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 !

Sterlite Tech Shareholders short circuited in the Demerger ! ?

Sterlite Technologies (STL) Shareholders short circuited in the Demerger ! ?

I was approached to buy some unlisted shares of Sterlite Power Transmission Ltd (SPTL) & then was astounded when told an offer had already come in for Rs 270 already !

So what’s the Big Issue ? ~ How Can the Value of unlisted SPTL change dramatically upward by over 300% from Rs 112.30( as on March 31,2015 cut off date) that the company offered for in the demerger of STL  and paid in August 2016 & just eight months later value the same atR s 464.46 ! on March 2,2017 when they announced an EGM for March 29,2017 to issue new shares !(Details Below)

It’s thus  to do with the low Valuation of unlisted SPTL as on cut off date March 31,2015 that was the subsidiary of listed STL that got the Power Division of  STL in the Demerger & then ceased to be a subsidiary post demerger.

Haribhakti & Co LLC did the valuation on a NAV (for Holding Co) & Income DCF Approach (for Operations) at a maximum of  Rs 111.50 /share.Price Waterhouse & Co LLC also used similar Valuation approach and got  mariginally higher Maximum Valuation of Rs 112.30.Both had valued SPTL below Rs 900 crs only ! despite Income Approach having to consider Potential of Scale Operations in coming years.Both Valuation Reports are dated May 18,2015 in sync with STL Board Meeting Date as below.STL has gone with PWC

These are the relevant Dates  & all relevant documents for Shareholder/Court/Exchanges Permissions & Approvals can be found here :

May 18,2015 ~ Board of STL in a corporate restructuring decision approves the Scheme of Arrangement between the Demerged Company STL & Resulting Company SPTL (then subsidiary of STL)effective date April 1,2015.Decides to keep SPTL unlisted unlike the Adani Group that listed Adani Transmission after their restructuring exercise

December 15,2015~ Court Convened Meeting of STL Shareholders passes the Scheme

April 22,2016 ~ Mumbai High Court issues an Order approving the Scheme

May 23,2016 ~ Order becomes effective on date of filing with Registrar of Companies

June 15 & 16,2016 ~ STL begins ex demerger quote on June 15,2016 as Company has set June 16,2016 as record date for STL shareholders entitled to receive Demerger benefits of SPTL.SPTL ceased to be a subsidiary of STL on this Demerger & it was decided to keep it unlisted unlike the Adani Group which demerged & listed Adani Transmission.

June 27, 2016 to August 8,2016 ~ Election Date Range for @ 122000 shareholders in STL up from under 120000 shareholders at June 30,2015 when the Demerger plans were announced in May 2015 and I wrote a detailed blogpost in July 2015 (see later below) .There were two options for Resident Shareholders ~ receive Equity Shares of  SPTL at Rs 112.30 (FV Rs 2) in a 1: 5 ratio for shares held in STL or go for the 8% Preference reedeemable shares of Rs 112.30 in the same 1: 5 ratio that would be reedeemed at Rs 125.55 in eighteen months from allottment.FPI/FIIs?Non Resident shareholders had to sell their shares back to the Promoters or their affiliates.

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HCL Info up 12% to @ Rs 51 with super volumes~Will BSE & NSE ask Why again?

HCL Infosystems Ltd up 12% to @ Rs 51 with super volumes ~ Will BSE & NSE ask Why again?

Just under a fortnight ago on September 22,2016 HCL Info opened at @ Rs 42 & surged to Rs 48 before settling at Rs 47 on huge above average volumes with BSE clocking over 42 lakh shares and NSE  trading near 1.63 cr shares

BSE & NSE had asked the Company to Clarify on whether there was any reason for this surge in Volumes & Share Price

Interestingly the Company replied instantly that “The increase in volume seems speculative in nature”   

The Delivery % was just under 20

The Share Price then slid last week back to Rs under 43

Today  BSE  & NSE clocked even more super volumes exceeding 45+ lakh & 1.84+ cr  shares respectively with Share Price shooting up 12% to close just under Rs 51

What’s Happening? Will the Exchanges in 13 days yet again ask the Company for clarification for today’s surge too & will the company reply the same that it’s seems to be speculative & will thus the share price slide back ?

