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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    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

    Anil D Ambani Reliance Group~Market Cap & Debt ~ Defence to its Defence

    Have a Look at the Market Cap (today closing March 28,2016)& Consolidated Debt (September 30,2015) of these Five Listed Companies of Anil D Ambani

    Name Of The Company

    Market Cap (Rs.Crs)

    Total Debt (Rs.Crs)

    Reliance Power

    13015

    31428

    Reliance Infrastructure

    13747

    24645

    Reliance Capital

    9117

    22730

    Reliance Communication

    12457

    35254

    Reliance Defence

    5098

    6884

    Total

    53434

    120941

    Rs 120941 crs was the Aggregate Consolidated Long & Short Term Debt of Anil Ambani’s Reliance Five Listed Group Companies as on September 30,2015 while today’s Market Cap is Rs 53434 crs.Aggregate it and you’ll get Enterprise Value without adjusting for any Cash    

    Reliance Defence (erstwhile Pipavav) has come into his fold now and a turnaround is expected after CDR was approved ~ RCom is planning to reduce Debt substantially by selling Assets like it’s Tower Business.It also is being supported by Big Brother Mukesh Ambani’s tie ups for Jio Roll outs etc ~ RPower has just declared and paid it’s maiden interim dividend of 10% in December 2015 but continues to struggle to commission Samalkot Power Plant on non availability of Gas ~ Rinfra & RCap are the relatively stabler companies

    As long as his companies keeps servicing debt the Banks who have lend will not have to classify the Loans as NPAs….In fact with Anil Ambani planning huge Defence Sector Investments and Growth in his other Companies the aggregate Debt may increase even after Asset Sell offs

    Problem is that Anil Ambani has not been enjoying good Investor Credibility after wealth destruction in RCom & RPower & suspected involvement of top management in the 2G Telecom Scam.Investigation continues

    The Group’s Market Cap is Rs 53434 crs ~ Compare this with Big Brother Mukesh Ambani’s Reliance Industries that closed today with a Market Cap of Rs 330654 crs

    Now his big Focus is on Defence with India having embarked on a Huge Defence  ‘Make in India’ Endeavour opening out FDI  Cap to 49% in the Sector

    None of Anil Ambani’s Companies have approached it’s shareholders or the Public for funds after the Reliance Power IPO at Rs 450  in January 2008

    None have as None could !

    The Reliance Power IPO was a huge obscene premium assault on the Public from which the Public has yet to recover (Quotes at Rs 47 today after a Bonus Issue in 2008 itself  from the Premium collected that adjusted the Price to @ Rs 270!) .The Issue was hyped by the Investment Banker Wolves to create a huge oversubscription.

    Of course in January 2011 Anil Ambani had entered into a Consent Plea with SEBI without admission of guilt & was investigated for misuse of Overseas Borrowed Funds and was personally fined and banned access to Capital Markets for a year and Reliance Infra for two years    read more

    Wow! A Full House NSE Training Fundamental Workshop !

    Wow! A Full House NSE Training Fundamental Workshop yesterday !

    Seems to get bigger & better every time !

    Did the first one on August 8,2015 and had blogged on it  as linked below

    Interesting Interaction at the NSE Equity Fundamental Training Workshop

    Sunday, August 16th, 2015

    Did this one too on “Interpretation of Financial Statements for Stock Analysis” under NSE’s Rapid Series at their NSE BKC Complex

    @ 30 Participants,both genders aged 22 to 58 from leading Broking Firms,Corporates,Banks and even Individuals who had come on dot and stayed till 8 pm ! expecting to learn how to read financial statements and  market dynamics to assess risks and opportunities in Indian Equities

    Common Question right from Manish Shah,who introduced himself  to me in the lift going up to the Class ” How are the Markets Looking “? ~ “Where will the Sensex & Nifty head in the short term”?

    Had taken a Bull along ! really !…a smaller version of the Wall Street one….told the class I love four animals…Elephants (Lord Ganesha),Lions (My Zodiac Sign),Tortoise(Good Luck & of course Bulls (I’m always one!)….and you’ll always find them on my office desk !…in fact four bulls of various sizes !…and clients know my market view on simply seeing how the bulls are placed !…if facing them straight up  (↑)  as they sit across me,I’m very bullish…if slanted ( ⁄ )towards them,I’m bullish…slant inclination reveals how much !….if a horizontal view (↔ ) then indicates market will remain flat to rangebound and if the bulls face me vertically (↓ ) I’m bearish !….and slant facing me shows intensity of being bearish !

    That got a few knowing laughs from the participants and set off the mood for the Workshop with humour being interspersed right through

    Interacted on the Sensex Dynamics right from base year 1978 and in the last 20 years from November 1,1995 to October 30,2015 when despite nearly half of the @ 4850 trading days saw the Sensex close negatively the Sensex ran up over 650% !…but is that enough!…..the Opportunities & Threats that were clearly visible during the years right from 1991 when Modern Reforms set in to 2001 when Markets had bottomed  out on the ICE Age Melting to the Sharp drop in Interest rates from 14% to 7% in and around 2004 to post Lehman 2008 levels of 8000 in October 2008 and March 2009….showed them from current Sensex of 26657 how to assess fundamentally where we could be heading and the risks associated….discussed Passive Index Investing vs Active Investing and therefore the need for Fundamental Analysis and therefore the need to Interpret Financials & therefore the need to assess Value vs Price  & therefore this Workshop  ! read more

    Superstar Amitabh Bacchan invests a Million Dollars in Nitin Fire at Rs 42.99 !

