Economic Times quotes me when covering L & T Finance Share Price Movement being under the Lens before Offer For Sale Announcement by Parent L & T

Economic Times has quoted me in their Mumbai Print edition today on Page 11 on one of my fears on Insider Trading and the coinicidence of the parent L & T announcing the Offer For Sale in L & T Finance Shares on the same day as the Scrip began trading in the F & O Segment on BSE and NSE

The weblink to their coverage is  => Swing in L & T Fin’s Share Price ahead of OFS under Lens 

So Yes,Hemant  and Sumit,the market traders and brokers and mainstream pink paper media and even the regulator SEBI is quite aware of the Corporate Governance  Issues that L & T has stirred up with this OFS and which I had highlighted through Five Questions posed in my recent blog on the same to which you’ll had responded as linked below

L & T Finance drops below Rs 80 yesterday ~ Insider Trading!?

Friday, March 14th, 2014

The Issue is will SEBI do something about it…at least investigate it !?  

And probably just a coincidence that the Chairman of  parent Larsen & Toubro,Mr A M Naik and his CEO Mr Venkataramanan sold L & T Shares worth Rs 28.30 crs and Rs 1.26 crs from March 10 to March 18,2014 !

L & T Finance drops below Rs 80 yesterday ~ Insider Trading!?

Check out this fresh morning post in the freely accessible SCRIP STANDPOINT Module on my company’s website www.jsalphaa.com

L & T Finance drops below Rs 80 ~ Insider Trading!? ~ 14-Mar-2014

Both parent company Larsen and Toubro and L & T Finance Holdings issued notifications to the BSE and NSE that Larsen & Toubro will be Offering For Sale Shares of L & T Finance through the Open Window on the Exchanges today through Broker Credit Suisse Securities (India) Pvt Ltd

The Notice that announces the Floor Price of Rs 70 carries a paragraph in the Larsen & Toubro Letter requesting the Exchanges to disseminate the Floor Price Information only after Trading Hours on March 13,2014,a day before the Offer for Sale is being made as per SEBI Circular

Clearly this Offer for Sale is to bring down Parent Larsen & Toubro Equity Stake in L & T Finance Holdings to 75%

Questions arise….here are five of them :

Q 1 : Clearly the fall of L & T Finance from Rs 88 levels in the morning to close at Rs 79 levels in the afternoon appears to be related to this Notice of parent Larsen & Toubro to Offer Shares of L & T Finance at Rs 70 Floor Price today ! ~ who knew this before hand to take advantage of this Low Floor Price and sell Futures or even stock at higher levels yesterday !….and is it just a coincidence that The Offer For Sale Notifications were timed to be announced on the Day that L & T Finance began trading in the F & O Segment  ?

Q 2: What Time did the Exchanges receive the Notices from Larsen & Toubro yesterday  and how were these received..email,fax,hand delivery of letter….could not the Exchanges have released the first Notice earlier and then later the Notice that announced the Floor Price ?

Q 3: Check the Books of Brokers who have done an abnormally  high Volume of Trade yesterday in L & T Finance in Spot & Futures to see if Insider Trading is indicated and if so who has perpetrated it?

Q 4: Why is the parent Larsen & Toubro selling the shares of L & T Finance now  at such a low floor price of Rs 70,given that  the latter is a front runner in being awarded a banking license that should be announced shortly  by RBI….as it could, in all probability, have got a much better price later if L & T Finance is  awarded a banking license!?

Q 5 : Has RBI told,on record or off, Larsen & Toubro or L & T Finance that the latters banking application will only be considered if the parent bring down the stake to 75% in L & T Finance,the license aspirant and applicant before they announce who have been awarded the new Licenses !?…and this has led to Larsen & Toubro coming out with the Offer For Sale today and it has nothing to do with March 31,2014 Financial Year Closing!….or more importantly does this Offer For Sale signal that L & T Finance will not get a Banking License !?   read more

Whatsup in TRF !? Up over 16% at Rs 157 yesterday ! with under 13% delivery stats..be cautious

Whatsup in TRF !? Up over 16% at Rs 157 yesterday !  Higher than Usual Volumes but Low , with only 19% delivery stats !…Previous Day Tuesday closing was Rs 134.95

On BSE ,TRF zoomed to close at Rs 157.05 after touching a High of Rs 160.60…just below upper circuit of Rs 161.90

The Volume traded was 707152 with delivery status of only 91588 shares =>that’s just 12.95% !

