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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    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

    My First Take on Just Dial IPO ~ WTF ! JUST DONT DIAL !

    WTF ! JUST DON’T DIAL ! 

    That’s My First Take on the ‘Just Dial’ IPO ! 

    How can SEBI,Exchanges,MOF,Company Law Board even allow this IPO of just under Rs 1000 crs ! ~ there are no  real Objects to the Issue as  it is fully an Offer For Sale by Existing and Part Exiting Promoters and PE  Shareholders and the Company does not get any IPO Money

    If you do subscribe in the IPO you’ll make these Existing and Part Exiting Promoters & Other PE Shareholders more very very very filthy rich in no time and making  yourself poor in time to come ! 

    The Just Dial IPO opens on May 20,2013 in the book building band of Rs 470 to Rs 543 for a FV Rs 10 share ~ Shares on Offer for Sale by 9 Shareholders  total 17497458 with 75% amounting to 13123095 shares reserved for QIB Portion (normally it is 50%) ~ At top band Price of Rs 543 the Issue Size is Rs 950 crs with all the Monies going to the selling shareholders that include three Promoters,V S S Mani,Ramani Iyer and V Krishnan and 6 Funds that include Sequoia III,SAIF,Tiger Global Four JD Holdings,Tiger Global Five Indian Holdings ,EGCS and SAPV ~ All are Part Exits except for EGCS who exits in full

    Plan to write a  detailed note on this Obscene IPO but be forewarned now with these few details and perspectives

    Am stunned simply at the gaul and audacity of the Company guided by it’s Lead Issue Managers Citigroup Global & Morgan Stanley  to come out with such an overvalued IPO that is totally an Offer for Sale providing part Exit to Promoters and some PE Players !

    SEQUOIA’s Role Play as an Illustration 

    SEQUOIA III (Yes,it also holds shares as Sequoia I and II) ,for example at the top band price of Rs 543,will make an obscene 836% Return inside four years on it’s initial Investment in July 2009 at an average Price of Rs 58 a share after  adjusting for a  crazy 55: 1 Bonus in 2010 ! ~ even this Initial Investment of  Rs 38.35 Crs was a Transfer of 118014 Shares on July 21,2009 from another Shareholder Clearmist Ltd at Rs 3250/share  The Liberal Bonus 55:1 on April 24,2010 took the holding to 6608784 shares ~ Of this they are offering 3207934 shares in this IPO and would stand to get Rs 174 crs at Rs 543 and yet be left with 3400850 shares  !

    I mean they came in at Rs 50+ and want us to come in at Rs 500+ through their shares ! Whoa ! ~ all for a Company that they just pumped in Rs 250 crs again in  

    Promoters exiting make even more ! as their holding cost is between Nil to just 64 paise per share ! read more

    MCX-SX launched the Equity & Derivatives Segment today with 700 members and 1116 Listed Stocks and their SX 40 Index

    MCX-SX launched their Equity & Derivatives Segment today with 700 members and 1116 Listed Stocks and their SX 40 Index

    The Launch Equity & Derivatives Segment of  MCX-SX ~India’s Newest Stock Exchange

    Just returned from the launch of the Equity & Derivatives Segment of  MCX-SX,India’s New Stock Exchange at Hotel Trident in Mumbai ~ packed Regal Room and live launch functions in four cities beamed on the screens as were also the Live Proccedings

    Met up with many,including Joseph Massey the MD and CEO of MCX-SX and Dr Bandi Prasad,President of FTKMC the knowledge arm of MCX, in our Capital Markets

    Met two ex BSE CEOs but did not see any from the current top management of  BSE and NSE ! ~ MCX-SX is now their competitor ~Even the Invite Cover ,if you observe above, does not show BSE with a history of 138 years or NSE with a history of 20 years !  

    A 5 Minute AV was shown highlighting  moments of Capital Market History and MCX-SX ~ A few  Short Speeches later  Finance Minister, P Chidambaram rang the Gong @ 4.15 pm to launch the Equity & Derivatives Segment of MCX -SX  and also launced the New SX 40 Index and even punched in a symbolic Trade ~ quite ironically it was a Derivatives Trade and he had just sounded an alarm in his speech of how concerned he is of the high level of Non Delivery Trades !

    MCX-SX begins Trading on Monday

    SX 40 ~ The Index of India 

    The SX 40 is tagged as the Index of India by MCX-SX~ It is a free float based index with a starting base of 10000 as on March 31,2010.It has 40 top large cap Consitituents ~ all the 30 of the BSE Sensex except for the two S’s ,State Bank of India and Sterlite ! ~ Although  Wonder Why these have been excluded though it should meet their stated criteria of positive networth,free float of at least 105 and within top 100 liquid companies~ they also have  Industry capping at 20%( +/-) 2% band  ~ and with HDFC Bank and ICICI Bank the current weightage is already 22% for Financials (it’s 29.4% for Nifty and 26.4% for Sensex) and thus State Bank could not be accommodated ~ or probably not in the 1116 Companies that are listed and will begin trading on Monday ! ~ we’ll know Monday!

    Interestingly SX 40 has Zee Entertainment as a constituent which neither the Nifty nor the Sensex has got !

