Kotak Group again enters beleaguered Diamond Power Infra at Rs 23.65 ~ Why?

Kotak Group enters beleaguered Diamond Power Infra at Rs 23.65 ~ Why? ~ their Mutual Fund  had been selling since August 2015 !

On March 30,2016 Kotak Mahindra (International) Ltd a FPI & a subsidiary of Kotak Mahindra Bank picked up 3868606 (6.787%) stake in Diamond Power Infrastructure at Rs 23.65 from Macquarie Bank.Deal Size thus was Rs 9.14 cr with Macquarie exiting fully

Why did Kotak buy in ! ~ as just a month ago the Trustee of Kotak Growth Fund II & PAC had notified the Exchanges that from August 2015 to March 2016 the Fund had sold 1215382 shares ( 2.13% stake) from the 3002946 shares held (5.27% stake).Over 2% had changed hands on March 2,2016 …unless these were inter scheme or within group transfers by the Mutual Fund

The above Notifications already were on the Exchanges websites but only today has the Counter seen a smart rise by over 15% to register a days’s high till now of Rs 27.95.At 12.40 pm it’s trading higher at 12% at Rs 26.60. Trading Volumes have been below One lakh most days in the Year but till now they have crossed 4 lakh on BSE and 18 lakhs on NSE

Diamond Power Infra is an interesting & intriguing case study.It’s been a rapid Wealth Destroyer of 75%  inside five months from Rs 143 levels in November 2014 to Rs 37 in March 2015 …it never was a 24 Carat Diamond ! but you can say it had all but lost whatever Carats it was ! 

Over 10 years ago  in 2005 Diamond Cables (IPO at Rs 10 par way back in August 1993),the earlier name of Diamond Power Infra, was trading low at @ Rs 17 and I spotted a turnaround when it  notified the BSE that they had the second largest cable capacity after Sterlite but were functioning at just @ 15 % capacity due to a working capital crunch.It was negotiating to receive both loan & equity support from Clearwater Capital Partners.The Deal for Zero Interest FCDs & Warrants was announced a year later in August 2006 when Price levels had shot up to Rs 60 and CCP would be getting the shares at Rs 95 on conversion…Then the Share Price simply went into 10 Bagger space inside two years recording highs of Rs 589 in 2007 & Rs 599 in 2008…. I had not waited for these record highs……. so the real wealth Destruction has been immense at the extreme of 96% from Rs 599 to Rs 22 !….even adjusting for 1: 3 Bonus in August 2013,the destruction is 95%!….CCP brought some more at fallen levels of Rs 160 levels 2010.It exited at a Loss in  June 2014 at Rs 90  & just a few months ago at a bigger Loss in December 2015 at Rs 42.68 read more

Typical ~ Equity Investors are piling on at these Highs ~ they need to be cautious

Sensex has crossed a record 26000 & Nifty is now ahead of 7700

Typical ~ Equity Investors are piling on at these Highs  ~ they need to be cautious ~ especially those who are returning or initiating fresh exposure now not having done so in 2013 or earlier in 2014 ~ advisable to await the post budget scenario as there is a high probability that once euphoria abates the Sensex and Bellwether Scrips may correct 10% or more…the real danger though are the small caps and midcaps that have run up crazy,some over 100% in months…they may correct 25% to 50%…yes that high !  

At June 30,2014 ,Equity mutual funds saw record absolute rise in average AUM in the quarter, up by Rs 33000 crore or 16% to Rs 2,36,000 crore led by mark to market gains and inflows. The equity funds’ contribution to the gains in the industry assets was the highest among all categories

While this is to be expected on the back of the resounding BJP Victory and Narendra Modi assuming Prime Ministership there needs to some caution that should be exercised especially by those seeking instant profits and gratification as Sensex has crossed 26000 levels and seems to be running a little ahead of fundamentals for the near term on the back of  BJP & Narendra Modi sweeping the elections,FII Net Inflows exceeding US $ 8 Billion in 2014 till date and Great Expectations from the Budget in particular and the Government in general going forward

Great Expectations from the Union Budget this Thursday are countered by great challenges that continue to confront us on the economic and geo political front…Iraq & Ukraine Tension can escalate further causing Oil Price to surge even further past US 120/barrel and putting pressure on the Rupee…though a lot of the pressure has been taken off by record FII Net Inflows into India this year into both Debt & Equity