52 Week H/L is Rs 66.75/30 & Market Cap is Rs 1135 crs

The Company is part of the Shiv Nadar HCL Tech Group & has undergone a Scheme of Arrangement effective January 1,2013.It has 14 unlisted subsidiaries including eight step down & one jv associate and has suffered losses in the past three financial periods which even witnessed declining topline with the last dividend being paid for FY 12.Consolidated Networth on March 31,2016 declined to Rs 1008 crs with Equity (FV Rs 2) at Rs 44.58 crs  of which Rs 596 crs in reflected in Goodwill on Consolidation.There are no Non Current Investments in Consolidated Accounts.Standalone shows these at Rs 972 crs in six unquoted subsidiaries after providing for diminution (Original Investments Cost was Rs 1568 crs).Short Term & Long Term Borrowings,about evenly split at March 31,2016 aggregated 996 crs.Book Value at year end March 31,2016 was Rs 45

The Business Model is of Four Market Driven Business Units housing nine Lines of Business over Distribution,Services,Learning & Hardware Products & Solutions & the Company states in it’s FY 16 Annual Report that it will be their Core Enterprises Business of Distribution & Services that will be the engine for the next level of growth.Do remember that the Company has been contracted for UIDAI & the milestone of over 100 crs Aadhaars has been crossed.India has a population of over 125 crs.Their System Integration Business has seen many of the defence projects move towards commercial conclusion

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Indiabulls Ventures Ltd at Rs 33~ Up 100% in a month ~ More in Store?

Indiabulls Ventures Ltd at Rs 33~ Up 100% in a month ~ More in Store? ~ 52 Week high was Rs 39+ a year ago in July 2015 & 52 Week Low was Rs 13 this April 2016

The Market Cap from @ Rs 500 crs a month ago is now kissing Rs 1000 crs

It was earlier called Indiabulls Securities Ltd

The uptick has been brilliant in quick time & the writing has been on the wall..read that as Company Notifications on the BSE & NSE in the past few months

May 13,2016 ~ Granting of 9.5 Million Stock Options at an exercise price of Rs 16(current price at the time) under the ESOS 2009

June 15,2016 ~ Board Approval of a Preferential Issue of  58.3 m Convertible Warrants to Promoters & CEO at exercise price of Rs 19.75

June 20,2016 ~ EGM Notice for July 15,2016 to pass the Preferential Issue as above & SALE OF INVESTMENT 

July 2,2016 ~ Granting of 19.7 M Stock Options at an exercise price of Rs 24.15(price a few days ago) under ESOSs 2008 & 2009

So what’s the Big Deal ?

Big Deal is being planned to happen & that’s disclosed in the June 20,2016 Notification of SALE OF INVESTMENT for improving liquidity & reduction of debt purpose which is Item No 2 and relevant part extracted as below

“….to sell upto 100% of shares held by Indiabulls Distribution Services Limited, a wholly owned subsidiary of the Company (“IDSL”), in India Land and Properties Limited, a wholly owned subsidiary of IDSL, on the terms and conditions, including the consideration, which shall be more than the amount invested by IDSL, in such shares, as the Board may finalize” 

This actually is the Sale of One Indiabulls Park,Ambattur,Chennai which was bought in November 2014 at @ Rs 600 crs from Madrid Based NRI Investor Harish Fabiani (he’s also invested in Edelweiss & Indiabulls Group Companies + others)

FY 15 Consolidated Accounts as on March 31,2015

Consolidated FY 15 Accounts of Indiabulls Ventures Ltd shows Net Fixed Tangible Assets at Rs 550 crs  of which 77% is this Property reflected  with a aggregate value of Rs 426 crs ~ Rs 320 crs for the Building + Rs 15 crs for Furniture + Rs 91 crs for Plant & Machinery

Long Term Debt at March 31,2015 was Rs 331 crs ,all of which relating to the One Indiabull Park Property ~ 150 crs 10 year (monthly EMI) Lease Rental Discounting Facility + Rs 185 crs 5 year Loan Against Property

FY 15 also shows Goodwill on Consolidation of Rs 109 crs,most of which is related to this property acquisition by subsidiaries

FY 16 Consolidated Accounts as on March 31,2016 reveal :

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L & T Finance Holdings recovers to Rs 70 & up 44% from Low inside Two Months

L & T Finance Holdings recovers to Rs 70 & up 44% from Low of Rs 48.30 on February 12,2016….that’s inside Two Months…it also trades in the F & O Segment

It opened 2016 at Rs 65  when Sensex levels were at 27500 +  and closed January 2016 at Rs 58 only to drop sharply below Rs 50 to Rs 48.30 on February 12,2016 and in fact closed February 2016 at Rs 52

Today it’s up to Rs 70 on a day when RBI has dropped Repo Rate to 6.50% ~ cut of 0.25% as expected by the markets & therefore priced in earlier.The Sensex post Noon  & announcement of repo rate cut has corrected over 330 points and is below 25100 currently  but L & T Finance is up 7.4% to Rs 70 !