    Some noteworthy speech bytes…..largely verbatim but definitely in context

    Ashok Jha ~ Chairman MCX-SX

    “I am often asked why another Exchange when two already exist!? and my simple answer to that is because Competition benefits the Consumer”  read more

    Are IPO Gradings Misleading in the Initial Public Offers (IPOs) ? ~ Yes !

    Just Uploaded a few days ago a Report on IPO Gradings on www.jsalphaa.com

    Are IPO Gradings Misleading in the Initial Public Offers (IPOs) ? ~ Yes !

    Of all the 129 Graded IPOs from 2009 to 2012,81  are currently quoted below IPO Offer Price

    Top View of Graded 129 IPOs

    Grade ↓

    Grade Wise

    No of Companies whose Share Price is Up from Offer Price

    No of Companies whose Share Price is Down from Offer Price

    TOTAL  Graded IPOs

    1

    4

    8

    12

    2

    9

    35

    44

    3

    17

    24

    41

    4

    15

    13

    28

    5

    3

    1

    4

    TOTAL

    48

    81

    129

     

    Year ↓

    Year Wise

    No of Companies whose Share Price is Up from Offer Price

    No of Companies whose Share Price is Down from Offer Price

    TOTAL  Graded IPOs

    2012

    8

    1

    9

    2011

    15

    23

    38

    2010

    17

    46

    63

    2009

    8

    11

    19

    TOTAL

    48

    81

    129

     

    Two Startling Evidence revealed themselves when we observed all the 129 IPOs that were Graded by SEBI Registered Entities to do so ~CRISIL,CARE,ICRA,FITCH or BRICK

    Observation 1

    IPOs that were graded lowest 1/5  that have become WEALTH CREATORS

    4 of the 12 IPOs graded poorly at just 1/5 by one of the SEBI accredited rating agency are actually huge Wealth Creators

    Just Look at the Uptrend ! ~Were the Grading Agencies wrong in giving the lowest grading or is there Share Price Manipulation ? ~ if one suspects the Latter how is it that such Manipulation has been sustained for long !

    IPOs that were graded lowest 1/5  that have become WEALTH CREATORS

    Listed Company

    Issue Closing Date

    Graded a Poor 1 by

    No. Of times Oversubscribed

    Offer Price

    Rs

    CMP

    Rs

    Up Trend

    %

    Onelife Capital Advisors Ltd

    04-10-2011

    CARE

    1.51

    110

    721

    555

    VKS Projects Ltd

    04-07-2012

    CRISIL

    1.02

    55

    218

    296

    Sudar Industries Ltd

    24-02-2011

    CRISIL

    1.30

    77

    168

    118

    Olympic Cards Ltd

    13-03-2012

    CRISIL

    0.99

    30

    59

    97

     


    1. Observation 2

     

    1. IPOs that were graded highest at 4/5 or 5/5 have become WEALTH DESTROYERS


    14 of the 32 IPOs graded high at 4 or 5 between 2009 to 2012 have been Wealth Destroyers !

    IPOs that were graded highest at 4 or 5/5 that have become WEALTH DESTROYERS

    Listed Company

    Issue Closing Date

    Graded by

    No. Of times Oversubscribed

    Offer Price

    Rs

    CMP

    Rs

    Down Trend

    %

    A2Z Maintenance & Engineering Services Ltd

    10-12-10

    CARE

    0.92

    400

    40.35

    -89.91

    SKS Microfinance Ltd

    2-8-10

    CARE

    11.44

    985

    155.45

    -84.22

    Orient Green Power Company Ltd

    24-9-10

    CRISIL

    1.06

    47

    11.48

    -75.57

    Tecpro Systems Ltd

    28-9-10

    CRISIL

    20.26

    355

    146.9

    -58.62

    PTC India Financial Services Ltd

    18-3-11

    CARE & ICRA

    1.51

    28

    15.9

    -43.21

    Punjab & Sind Bank

    16-12-10

    CARE

    50.37

    120

    72.05

    -39.96

    Ashoka Buildcon Ltd

    28-9-10

    CRISIL

    14.65

    324

    200

    -38.27

    MOIL Ltd

    1-12-10

    CARE

    56.16

    375

    251.9

    -32.83

    JSW Energy Ltd

    9-12-09

    CARE

    1.56

    100

    71.25

    -28.75

    IL&FS Transportation Networks Ltd

    15-3-10

    CARE & FITCH

    35.62

    258

    197.8

    -23.33

    Cox & Kings Ltd

    20-11-09

    CARE

    5.64

    165

    136.4

    -17.33

    SJVN Ltd

    3-5-10

    CARE

    6.51

    26

    22.55

    -13.27

    Hindustan Media Ventures Ltd

    7-7-10

    CRISIL

    4.89

    166

    148

    -10.84

    Gujarat Pipavav Port Ltd

    26-8-10

    CRISIL

    18.51

    46

    43.7

    -5.00

    A2Z was supported in the Primary and Secondary Markets by the well known Investor Rakesh Jhunjhunwala ~ your IPO Investment has eroded 90% in it !

    For more details you can access the Free Module SCRIP STANDPOINT on www.jsalphaa.com where this and several other Interesting Reports & Views have been uploaded