Two week average volume is 1.4 lakh shares daily and that includes yesterdays volumes !

There was a Bulk deal of 55399 shares with the same Buyer and Seller,Crossseas Capital Services Private Ltd…an old name that crops up in many bulk deals …the Purchase and Sale were at Rs 149.88 and Rs 149.32 respectively

TRF is a Tata Group Company that has had a terrible Operating loss making  FY 13  when it skipped dividend after giving 40% in FY 12….loss continues in FY 14….It’s into Material Handling Equipment for the Infrastructure Projects Sector…the slowdown in the economy and the delaying ,deferring and stalling of big projects in the Mining,Power and Manufacturing Sectors meant lower orders for TRF

To reflect a very poor FY 13 its share Price crashed to a low of Rs 86 on July 31,2013 before recovering….In April 2011 it had hit a High of Rs 653! and even in February 2012 was just under Rs 400 levels….it’s been a miserable time for TRF Shareholders for the last two years

Tata Steel owns the majority 32.58% of the Tata Group’s 34.3% stake in the Equity of Rs 11 crs (FV Rs 10)…Consolidated Net worth had dropped to @ Rs 100 crs as on March 31,2013 with Reserves at Rs 89 crs….With FY Losses of near Rs 50 crs for the Nine Months at December 31,2013 and expected losses in the last quarter too in FY 14 of Rs 25 crs ,the Networth will have dropped dramatically to just @ Rs 25 crs….giving a book value of under Rs 25 down from @ Rs 100

So then whatsup with TRF !?….Insider stuff….low delivery volumes indicate a lot of speculative intra day trading being created…for what !?

Is TRF going to merge into Tata Steel? Is Azim Premji Invest buying shares of TRF !?

Whatever !…just be cautious….Continuing Losses and dramatically dropping Networth give TRF  a poor Valuation that just does not justify the share price rise…..low delivery volumes point to speculative activity rather than than any serious buying…and the names that crop up in bulk deals are even more reason to be cautious !

And all this in a Tata Group Company right under the nose of BSE and SEBI ! read more

Ask yourself this ~ Did it really matter to me here in India who won the USA Presidency ? ~ am I better or worse off!?

Ask yourself this ~ Did it really matter to me here in India who won the USA Presidency ? ~ am I better or worse off !? ~does it affect my health,my family,my job or business,my wealth….my stocks ! ? ~ am I really going to advice to get out of Indian IT Space !?

On US Foreign Political or Economic Policy Issues,neither Obama nor Mitt Romney would dare to effect any changes that will affect US Interests

Happy for Obama that he won as incumbent…..and his anti India IT outsourcing stance ,am told by Indian IT Insiders is only a local  appeasement tactic to protect American Jobs,as they really have little choice in the matter as of date ~ call it Catch 22 ~ they want to protect American Jobs but in a leveraged economy and a recessionary environment the economics simply don’t work out  not to outsource ~ having said this the cap on H-1B Visa for highly skilled foreign workers has been dropped by USA from 195000 in 2001 to just 85000 this year ~ Indian IT Companies get round this hurdle by rationalising the team numbers on a project,local US Hiring and doing more work on the Project out of India…of course they have been accused of other ways too !

David Bier,an US immigration policy analyst,wrote in Forbes earlier this Year that Foreign Highly Skilled workers on H -1B Visas create jobs not take them ~ in support,he quoted a 2009 finding by the National Foundation for  American Policy that for every H-1B Visa request it co-related with five new jobs at major firms and more than seven new jobs at firms with less than 5000 employees   !

Though  Indian IT may not be a great Investment Theme that it was in the 1990s and earlier part of the 21st Century when all IT majors,except for  Satyam, were simply great multi bagger pickings !, the IT Story is far from ebbing and I’m not going to advice Clients to move out of this space totally ~or even switch from TCS to Infosys like CLSA thinks should be done !