    Wow ! Superstar Amitabh Bacchan has invested nearly a Million Dollars in a Bulk Deal on NSE on August 14,2015 by purchasing 1.5 Million Shares of Nitin Fire Protection Industries at Rs 42.99 !

    Consequently Nitin Fire has fired up today 10 % and was on  on upper circuit at Rs 47.05 on BSE and Rs 47.15 on NSE in the morning before opening again only to get back on circuit

    Remember how Amitabh had stampeded by buying Two Lakh Shares into BSE Listed Stampede Capital at Rs 88 & Rs 110 levels in December 2013 and see where Stampede is today within a year and a half with long term gains exempt! => Rs 650 levels after crossing Rs 700 recently …that’s a five bagger !

    So whats fired up Amitabh Bacchan ! …or is it payment in lieu of Advertising for Nitin Fire just as he took shares of Just Dial at par before IPO and made a killing !

    And who’s sold to him ? as it’s a bulk deal in NSE and not a fresh allotment

    Nitin Fire Products Industries is a FV Rs 2 Share with a FY 15 Consolidated Book of Rs 15 (moved up in June Q 1FY 16 to Rs 15.67) and an EPS of  Rs 2.3   …Networth is Rs 458 crs as on June 30,2015 with Equity at Rs 58.45 crs

    Relative Valuations at Rs 47  work out to PBV of 3 and PE of 20 with Capital Employed of Rs 980 crs as on June 30,2015 spread Rs 343 crs in India and Rs 637 crs overseas

    Finance Charges were Rs 41 crs in FY 15 and Rs 10 crs in Q 1 FY 16 but most of the Rs 400 cr Debt is actually short  term and therefore not reflected in Fixed Assets but in Current Assets

    FY 15 Consolidated Topline & Bottomline were Rs 1150 crs & Rs 67 crs respectively.Overseas Sales contribute over half.The Company operates two plants at Navi Mumbai & Andhra Pradesh and has operations in Jebel Ali,Dubai and Singapore

    They have an enabling provision to raise US $100 m in Equity and in FY 14 saw  a successful buy back of 13.47 lakh shares at Rs 57 average involving Rs 7.7 crs  too.Share was split in 2010 from Rs 10 to Rs 2 after raising Rs 64 crs in a 2007 IPO at Rs 190.Two Bonus Issues ,one liberal 5:2 in 2011 and one of 1:3 in 2014 have been given  to shareholders

    Auditors Haribhakti & Co,LLP have qualified their Report for two non provisions being Rs 5 crs for a Derivative Contract Loss disputed with a Bank and Rs 45.76  crs Investment in Worthington Nitin Cylinders Pvt Ltd where the Company has relied on a Valuation Report to recover their Investment but Auditors are unable to comment on any potential Impairment as a Fair Valuation Report as required by Accounting Standard 13 is not available read more

    Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

    Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

    Pipavav under CDR with Heavy Debt,Huge Capacities but Few Orders to serve the Debt was up for sale and Mahindras & Munjals were interested if there was Debt Restructuring

    However listed Reliance Infra &  it’s unlisted Reliance Defence of Anil Ambani has bought out most of Pipavav Promoter’s Stake at Rs 63  and will make an open offer to Other Shareholders for another 26% at Rs 66

    This announcement was made post market hours yesterday

    Pipavav which was hovering in the mid 70’s for a week  opened this morning down 10% on the lower circuit at Rs 68.85  on both NSE & BSE

    Is this because the Buyout  & Offer Price  was lower  that yesterday’s closing of Rs 76.45 !?

    This could be one reason…..but think about this ….after the Reliance Power IPO and post IPO mess up where Shareholder Wealth has been destroyed in the past five years  Anil Ambani had eroded a lot of his market credibility ~ Reliance Power is currently down at just Rs 60 from an IPO Price of Rs 450 which adjusts to @ Rs 270 after a Bonus from Premium collected to appease IPO Allotees !

    He & his companies  were even banned from accessing the Capital Markets after a consent fine of Rs 50 crs for misuse of ECB Funds overseas

    This begs the question…can Anil Ambani redeem himself with Pipavav Defence  even as his Power Company is Powerless yet in a sense ! ~ Market is ruthless and has given a huge thumbs down today !

    Contrast this with the entry of Sun Pharma’s Dilip Shanghavi in Suzlon at Rs 18 last month with an Open Offer to coming at this price ~ Suzlon raced away over Rs 25 on this announcement !

    Incidentally after Sun Pharma Price shot up yesterday,Dilip Shanghvi (US $ 21+ billion) overtook Mukesh Ambani (US $ 20+ billion as the Richest Indian

    Don’t you wish even Dilip got into Defence ! 🙂

    So which Anil Ambani Company now do you prefer at Rs 60 to Rs 70 ! ~ Reliance Power or Pipavav ! ?