The Budget Backdrop is :

High ~ Inflation,Deficits & Debts

Low ~ Economic Growth with Manufacturing sector that needs urgent revival

45% + of the Projected FY 15 Fiscal Deficit has been reached in the first two months April & May  of FY 14 itself 

There is little room to lower Interest Rates immediately….so manufacturing thrust can be provided through diluting the Land Acquisition Act and opening out or increasing FDI cap in many sectors

It is commonly expected that the Budget will be kind to the Infrastructure,Housing Finance,Power & Banking Sector….a major beneficiary of this should also be the Cement Sector read more

Insider in Crompton Greaves doubling in months in 2014 to Rs 190?

Insider in Crompton Greaves doubling in months in 2014 to Rs 190? 

All the Rise can neither be explained by a favourable impact of the Company turning back into a Consolidated Black in FY 14 from a Consolidated Red in FY 13,the first loss in 10 Years nor can it by the positive effect of the buyback exercise

Standard Clarifications sought by BSE & NSE from the Company based on two Economic Times articles in mid March 2014 and  mid April 2014 on Promoter Thapar seeking to exit  and Standard Responses from the Company !

Check out a detailed write up on this in the SCRIP STANDPOINT Module on www.jsalphaa.com

Company does not know if the Promoter is seeking to exit!? Really !?….It’s as if  Thapar is only the Owner but the Company is not managed by him !…and we know that’s not the case !…he is the Chairman and Laurent Demortier is the CEO & MD 

Why can’t the Exchanges & SEBI seek Clarifications from Promoter Gautam Thapar and Goldman Sachs entrusted to seek Buyers for the Thapar 42.7% Equity Sake !? …they did not respond to Economic Times Questionnaire while the Reporters were writing their Story as they were not legally bound to do so

Need to revise or amend,if not already  a part of,  the Listing Agreement,Insider Laws,Securities Act,Companies Act and even the Substantial Acquisition & Takeover Act to make Exchanges also approach the Promoters and the Investment Bankers and even the Media who reports on such stories for  mandatory seeking compliance and other relevant information

Meanwhile Crompton Greaves yet has some ground to go towards Rs 250 if  one has to believe that Thapar wants a certain Valuation that indicates a price @ 50% higher than current price of @ Rs 190 ! 

Check out the detailed write up linked above and you’ll know what I mean !

This one is for Blogreader Salafi from Chennai ~ Goldstone Infratech @ Rs 10 ~ Open Offer at Rs 23 or at Rs 43 ? Supreme Court will decide ~ but it is a Win-Win either way

This one is for Blogreader Salafi from Chennai ~ Goldstone Infratech @ Rs 10 ~ Open Offer at Rs 23 or at Rs 43 ? Supreme Court will decide ~ but it seems a Win-Win either way.

Background of the Open Offer

On November 4,2008 Saffron Capital Advisors of Mumbai ,as Manager to the Offer and on behalf of the Board of Directors of Goldstone Exports Ltd (GEL) the Acquirer (now Trinity Infraventures),issued  a Public Announcement in the Newspapers that the Acquirer makes an Open Offer for 20% of the Equity of Listed Goldstone Infratech Ltd (GIL) (erstwhile GoldstoneTeleservices) at the Price of Rs 23 per share

On December 16,2008 SEBI advices the Acquirer to use October 29,2008 as the Reference Date to determine the Offer Price

It was on this Date when Shares were allotted to GEL on conversion of the Share Warrants they held ~ The Offer Price arrived at  was Rs 43

GEL had used the Reference Date of January 25,2007 when the Board of GIL had decided to issue 1.5 cr Share Warrants to GEL which could be converted into Shares at Rs 22 within 16 months of the allotment ~ GEL held 9.51% of GIL’s Equity of 2.1 cr shares of FV Rs 4  at the time and the conversion would take their stake to 47% ~ The Conversion took place on October 29,2008 when GIL issued 1.5 cr shares to GEL

GEL disputed SEBI and appealed to SAT which admitted the Appeal on February 16,2009 and later upheld SEBI Position ~ GEL then took the matter to the Apex Court,Supreme Court in 2009 (Civil Appeal 7666 of 2009)