Make no Mistake,Obama will continue to bully India on both fronts and,I daresay, we shall continue to acquiesce quickly without serious debate justifying US entry on grounds of aiding GDP Growth and creating millions of jobs  and upgrading our Infrastructure with latest technology !  ~ We need to be cautious that while USA promotes their Interests aggressively,they will as they need to survive and recover from a faltering and highly leveraged economy,we need to safeguard our interests ~ I genuinely fear this is not happening  ~ we are opening out more US exposure in Insurance,Retail,Defence,Aviation,Agriculture,Banking,Higher Education,Automobiles and allied sectors without the rigors of  an intelligent debate without premediated bias or prejudice on the long term implications of this 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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Performance of the BSE Sector Indices in 2011/12 and to date is quite Interesting

Performance of the BSE Sector Indices in 2011/12  and to date is quite Interesting ….What provoked this post is Sameer’s counter argument in my earlier post…he is bullish in the short term,citing the favourable upmoves in the Pharma,Cement and Auto Sectors…I’m looking at the Bigger Picture and I’m not so excited really as Macros are clearly playing up and this Government is unlikely to push big ticket reforms…we need to await 2014 General Elections,which I fear may yet again through up a fractured verdict…but I hope with a more reform friendly and decisive coalition !

Have a Look at the Performance of the BSE Sector Indices in 2011/12 and to date…Quite Interesting…The Reds & Greens signal fall or rise/holding up from over a year ago  

The Alltime High & Low Columns are quite revealing

  • FMCG,Healthcare and Auto Indices  have registered All time Highs this Month…with consistent Wealth Creation in the 21st century in FMCG and Healthcare while a huge surge in the last four years in the Auto Sector
  • Quick and huge  wealth destruction in the IT sector in 2000/2001,the Metals and Power Sector inside Ten months in 2008 between January and October and in the Realty Sector between Jan 2008 and March 2009  

PERFORMANCE OF BSE SECTOR INDICES AS ON APRIL 26,2012

Sector

Valuation

Current Close

April 26,2012

A Month Ago

A Year Ago

52 Week

All Time

%

Mkt Cap

PE

PBV

Index

%

Index

%

High

Low

High

Low

IT

9

19.4

6

5509

6011

(8.4)

6244

(11.8)

6361

4639

8678

Feb 2000

835

Sept 2001

Teck

12.6

23.4

3.5

3239

3516

(7.9)

3764

(13.9)

3799

2982

4188

Oct 2007

547

Sept 2001

FMCG

7

35

14

4806

4386

9.6

3739

28.5

4834

3562

4834

April 2012

706

April 2003

Consumer Durables

0.7

20

2.7

6509

6377

2.1

6491

7097

5063

7370

Nov 2010

414

Sept 2001

Metals

9.4

14

2.4

10981

10978

16723

(34.3)

16723

9191

20495

Jan 2008

3807

Oct 2008

Oil & Gas

11.7

16.9

1.8

7896

7910

10093

(21.8)

10102

7495

14269

Jan 2008

2529

Aug 2004

Capital Goods

3.8

15.9

3.1

9424

9933

(5.1)

13710

(31.3)

14108

7807

21021

Nov 2007

481

Sept 2001

HealthCare

4.4

57

4.4

6747

6391

5.6

6191

9

6879

5757

6879

April 2012

985

April 2001

Bankex

9.8

13.3

2.1

11666

11571

13520

(13.7)

13501

8947

15108

Nov 2010

1614

June 2003

PSU

25.7

13.8

2

7160

7235

9169

(21.9)

9254

6204

11205

Jan 2008

734

Sept 2001

Auto

4.9

22

4.8

10745

9861

0.1

9678

11

10829

7814

10829

April 2012

2128

Dec 2008

Realty

1.2

20.9

1.4

1677

1726

(2.8)

2346

(28.5)

2311

1348

13848

Jan 2008

1298

March 2009

Power

7.2

15.3

2

1991

2082

(4.4)

2724

(26.9)

