Shareholder Shenanigans ~ Hey Mister Aster whose Healthcare are you after !

Shareholder Shenanigans ~ Hey Mister Aster whose Healthcare are you after !

Invariably the Construction of  the Pre IPO Equity Capital of a Company  reveals the Fairness & Character & Mindset of Promoters & other Equity Stakeholders in it & extent of any obscene premium seduction if any 

What can we infer from a Company  :

  • that issues further shares end December 2011 at Rs 10,000 to an existing Private Equity (PE) Stakeholder Player 1   from 2008 which takes their total Equity Investment in the Company to just over Rs 22 crs & just 20 days later in January 2012 ,this PE Player 1 sells just @ 30.8% of  it’s Equity stake for Rs 110 crs ! to a new incoming PE Equity Player 2 at Rs 1,58,918 per share ~that’s 1500% & 15 times over latest unit share cost of Rs 10000 ! Thus it recovers 4 times it’s aggregate Investment in literally no time  & yet continues to hold a good stake in the Company which it has just sold for Rs 120 to get a huge Rs 554 crs    
  • that issues two liberal back to back Bonus issues of 1000:1  in 2012 & 2: 1 in 2013 from the Share Premium paid by incoming PE Player 2 in 2012 when it invested Rs 504 crs in the Company through Rs 394 crs new issue by the company & Rs 110 crs purchase from PE Player 1 as stated above  
  • where Promoters transfer shares in December 2017 at just Rs 22.14 per share just two months before February 2018 IPO at Rs 190 to PE Player 2 referring to a costing methodology of a Shareholder Purchase Agreement (SPA) of May 2014 when this PE Player 2 had invested further in May 2014 itself directly in a fresh issue by the Company at Rs 102.85 & on same day as per same SPA even picked up shares from Promoters at Rs 189.46.Even CCCP’s issued were converted at Rs 111.65 in November 2017,three months before the Rs 190 IPO.An SPA that spells out a costing method that works out to a much lower throwaway price of just Rs 22.14 per share three & a half years down the road in December 2017 will indeed raise an eyebrow.A lower price would imply growth parameters have not resulted as envisaged.Why  price the IPO at Rs 190 ? Should have been at Rs 22,I daresay !        

If Memory serves me right,the Financial Year 2011-12 was perhaps the last year before Income Tax & Company Act restrictions came into force on the issue of Shares at unjustified & obscene premiums….nevertheless

Such Modus Operandi was quite prevalent in Companies to infuse huge funds into Equity at bizarre premiums not in sync with Valuation which would facilitate insignificant Equity Dilution which otherwise would have impacted Promoter & Other existing  Shareholders Stakes.This invariably was followed up with bizarre Bonus Issues which while maintaining the Equity Stakes of all served largely to considerably lower per share holding cost of Shareholders that had infused such Equity Capital at obscene Premiums….daresay some indulged in this even for laundering or accepting white bribes

Two recent events drew me to  checking out Aster DM Healthcare @ Rs 127

1~ First when observed huge Market Deals being executed end of last month on June 26 & 27, 2019 at Rs 120 with Private Equity Shareholder True North Fund III A  ( earlier called India Value Fund (IVF) ) offloading it’s full 9.15% stake of 4.62 cr shares to a host of Big names that included Fidelity,Tata AIG Insurance A/c Wholelife Midcap Equity,HDFC Small Cap Fund,Ontario Pension & Steinberg

2 ~Was not impressed at this first quick look on performance & prospects & was letting go when a Stock Channel carried an interview of it’s Promoter & ED & Chairperson Mr Azad Moopen on July 12,2019.