On hearing Counsel on August 13,2012  the Court ordered to put it up for Final Disposal on October 10,2012 ~ It has been listed but never comes up for Hearing ~ the next listing date is July 9,2013  ~ so hearing is actually overdue after 16 ordered listing till date  in 2009 (1),2010(2),2011(5) and 2012(8)

An Investment Opportunity to consider in such a situation

GIL is available at Rs 10 ,near 52 Week Low of Rs 9 ~ 52 Week High was in October 2012 at Rs 17.60  on BSE ~ It is also listed on NSE

Market Cap is Rs 36 Crs ~The Volumes are not to heavy ~ Two Week average is below 5000 on BSE and yesterday it was under 1000

Current Shareholding of GIL as at March 31,2013 ~ Equity is Rs 14.43 Crs of FV Rs 4 comprising 36080737 shares

Promoters

No of Shares

% Stake

Trinity Infraventures Ltd

17776165

49.27

L P Sashi Kumar

534350

1.48

P S Parthasarthy

37000

0.10

Total Promoters

18347515

50.85

 

 

 

Non Promoters

 

 

LRSD Global Holdings Pvt Ltd

2410208

6.68

Globe Capital Market Ltd

1160795

3.22

Smridhi Farms Pvt Ltd

566862

1.57

Aggarwal Rakesh

436525

1.21

Ashok Kumar Sharma

365527

1.01

Total

4939917

13.69

Other 9988 Shareholders

12793305

35.46

Total Non Promoters

17733222

49.15

Total 9996 Shareholders

36080737

100

The Open Offer will have to be made to Non Promoter Shareholders to pick up 20% of the Equity

Thus 20% of Equity works out to an Open Offer for 7216147 shares => is @ 40.7% of the Non Promoter Shareholding of 17733222 Shares

This would mean that for every 10 shares held ,the Open Offer Success Ratio should be 4 Shares read more

One Line Snap Observations on Results of Havells @ Rs 550 & Pipavav @ Rs 81 & Cheviot @ Rs 321 & Suprajit Engineering @ Rs 22

One Line Snap Observations on Results of Havells & Pipavav & Cheviot & Suprajit Engineering

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  • Havells @ Rs 550 ( FV Rs 5) ~ Electrical Equipment ~ 52 wk High/Low Rs 616/Rs 313

“Babu Moshai ! You can’t take my Fans away from me “

~ FY PAT up 20% + at Rs 370 crs that’s now Earning Rs 1 +Crore a Day !

http://www.bseindia.com/stockinfo/anndet.aspx?newsid=08157a09-a6c9-4893-8061-e377dc1f11ad

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  • Pipavav @ Rs 81 ( FV Rs 10) ~ Defence ,Ship Building ~ 52 wk High/Low Rs 93/Rs 51
Battling Order Cancellations ~ Concede it’s a capital intensive and high gestation and expertise business but Deploying Rs 2000 crs to earn just Rs 20 + crs is unacceptable

http://www.bseindia.com/stockinfo/anndet.aspx?newsid=3ca5cfdb-260d-467b-84fb-30b2cf3b1294

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  • Cheviot @ Rs 321 ( FV Rs 10) ~ Jute,Captive Power,Investments ~ 52 wk High/Low Rs 377/Rs 249

Continue to be Impressed

~ Cash Rich ~ No Debt ~ Networth Rs 292 crs that’s a Book Value now @ Rs 650 and that’s PBV below 0.5! ~ Equity Low at Rs 4.51 crs ~ PAT Rs 29 crs ~ EPS Rs 64 that’s PE of 5 ~ Dividend 130%,that’s a yield of 4%

http://www.bseindia.com/xml-data/corpfiling/AttachLive/Cheviot_Company_Ltd_300512_Rst.pdf

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  • Suprajit Engineering @ Rs 22 ( FV Rs 1) ~ Two Wheeler Cables ~ 52 wk High/Low Rs 23/Rs 16

Steady Share Price and Steady Earnings

 ~ Networth Rs 129 crs that’s a Book Value @ Rs 10.75 and that’s PBV of 2 ~ Equity is Rs 12 crs ~ PAT Rs 40 crs ~ EPS Rs 3.3 that’s PE of sub 7 ~ Dividend 65 %,that’s a yield of 3% ~ Capacity to be 150 million by March 2013

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Suprajit_Engineering_Ltd_290512_Rst.pdf

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