Have always had a soft corner for L & T Group even when they’re in soft times  & in midst of controversies like just  two years ago in mid  March 2014 when it was introduced for trading in the F & O Segment in mid month just when parent Larsen & Toubro offered a stake through OFS on the Stock Exchange Window at a Floor Price of just Rs 70 on SEBI allowing this route even though they had sold shares in the prior six months.The F & O trading pattern a day or two before showed insiders ( who must have known lower floor price before hand) short selling at Rs 85 levels  & SEBI investigation revealed parties who had never before ever done F & O having indulged in it to make several Crores of Profit

Had been disappointed with L & T Finance Holding’s inability to leverage strongly on the parent L & T Brand in their Finance Foray….This Listed Company should have been over Rs 200 by now inside 5 years  after it’s IPO at Rs 52 in mid 2011….Had recommended it strongly in 2011 & saw it’s price move smartly to Rs 95+ Highs in 2012 & 2013 only to slide back….then had recommended exit as was not enamored with top management who always wore a bored & disinterested look at analyst meets

Then came in Bain Capital in September 2015 to stir the shareholding in the company by picking a preferential post issue  stake of 5.27% through an aggregate of 95.66 m shares & warrants ( to be exercised from six to eighteen months from allotment)  @ Rs 74.This would infuse over Rs 700 crs into the Company.It  also created another Rs 600 cr exposure through a 4.95 % post issue stake by buying 85.2 m shares from parent Larsen & Toubro in market deals at @ Rs 70…the Sensex at the time was @ 26200 levels with the Share Price of L & T Finance Holdings in the Rs 67 to Rs 70 range

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Essar Oil Delisting is Over or is It !? ~ Glitch or Golmaal !?

Essar Oil Delisting is Over or is It !? ~ Glitch or Golmaal !? 

Yesterday at 3.30 pm was the cut off time for all shares to be tendered in the Essar Oil reverse book building on BSE & NSE

The First criteria for the delisting endeavour to be considered successfull is that  at least a minimum number of 92,569,408 Shares be tendered  in valid bids from the 142489858 Equity Shares being 28.54% of the public shareholding that could

At  Closing 3.30 pm on Monday,December 21,2015  BSE & NSE showed aggregate cumulative bids for 101143045 shares

So then what’s the problem !?

1,98,99,305 shares from 8 bids all at Rs 262.80 are yet showing unconfirmed on the BSE Screen !

Seems there is a Glitch ! or was it a Golmaal !?….if so for what purpose ? …to derail the delisting effort !? If so ,why!?

Seems Ruias of Essar court controversy regularly….either they  follow it or it like a guided missile follows them !  

 The 8 Unconfirmed Bids for Rs 262.80 for 1,98,99,305 shares apparently is from the LIC Holdings of Essar Oil in their various portfolios

If you remove these unconfirmed bids then the valid bids aggregate just 81243740 shares which is short of the 92,569,408 shares requisite

BSE has referred the matter to SEBI for guidance as to whether they should accept the LIC Bids as confirmed and therefore valid….if they say ‘Yes’ and that it was a genuine issue by Stockholding who were unable to upload the bid as confirmed in time by 3.30 pm for LIC then we have the Discovered Price or Exit Price of Rs 262.80 provided this price is accepted by Oil Bidco( Mauritius ) Limited the Acquirer….they can of course offer an even higher price than this to garner more shares

Essar Oil has got to be extremely anxious for delisting….in 2014 I had raised a stink when they set a floor price of just Rs 108….SEBI had to stop the effort…..however they allowed it this time around  with a higher floor price of Rs 146.05….in my view they should not have until the Rosneft Deal price for acquiring 49% stake in Essar Oil which is being negotiated was announced

Essar Oil is anxious that the delisting takes place before the Rosneft deal as otherwise that would have triggered of an Open Offer by Rosneft and would have disturbed the Equity Stake Holdings by Essar Oil Promoters & Rosneft leaving Essar Oil Promoters vulnerable

Whatever ! ~ even if this delisting is allowed with LIC’s bid being accepted at Rs 262.80 the shareholders who bid below this price or the exit price to be announced by Oil Bidco  will also get the Discovered  Price which will now be established at a minimum of Rs 262.80. Oil Bidco can accept this Price or announce a higher one as the Exit Price .It of course can reject it and the delisting would then not have succeeded

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