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A Weak Week Gone by …Sensex shakes down 5% as Scams Surface and CBI makes ‘Listed’ arrests…have Selective Conviction

It’s been quite a weak week gone by….the Sensex shook 5% opening at 19841 last Monday but shaking in some shock down to 18955 on Friday…it has recovered to 19400 close as this week opens…..Looking beyond the Sensex shows that the shakedown has been more intense in the Mid cap and Low Cap Areas

IFCI has dropped to Rs 57 levels and IDBI Bank from Rs 200 ! to below Rs 160…both nearer Consolidated Book Value for this year….these price points offer lower risk Opportunities unless ofcourse scams unfold here too !

….what is also spooking the markets,apart from Korean War fears, is the CBI confirming a sense,long suspected by all of us really, that there have been huge sinster gameplans at work on the Exchanges…..collusions between Promoters,Bankers,Merchant Bankers,Politicians,Brokers,Fund Managers and  sadly even certain Print and Broadcasting Media…..to hype Companies and  rig up share prices to facilitate QIPs at high Prices with Fund Managers being paid off for participating in the QIPs…..it is alleged that even Exit Prices and Time Periods for this were pre decided….this would necessarily involve the need for Market Price manipulation…..where Loan has to be arranged it would involve Corruption…bribing those who can make decisions to deploy their Employers Huge Funds

CBI has made high level ‘Listed’ arrests…CEO of LIC Housing Finance….DGM of Bank of India and Independent Director of Central Bank of India,DGM of Punjab National Bank,Secretary (Investments) of LIC,CMD of listed Finance Intermediary, Money Matters Financial Services Ltd….the stink of corruption is polluting the markets….bribes being paid to Finance Heads of Listed Institutions through a Listed Financial Intermediary to faciliate Loans and QIP of Equity of hundreds of crores to Listed Corporates,especially Real Estate Companies….being ‘Listed’ seems to be the key….often manipulating the share price pays for the Corruption……..who suffers here ?….those primary market institutions and those secondary market  suckers who unknowing of this gameplan invested in the Share at an inflated price….if the situation is that of Loan Outstanding…it will probably remain outstanding till declared Non Perfoming and quietly written off after a few years !…and civil court cases takes years ! 

Maybe SEBI should report to the CBI !……..Because more often than not even this IPO High Obscene and Vulgar Pricing is a Scam of Sorts…though SEBI may argue it’s not their job to comment on Valuation and Pricing…and market forces will decide the success of the IPO…..but the truth is that most Investors are not educated enough to understand the Difference between Value and Price…and with no Protection now that the CCI Formula for Pricing the Premium gave the Promoters and Merchant Bankers will create Hype and milk Investors…we all know the Reliance Power IPO Debacle…probably only Mukesh Ambani did not invest in this !…Kishore Biyani’s Future Capital,Tanti’s Suzlon were nothing but IPO Loot Pricing….Adani Group is simply another story ! …of Satyam is now well known ! read more

Happy Dussehra to all….Good Always Triumphs over Evil…Always

Other Days may be different…but today India celebrates Dussehra…when Lord Rama vanquished the arrogant Sri Lankan King,Ravana……and this is traditional….get up early…bathe early…Adorn Car and House with fresh Marigold ‘Torans’….Pray….Arrange for Breakfast of Hot ‘Jalebis’,’Fafda’ or Papdi with Raw Pumpkin Chutney for eight houses in my extended Family….most had yet to awake on this lazy Sunday…..there are huge lines that form from early morning at famous Indian Sweetmeat Shops to buy fresh Hot Jalebis……I got mine from ‘Sangeeta’ at Neapean Sea Road in South Mumbai….had to wait my turn….fortunately the line in front of me was shorter than the one that formed behind me at 8 am…..managed to do all this by 9 am this morning !  