Intrigued me to have a re-look as Mr Moopen stated verbatim these two threads  :

  • “we think  that this is a very low price for this stock “ ~ on Share Price of @ Rs 121/122 as on July 12,2019 & on bulk deal price of Rs 120 end June 2019 when PE Player True North Fund III exited ~ is not there some restriction on Company promoters and management making such views public on Share Price ?
  • “extremely useful in the initial phase” ” significant value addition to the company”  ” True North has been a great strength ” ” no way they could hold on beyond 9 to 10 years” ~ on Private Equity Player, True North Fund III A who had initiated a stake in 2008 in Aster & who exited last month in June 2019

I looked at the IPO Prospectus that announced Aster DM Healthcare’s February 2018  IPO eighteen months ago at Rs 190,a pricing that’s 33% higher than today’s Rs 127

While I appreciate Mr Moopen’s honourable healthcare venture in the last three decades what caught my attention,as it usually does,was the not so honourable Construction of the pre IPO Equity Capital

Here are some interesting extracts & derived data  on the constructions of holdings of PE Player 1  True North &  PE Player 2 Olympus Capital Asia Investments in Aster DM Healthcare Limited.The Post IPO Equity Issue stands at Rs 505.23 crs with  50,52,27,345 shares of FV Rs 10 . read more

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 !

Claris Lifescience to sell off at twice Market Cap Valuation ?

Where Monies are involved there will be Stink!

This Generalisation fits Stock Markets wonderfully well !

I believe ,and have quoted often and even set a MBA Post Graduate Final Examination question to discuss with real illustrations that ‘India & Insider Trading are Inseparable’…and I daresay,deliberately kept so !

Let’s take this morning’s Headline on Page 1 in the Mumbai Edition of India’s leading and influential pink paper

Cadila Healthcare to acquire Claris Lifesciences for Rs 3400 crore  

Such Acquisition News has been floated by the same reporter of the same newspaper just a few months ago on February 12,2015

Big pharma eyes takeover of Claris’ injectables business for Rs 2500-Rs 3000 crore

When BSE sought Clarification from Claris Lifesciences today,May 21,2015 and even on February 12,2015 here are the two replies from the Company

Clarification to BSE  by Claris today, May 21,2015

“As a company policy we do not comments on any market rumour and speculations. The Company continues to explore and evaluate inorganic and strategic opportunities in various forms from time to time; however nothing definitive in this regard has happened. We will notify the exchanges upon occurrence of any definitive developments in this regard.

Also as a company we inform stock exchange for any such information which is required under listing agreement as well as clause 36 of the listing agreement.”

Clarification to BSE  by Claris on Feb 12,2015

“we state that at present we are not negotiating the sale of stake in the injectables business, and the Board of Directors of the Company has neither considered nor taken any decision in this regard.

For the growth of the business, Company continues to explore and evaluate inorganic and strategic opportunities in various forms from time to time, however nothing definitive in this regard has happened. We will duly notify the exchanges upon the occurrence of any definitive developments in this regard.”

Relevant Share Price Movements in February 2015  May 21,2015 reveal the huge impact of such News by a leading pink paper

February 12,2015 ~ A Day Before,On & a Day After 

Date

Open

High

Low

Close

WAP

No. of
Shares

11/02/15

207.80

212.00

205.10

206.90

207.05

1,00,569

12/02/15

238.40

248.20

228.50

248.20

240.08

7,95,565

13/02/15

269.80

293.00

250.10

258.50

272.86

14,86,607

Opening February 2015 at Rs 175 and moving to just over Rs 200 levels by February 11,2015 before hitting and closing on upper circuit of 20% at Rs 248 on February 12,2015 on impact of the Newspaper Story with heavy abnormal volumes and  despite Company Clarification (see above) that was posted on BSE Website at 2.42 pm during market hours that they are not negotiating any such sale the Share Price yet hits up 18% at Rs 293 the next day,February 13,2015 with nearly double the Feb 12,2015 volumes ! read more

Union Budget 2014 ~ Will Sensex continue to Humour as Jaitley does not!

Have a look at our first impression posted  after our FM ‘s Union Budget Address and during market hours

Union Budget 2014 ~ Will Sensex continue to Humour as Jaitley does not!

