Sabero Organics up but FII,Clearwater Capital seen exiting ! Why ?

On August 6,2008,just under thirteen months ago I had blogged that Sabero Organics looks good at Rs 24..Click on http://www.gauravblog.com/?p=93

It had then dropped to Rs 12 in the market meltdown and since then has shot up to near Rs 40…Today it’s Rs 35 and has given an excellent June quarter performance…PAT is Rs 11.20 crs on Sales of Rs 121 crs,of which Exports are Rs 80.49 crs or a healthy 66%.Operating margins have surged from 14% to 18% levels 

It’s book value was Rs 25 at March 31,2009 and should be close to Rs 35 by end FY 10 with networth crossing Rs 100 crs…So Forward FY 10 P/B is 1….. Earnings Multiples too look great…EPS for FY 09 was Rs 7+ and for this year should be Rs 12+…so you’re getting the scrip at a Forward FY 10 P/E of just 3…The Current Market Cap is just Rs 103 crs,that’s just 20% of FY 10 projected sales of over Rs 500 crs…The Debt situation should ease with the increasing profitability

The Company’s expanded capacities went on stream earlier this year and from Rs 366 crs sales in FY 09 it has an ambitious plan to cross Rs 1000 crs sales inside three years

The current Equity base of Rs 29.19 crs (FV Rs 10) is expected to dilute to Rs 34 crs in 2010 or early 2011 on conversion of warrants alloted to the Promoter group of Chuganees

The Company should give dividend for FY 10..It skipped it for FY09 despite a great turnaround perfromance and an EPS of Rs 7.47

With such current and potential perfromance,the share price can only be expected to move northwards to cross Rs 50 first and then the three figure mark

THEN WHY IS THE FII, CLEARWATER CAPITAL PARTNERS (CYPRUS) EXITING THIS COMPANY !?

On March 31,2009,the shareholding pattern showed  CLEARWATER holding a 11.42 % stake in Sabero with 33.34 lakh shares…On June 30,2009,the shareholding pattern showed CLEARWATER with only a 5.09% stake…since then too,the selling has been happening and as per last records as of July 24,2009 on BSE,the shareholding has further dwindled to just 3.03%…that’s 883583 shares…so 25 lakh shares have been offloaded by CLEARWATER since April 1,2009 and records show that sales have been at prices of Rs 23 thereabouts,much lower than the current Rs 35

Infact the more CLEARWATER kept on selling,the higher the Price went !…someone has been absorbing this sale….raises valid questions as to whether was CLEARWATER merely warehousing or fronting these shares all these years…why would they sell off now that the company has got a brighter future than at anytime in the past ! ? Do they know something we don’t ?…then it would amount to Insider Trading !…or are they selling because they need funds desperately or that such a small holding (under US $ 2 million or Rs 10 crs) does not now fit in or make sense in their Indian Operations ?

The earlier the Company or ClEARWATER Clears the air on these sales,the quicker the share price will resume it’s upward march

Often I fervently wish that some Media Channel comes up with a ‘Such Ka Samna’ format type of show for Listed Companies and their Promoters and Strategic Investors !

Maybe I should create such a show….but I bet,very few companies would be willing to voluntarily come forward in the pursuit of good Corporate Governance and Investor Relations !

 

2 thoughts on “Sabero Organics up but FII,Clearwater Capital seen exiting ! Why ?

  1. Hi Gaurav,
    I liked this analysis. But in the end, to expect companies to come forward and participate in your ‘sach ka samna’ is like proposing to play hide-and-seek without anyone hiding!

  2. Yes Shyam…with the likes of IFSL,Lok Housing,Satyam,Austral……list is long of listed companies that have recorded fradulent transactions/manipulated accounts to create false valuations and therefore impact share prices and seduce gullible and trusting investors…the problem and danger is that Exchanges,SEBI and other Tax and Regulatory authorities in most such cases are reactive rather than proactive and most of the damage is already done on the bourses

    We can yet play’Sach Ka Samna’ with such companies…we can generate a list of Questions and role play the concerned company to answer ‘True ‘ or ‘False’ !…only here,most questions will tend to be rhetoric ! with the Company losing out even if it answers truthfully !

    Cheers !

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