Dussehra is being celebrated today with great faith,passion and vigour all over India…Its been nine nights of Navratri Celebrations that culminates in Dussehra…..Mysore,Kolkata,Varanasi,Delhi,Mumbai

…..Gujarat especially comes alive during Navratri with the famous folk dances of ‘Dandiya Raas and Garba’ Programmes dotting the landscape in it’s villages,towns and cities….children,youngsters and old alike draped in vibrant colourful kurtas,chanya cholis,turbans and badhinis with matching jewellery and other accessories dancing in fabulous rhythm,some even possessed by it,to traditional Gujarati songs and even hit Bollywood remixes either belted out live by singers,some famous like Falguni at Ankleshwar in Gujarat or Rahul at Goregaon in Mumbai or played out as recorded music…these celebrations are beamed out live on various channels

…..Kolkata celebrations of Goddess Durga Mata are legendary and one has to experience them….Goddess Amabaji Mata,Lord Ram and his consort Sita and brother Lakshman and even his disciple,Lord Hanuman  have also been worhipped with greater fervour for ten days now……’Ramayana’ has been read out and even enacted in spirited fashion at congregations all over India……. Idols of Goddess Durga Mata are now being immersed in Waters

……Mysore is celebrating 400 years of the famous Elephant Parade that is the hallmark of Dusshera festivities in the southern state of Karnataka 

To signify the Triumph of Good over Evil and to Destroy and Kill Arrogance and Evil ,Effigies of Meghnatha,Kumkarna and the ten headed Ravana are being set alight in this order at Maidans all over India ….captured some of this on my mobile camera from Live TV….at Subhash Maidan in New Delhi at 6 pm where all our governing Political bigwigs of the Capital were present…President,Vice President,Prime Minister,CM of New Delhi,Chairman of the Congress Advisory Council…..they set Doves and tricolour ballons into the air to express peace and solidarity and joy…soon after the Effigies were set alight….some of these bigwigs then drove to the famous Ramlila Maidan where at 7 pm the effigies were set alight…In Mumbai at Chowpatty beach the effigy of Ravana was set alight at the same time    read more

Spectacular Opening Ceremony in New Delhi for the XIX Commonwealth Games…..fabulous and colourful….7000 Athletes & Officials from 71 Nations….Swagatam !

 

Incredible India !

…..Just enjoyed the Live telecast on National Television of  the Spectacular Opening Ceremony in New Delhi of the XIX Commonwealth Games….7000 athletes and accompanying officials from 71 Nations…viewed by over 60000 at the Jawaharlal Nehru Stadium and on TV by billions across the globe

….Fabulous and Colourful…beautiful and breathtaking and varied traditional performances on a huge canvas…fantastic choreography  with hitech support….the  aerostat is magnificient

…enjoyed the Patanjali Yoga and the Kundalini with the Seven Chakras that emerged….lovely idea to showcase vignettes of common life all around India through a Train Journey….the dances …the songs…the depiction on large canvas of the rhythms and the rich cultural heritage  of India has to be lived…we have been doing this for centuries…no nation on earth can replicate this 

….felt warm when Pakistan got a warm  and roaring welcome when their contingent walked in……

…..Huge roars also rolled out as the huge and popular contingents from Australia,Canada,England and New Zealand marched in…..but the biggest deafening and sustained roar was for India…..as host nation,India paraded in last with the largest contingent of 620 athletes and officials with Abhinav Bindra a proud flag bearer of our tricolour…later he also took the Oath on behalf of all athletes

Clicked from my mobile a few glimpses on TV…so pardon the grainy effect

…and my daughter had called…she was watching the Ceremony on TV at the Football Camp in Gandhinagar…with her team mates and coaches of  the India Girls u 16 Football Team ….she leaves next week for Jordan to play the Asian Qualifiers for the FIFA u 17 Womens World Cup next year….she called to say it was awesome and she was inspired by the Opening Ceremony and her Team’s mood and spirit has been uplifted….feel so warm at this…Thank you God for giving my child such a glorious opportunity at such a young age