Think he missed a great opportunity to provide us with the ‘Naya Soch’ of the new NDA Government

His Speech stated quite a few challenges and objectives like tackling Black Monies,raising Tax to GDP ratio,lowering Inflation and Fiscal Deficit % but stopped short of spelling out the specifics of solving these

Having just 45 days after NDA was elected he has opted for the easier option of simply following the UPA budget process and numbers too that the UPA FM Mr Chidambaram laid out in his Interim Budget in February 2014….whether it be Disinvestment or Tax Receipts or Fiscal Deficit Control Targets…made right noises but was tokenism in a few areas like social expenditure…thankfully nothing really adverse or anti poor though direct tax incentives are not really cause for any celebration

Sensex had quite a roller coaster ride today as to be expected….opening stable & pre budget speech at 25514 in the morning then sliding before noon over 300 points to 25117 from yesterday closing of 25445 during the budget speech before strongly racing away by over 700 points to 25920 …over 400 points previous day closing post budget speech only to reverse all the gains and close at 25373,down 72 points  from previous day closing

Will the Sensex continue to Humor us in the near term despite not an iota of Humor in the FM’s Speech !? …sense is that any correction will be a hiccup on the onward march towards 30000 on the back of increased FII Net Infows & Big Corporate Infra spending  

I see some clear big winners in the Infrastructure Space across the Board from Shipping to Power to SEZs to Real Estate to Highway Road Construction Companies and Pipeline Companies

 

 

No Sugar ? What is my Alternative Sweetener ? Sugar Free or Equal or Splenda ?

No Sugar ? What is the Alternative Sweetener ? Sugar Free or Equal or Splenda ?

I use Splenda  especially as it does not contain Aspartame( a combination of two amino acids,aspartic acid and phenylalanine. Amino acids are the building blocks of proteins and are found naturally in many foods.Aspartame though approved by US FDA with prescribed daily intakes,has been perceived to be responsible for causing many Health issues , even Cancer…though tests are not conclusive

http://www.cancer.org/cancer/cancercauses/othercarcinogens/athome/aspartame 

Those who cannot consume Sugar because they are Diabetic or prefer low or no calorie sweeteners routinely turn to these three popular alternatives  :

  • Sugar Free Gold Low Calorie Sugar Substitute claims to be India’s No 1 Sweetener ~ It is made from Aspartame,a protein derivative ~ A 0.75 g sachet is equivalent in sweetness to two teaspoons of sugar and contains 2.8 calories instead of 40 calories that the two teaspoons of sugar hold ~ not recommended for Children and not meant for Phenylketoneurics.Ingredients are Lactose,Aspartame and Polyvinyl Pyrrolidone…..Phenylketonurics are people who have PKU disease. People with this disease cannot digest the amino acid phenylalanine properly, so if they eat too much of it, it could build up in their brains and cause mental problems. The warning on the wrapper is warning these people not to eat that product so they can avoid ingesting phenylalanine.
    PKU disease is a genetic condition, and it can be easily discovered through a blood test ~ Sugar Free Gold is manufactured and marketed by Zydus Wellness,Sikkim which is part of the Cadila Pharma Group of Gujarat
  • Equal is a low calorie sweetener ~ Each Sachet of 1 g contains 36 mg of Aspartame and it’s 4kcal is equivalent in sweetness to two teaspoons of sugar that is 32kcal.The ingredients are Lactose,Aspartame and colloidal silicon dioxide.It is not for Phenylketoneurics and not recommended for Children.It is manufactured by Qualicare Pharmaceuticals Ltd,Medak,Andhra Pradesh and marketed by Merisant India Pvt Ltd,New Delhi
  • Splenda is a no calorie sweetener that is ideal for the whole family ,including Children,Pregnant and Nursing Women and even those with Kidney,Liver or Cancer Issues.It does not contain Aspartame.It gets the sweetness from Sucralose and also contains Dextrose and Maltodextrin.Each Sachet is 1 g and suitable for people with diabetes.Splenda is distributed by McNeil Nutritionals LLC,Foret Washington,PA,USA.Sucralose is made from a patented process from sugar to a no calorie and no carbohydrate sweetener.Sucralose does not have the after taste bitterness associated with other alternatives to sugar like saccharin and acesulfame K and unlike Aspartame can hold up to heat and thus can also be used in cooking and baking.After 20 years of Research  and over 110 scientific studies it is now allowed in over 80 countries.The US FDA and WHO do not require it to mention any warnings or restricted use on it’s labels.Also it has no expiriy date unlike other sweeteners that need to be conumed within one to three years of manufacture .You can check out why Splenda is a preferred sweetener to others at this link on their website http://www.splenda.com/faq/no-calorie-sweetener   
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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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