Share Price levels while SpiceJet’s Market Cap is just over Rs 4600 crs at Rs 76.70 levels

    Sensex is up  over 210 points at 24650 levels

    Crude Oil Price has shown some re-bounce to US $ 31 a barrel from lows of US $ 28 a few days ago

    Aviation Sector will continue to thrive on lower ATF which will remain it’s underlying for Profitability levels

    Will be interesting to see how Jet,Indigo & Spicejet play out in 2016 !

    Go Air too is lining up for an IPO

    Disclaimer : Have an interest in Spicejet

    FLY INDIGO !~Lists high at Rs 850+~Why!?~Read My October 2015 IPO Note

    IndiGo has had a brilliant listing this morning at 10 am opening at Rs 856 on BSE and racing to a high of Rs 898 and  now is at Rs 860 levels at 10.20 am.The IPO Price was Rs 765

    Why this Premium on Listing !?

    Go through my  IPO Note below to get some sense and wonder why Retail Investors missed out and why many  ridiculed the Pricing and the over liberal Dividends

    October 29,2015

    SCRIP SCAN

    FLY INDIGO !

    IPO of InterGlobe Aviation Ltd (IndiGo)

    Book Building Price Band : Rs 700 to Rs 765

    IPO refuelling the IndiGo Fleet for Operations & Expansion

    IPO refuelling the IndiGo Fleet for Operations & Expansion

    Profitable Operations in 7 of 9 Operating Years as a Low Cost Carrier & Bumper Profits on significantly lower Aviation Turbine Fuel Prices in ongoing FY 16 indicate an Earnings Multiple of  just 11 on IPO Top Range Pricing of Rs 765

    +

    Scale Potential being tapped with Huge Expansion with current 97 Airbus Fleet to be expanded to over 527 (Orders placed) over the next decade

     

    Major Risk

     Listing Gains may not be available as :

    Indigo drained of all Networth by Dividends to show a negative Networth on June 30,2015 ! +  Offer for Sale Component is huge at @ Rs 1750 crs (nearly 60% of Issue Size) and nearly all shareholders are offloading part of holding

    Thus Promoter Mindset perceived to be Greedy by Retail  Investors who tend to invest more on emotion & sentiment than on pure reason and thus response has been tepid from them

    “Why should we pay a high IPO Pricing of Rs 765 just for Potential & Promoter Pocket. Moreover Bumper Profits & Over the Top Liberal Dividend Distribution Practice & Policy may not sustain into the Future!”

    IPO Opened on

    Tuesday, Oct 27, 2015

    IPO Closes Today

    Thursday, Oct 29, 2015

    IPO Type

    100% Book Building

    Equity Shares  Offered

    Fresh shares ~ 16.6-18.2 Million shares (worth Rs 1272 Crs) Offer For Sale (OFS) ~  22.8 Million shares being part of holdings from nearly all existing shareholders

    Face Value of Shares

    Rs 10

    Price Band

    Rs 700 – Rs 765 Per Equity Share

    Issue Size

    Rs 3018 Crs @ Rs 765 per share

    Listing on

    BSE, NSE

    Bid Lot

    15 Equity shares and multiple of 15 Equity Shares

    Global Book Running Lead Manager

    Citigroup Global Markets India Private Limited,  J.P. Morgan India Private Limited,  Morgan Stanley India Company Private Limited

    Book Running Lead Managers

    Kotak Mahindra Capital Company Limited

    Object of the issue

    1. Rs 1165 Crs towards retirement of certain outstanding lease liabilities and consequent acquisition of aircraft
    2.Rs 33 Crs for purchase of ground support equipment for airline operations; and
    3. General corporate purposes
    4. To receive the benefits of listing of the Equity Shares on the Stock Exchange

    QIB’s

    50% of Net Issue Rs 1512 Crs (including Anchor) at upper band

    NIB’s

    15% of Net Issue Rs 454 Crs at upper band

    Retail (upto Rs 200000)

    35% of Net Issue Rs 1059 Crs at upper band

      

    OVERVIEW

    InterGlobe Aviation is the company  that owns & operates the Low Cost Carrier IndiGo Airlines. The airlines commenced operations in August 2006 and is now one of the largest players in the domestic airline space with the largest market share that’s fast closing in on 40%. It ranked seventh in terms of largest low-cost carrier globally in seat capacity in 2014, according to CAPA Centre for Aviation . At the end of August 2015, the airline had a fleet of 97 aircraft.

    It has an order book of 180 A320 neo (new engine option) aircraft and expects to take delivery of 15 additional aircraft, including nine A320 neos by March 31, 2016. According to Airbus, A320 neo aircraft are expected to consume up to 15% less fuel than current generation A320 aircraft without shark-lets, which will further reduce fuel consumption per flight.

    Indigo has also recently placed an order for 250 new Airbus aircrafts in 2015 which  are scheduled for delivery between 2018 to 2026. read more