We’ve had addresses by Games Heads,Suresh Kalmadi and Mike Fennel….and Prime Minister Manmohan Singh….then we had the Queens Baton Relay…the Baton was brought into the Stadium by Indian Boxer Vijender Singh,who passed it on to our World Champion Women Boxer,Mary Kom who relayed it to our Ace Shooter Samaresh Jung and who finally passed it on to our World beater Wrestler,Sushil Singh…and Sushil Singh presented the baton to Prince Charles…..Prince Charles then read out the Queens Message……then President Pratibha Patil addressed and declared the Games Open with a youthful flourish of her hands and Abhinav Bindra took the oath for all athletes and the Commonwealth Flag was unfurled read more

IDBI Bank at Rs 153….Yet Lovely for all Risk Profiles and Portfolios

On September 8,2010 I recommended IDBI Bank at Rs 134…it had been on my radar for sometime and the Scriptech Stock Select committment was made as a Scriptech Sparkle SS 2 Stock Select…..It has done well past two trading weeks and soared to Rs 153….It suits all Portfolios and all Risk Profiles even at Rs 153

Just reproducing an extract from the Scriptech Recommendation Template of Wednesday,September 8,2010 for all of you

 

A SCRIPTECH SPARKLE SS 2 STOCK SELECT

 

IDBI BANK  at Rs 134 (FV Rs 10)

 

A BANK STOCK THAT WILL GATHER MOMENTUM 

 

Target Share Price Ranges over Time

 

 Inside 12 Months : Rs 175 – Rs 200…min 30%

Inside 24 Months : Rs 200 – Rs 250…min 50%

Beyond 2012 : Beyond Rs 250…90 % +

 

Downside Risk : Rs 110…@ 15%

 

SENSEX : 18667     NIFTY : 5608

 

 

When IDBI,the earlier avtaar,of IDBI Bank launched it’s IPO in 1995 at Rs 130 I had then said IDBI stood for ‘INSTANT DEATH BY INVESTMENT’….the issue was bailed out by UTI…it was a classic quid pro quo….UTI subscribed to IDBI and IDBI in what appeared to be  pre-arranged gratitude invested Proceeds in UTI Units !…IDBI collapsed to levels of Rs 30 in the years after the IPO

IDBI continued to receive oxygen from the Union Budget through Grants…Then in 2004 it merged and morphed into IDBI Bank and the future began to beckon

IDBI Bank,the new avtaar from 2004, is now past Rs 130 today and looking good for the coming years…It’s commenced an aggressive thrust to increase retail accounts in an attempt to to increase CASA Ratio and lower it’s cost of Funds…It’s new ads show this thrust…No Minimum Balance required…No Charges on many banking services like ATM,Funds Transfer and DD because as they assert to the client “you mean more than your money”

When IDBI and IDBI Bank merged in 2004,there was a mismatch  of working culture and mindsets that thwarted aggressive growth…Yet in the past two to three years it’s grown reasonably well…The momentum is set to intensify going forward

March 31

2006

2007

2008

2009

2010

 

EPS (Rs)

7.8

8.0

10

11.9

14.2

B V (Rs)

88

86

94

103

114

BV inc RR (Rs)

88

115

122

130

140

Div (%)

15

15

20

25

30

Rs Crs

 

 

 

 

 

PAT

561

630

729

859

1031

Equity

724

724

725

725

725

Free  Reserves

5648

5512

6075

6720

7502

Reval Reserves

2064

2022

1980

1938

Networth

6372

8300

8822

9424

10165

Deposits

26001

43354

72998

112401

167667

Borrowings

47530

42404

38613

44417

47709

Advances

52739

62471

82213

103428

138202

Investments

25351

25675

32803

50048

73345

FY 11 should see the EPS move past Rs 17 and Book Value move past Rs 155 as PAT moves past Rs 1250 crs and Networth after Dividend adjustment moves towards Rs 11200 crs…It’s had a muted Q1 FY 11 notching Rs 250 crs PAT at June 30,2010