2714

1725

4929

Jan 2008

1275

Oct 2008

  • IT  shows a Drop,but TCS has outperformed Infosys ,which has slumped and the latter holds 48% weightage in the Index ! against just 29% by TCS !…this needs to be rectified by BSE rightaway…more so as the Market Cap of TCS is Rs 233301 crs against just Rs 135415 crs of Infosys !….The Index tracks the share price of  10 Companies with 88% weightage of just three …Infosys,TCS and Wipro …Other interesting constituents are Oracle Finance and Financial Technologies 
  •   Techk comprises of 30 IT,Telecom,Media and Communication Companies and has mirrored IT fall
  • FMCG has been the years Darling with ITC (55% weightage) and HUL (18% weightage) outperforming to allow the Index to hit Alltime Highs…11 Companies constitute this Index…Interesting ones are the two Kingfisher Group Companies,United Spirits and United Breweries…. and Tata Global (spotted this at Rs 80 late in 2011) and the huge 2010/2011 winner Jubilant Foods (Dominoes Pizza)
  •  Consumer Durables has heavyweight Titan with 51% weightage in the Index…It’s been a flat year
  • Metals has seen a bad year…In fact this Index has slumped the highest @ 35% over last year…75% Index weightage is in Five scrips led by Tata Steel with 22% followed by Coal India,Jindal Steel,Sterlite and Hindalco
  • Oil & Gas too has seen a bad year…Reliance with a 54% weightage and ONGC with a 22% weightage aggregate a skewed weightage of 76% in the Index
  • Capital Good Giants,India Proxy Larsen and Toubro and BHEL have a weightage of  54% and 16% respectively in the Index that monitors the share price of  17 companies,that also include Siemens,Suzlon,Havells,Thermax,ABB and Punj Lloyd…it’s been a shocking year for both,Larsen and BHEL on the bourses and the steep fall has unnerved even the aggressive Investors
  • Healthcare has held up well in 2011/12…19 Healthcare and Pharma Companies comprise the Index with Sun Pharma (18%),Dr Reddys (17%) and Cipla (12%) leading the weightages
  • 14 Banks comprise the Bankex with the top three weightages given to HDFC Bank (26%),ICICI Bank (25%) and State Bank of India (16%)…it’s been a very challenging year for the Banks given the slowdown in the Economy and high interest rates affecting credit offtake…the rising level of NPAs remains a threat
  •  PSU ~ The Index has 60 PSU Companies in it ! with Coal India and ONGC leading at 14% each in weightages followed by State Bank of India with 9% and NTPC with 8%…Interestingly these 60 Comnpanies have an aggregate  Market Cap of Rs 1561821 crs currently….and this smartly and significantly  constitute nearly 26%,that’s over one fourth of the Total Current Market Cap of BSE of Rs 6108734 crs 
  • The Auto Index covers 10 Companies across the sector spectrum of leading four HMV and LMV wheelers & Two Wheelers,Battery (Exide) & Engine (Cummins) Manufacturers and Tyres (Apollo)…Aggregate 86% weightage is given to top Five Vehicle Players led by Tata Motors with a 31% weightage .Interestingly and encouragingly too,this Index has held up well,largely due to outperformance by Tata Motors…However Index aggregate Market Cap is below 5% of total market cap 
  • Realty Index tracks the share price of 12 realty companies…DLF lead weightages with 33% followed by Unitech (17%),Oberoi (10%) and HDIL (10%)…Shobha,Godrej Properties,Phoenix,D B Realty are some others in this Index…it’s continued to be a sliding year for this sector that’s been saddled with huge crippling debt,huge inventories and delayed projects….but how much more lower can it go !…search for contrarion winners in this sector over the long term…had spotted Orbit at Rs 20 + late last year and early this year…Price has doubled to @ Rs 48 currently…and even Indiabulls Real Estate at Rs 45 + levels after demerger of Indiabulls Power….it surged to Rs 80 levels before reacting now to Rs 62 …But Both do not form part of this Index 
  • Power Sector is battling  Source Feed Supplies of Coal and Gas that’s crippling Operations and resulting in lower output and capacity underutilisation….Implementation of both,Public and Private Mega Projects too has been delayed for a host of reasons …This Index tracks 19 companies in the Sector that cover Generators,Transmitters and Distributors as also others that supply Equipment like BHEL which has the second largest weightage of 15% …NTPC with a 20%  leads the weightages….Incidentally Private Power Players like Reliance Power  and Adani Power have a weightage of 4% and 3%  respectively….Given the Challenges faced,the Year has been quite unkind to this Sector…the Index has slumped @ 27% in the past year…anyone for a Contrarion Bull Play here !? 
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