IDBI Bank has spurted to close at Rs 134 today…yet at under Eight Earnings and under One Book….step brotherly treatment meted to it in relation to better multiples to it’s peers…probably guided by concerns on lower NIM,higher NPA Levels and muted growth   

There could be a likely dilution of Equity as the bank raises funds for expansion  

The Bank is present across Investment and Commercial Banking,Broking,Investment,Mutual Fund and Insurance(JV with Fortis) Spectrums read more

Updated Valuation of BSE Ltd

On August 5,2008 I had blogged on how BSE Ltd is losing Value

 SHARES OF BSE LTD LOSING VALUE

I blog yet again after reviewing it’s latest financials

Performance of BSE

BSE has posted it’s half yearly performance at September 30,2009 on it’s site

The results are dated December 5,2009 and signed by the MD & CEO ( no name !)

Here’s the long and short of the audited numbers for the Half Year Performance at September 30,2009

  • It has earned a lower net of Rs 113 crs in the first half of FY 2010 against Rs 117 crs in a similar period last year…For Full year 2009 it had earned Rs 213 crs
  • The Total Income was higher at Rs 256 crs against Rs 214 crs…Full Year 2009 Income was Rs 421 crs
  • The Exchange depends significantly on Income from Trading Members and from Investments and Deposits…these are 30% and 54% of Total Income respectively…an aggregate of Rs 84%
  • The bonus enhanced (12:1) Equity is now Rs 10.29 crs from just 0.79 crs last year…Face Value is Rs 1
  • The adjusted EPS is Rs 9.86 against Rs 10.34…Full Year 2009 EPS was Rs 18.67
  • Reserves were Rs 1718 crs at March 31,2009 and would have moved up past Rs 1830 crs with this half year profits in the current year
  • The Book Value would thus compute to Rs 169 at March 31,2009 and currently moves up to Rs 179

Valuation of BSE

The long awaited Listing of BSE is ,well,yet awaited !…BSE even issued a 12:1 Bonus to bring the Equity Capital to above Rs 10 crs as this was the minimum required for a Listing on the NSE

BSE had wished to list it’s shares on it’s own Exchange without an IPO, while SEBI is insisting on an IPO 

So what should be the Value of the BSE’s Share ?

On an Earnings Multiple basis an EPS of Rs 20 for FY 10 and a 20 Multiple would indicate a Value of Rs 400….On an Assets Basis and a Book Value of close to Rs 190 and a Multiple of 2,the Value would be Rs 380 

For all those who Bought BSE Share at Rs 5200

A few years ago,when Mr Rajnikant Patel was the MD of BSE,Member Brokers were invited to tender any part of 10000 shares allotted to them when the Exchange became a Company.The Price fixed was Rs 5200.These shares were then placed with overseas Bourses and Institutions.

Many Share Brokers tendered 4000 to 5000 shares and received upward of Rs 2 crs for the sale and many got out of financial troubles they were experiencing.

Adjusted for the Bonus of 12:1,the buyers of these shares at Rs 5200 now have a holding cost of Rs 400

The Current Performance indicates such a Value as opined above…so they would be happy to have atleast recovered their cost price,albeit even notionally in value

For those who did not sell any shares,the original 10000 shares allotted to them have now gone upto 130000 shares because of the bonus…At the Value of Rs 400,these are now worth Rs 5.2 crs…and the hypothetical Market Cap of BSE’s Equity of Rs 10.29 crs (FV Rs 1) would be Rs over Rs 4100 crs

Peer Valuation:Comparing with London Stock Exchange 

If we have a look at the Share Price of the Listed, London Stock Exchange on it’s own Exchange we find it is just over 710 p ,at a P/E of just under 10

If we use this Comparative 10 Multiple for BSE,then the Value of the BSE Share would be halved at Rs 200 only…that’s a hypothetical Market Cap of just over Rs 2000 crs an would mean that those who acquired the Share at Rs 5200 and have an adjusted holding cost of Rs 400 would be losing half their monies read more

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