A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

Gaurav's Blog


Month: December 2009

Cranes Software at 52 week low of Rs 28…was Rs 100 just over a year ago…Waste or Worth ?

End October 2008,when the Sensex had crashed below 8000 from a high of 21000 in January 2008,Cranes Software (FV Rs 2) was at Rs 90 and yet rated a ‘Buy’ by a leading Broking House with a target of Rs 106….Had you invested,you’d have gone ‘Broke’ and probably be with the ‘Angels’…get the whiff!? 

Cranes is now at Rs 28/29…a 52 Week Low…there is a lot of interested buying that has led me to have a brief look at this scrip

While the Whole market surged in 2009,Cranes reversed from Rs 80 to Rs 28

This appeared strange at first,given the fact that for FY 2009,the Networth shot up from Rs 481 crs at March 31,2008 to Rs 632 crs at March 31,2009,helped by a bottomline of Rs 115 crs….Book Value moved up sharply from Rs 41.95 to Rs 53.70 and is likely to cross Rs 60 this year….P/BV is very low at @ 0.50….. Equity is Rs 23.55 crs giving an EPS of Rs 9.8…..Q1 FY 10 indicates this EPS will be maintained this year…Thus the PE is under 3

So does Cranes Look great at Rs 28/29 ?….Look again

EBITDA in FY 2009 was Rs 227 crs,up from Rs 191 crs and PAT was Rs 115 crs,up from Rs 95 crs….Yet the company crashed Dividend to just 10% from 60%….Rs 2.36 crs was the absolute amount…that’s barely 2% of the PAT !

Look again…The Company is obviously in deep cash trouble…Borrowings have increased from Rs 573 crs in 2008 to Rs 743 crs in 2009…These incremental funds of Rs 170 crs along with Cash Profits of Rs 187 crs (after Depreciation adjustment) give additional funds of Rs 357 crs….Where have they been applied ?…Look at the Assets…Gross Fixed Assets have increased by Rs 103 crs and Debtors by a whopping Rs 272 crs from Rs119 crs to Rs 391 crs…that’s 74 % of consolidated (+15 subsidiaries) revenues of Rs 529 crs……that’s way too much….raises question marks on credibility of the Sales and Profitability figures and therefore Liquidity situation at the Company

Shareholding Structure reveals near 37% is held by Promoters and nearly as much by FIIs…Normally this should spell ‘confidence’…but seems more like just ‘con’

This Bengaluru proprietary software products based company will celebrate 25 years next year after it was co founded by Mukarram Jan and Asif Khader….Hope it does not go the way of Aftek Infosys (Rs 17) and Silverline (Rs 6)

There is heightened activity at the counter with traded volumes running into several lakhs of shares, both, at BSE and NSE read more

ABC of Investments…(B)harat coupled with and sandwiched between (A)merica and (C)hina…Have a 5 Year Equity Plan…2010 to 2014

2009…The Recovery Year after a fatal 2008….America has seen what appears to be a Bear Market Rally…so 2010 may see reversals there…..China has seen a doubling in Equity and Real Estate from 2008 lows…early signs of a Bubble forming in years ahead

…..and our Bharat is sandwiched critically between the two…America and China…West and East…clearly 2009 was a great surge back year from October 2008 and March 2009 Lows…but clearly 2010 will not witness a three digit percentage gain from these Sensex levels of 17500…the base is now higher and the macro valuations fairer

….so to beat Index benchmarks and chase alpha,strategy will have to be stock specific with a bigger exposure to low cap and mid cap scrips….thus the risk increases…and thus this strategy may not suit or be appropriate for conservative and even moderate risk profiles….they would best be served by sticking with the Large Caps…Reliance and Larsen

……there is optimism for Indian Equities in 2010 with encouraging GDP  and Corporate Earnings Growth rates in the face of high fiscal deficit and food inflation…and the intact Infrastructure and Consumer Story for years to come…..Nothwithstanding any  hiccups,the FII Flows and Domestic Insurance and other Institution Flows into Indian equity will continue to be strong in 2010…there is every indication of this..over US $ 10 billion from each stream

…….monies will flow to where returns are more certain and visible and therefore the risk is less….India simply has to be the Investing destination

……I’ve made this equity argument for India repeatedly over the years,so don’t let anyone sway you away from India….as an Indian,you have the right to participate in the returns that this Incredible India story unfolding before you will give you….cautious ,yes,…but cynical and critical and skeptical and you’ll only be grudging those who have participated

……so I reiterate as we close out 2009….Continue to go Long on India Equities for the Long Term…..just look back and contemplate for a second….being fearful,cynical,scared, critical and skeptical held you back from participating in this fantastic recovery in 2009

…believe in the power of Compounding…our government has a Five year Plan…you too have one for Equity…Beginning 2010 to end 2014….Bank Deposits may be safe….. but a compounded 8% annual return will take your Rs 100000 to Rs 146933 in 5 years….post Inflation and tax the real returns would probably be nearer 0 % ! read more

Christmas Eve…Christmas Spirit…..Cairn or Castrol !? maybe a Cox & Kings or even a Country Club !?

Christmas Eve…Christmas Tree…Christmas CarolsChildren….Chimes….Christmas Cheer….Cosy & Cuddly…..CandlelightCanoodling….Caress….Cabernet…..Cognac….Christianity…..Co-existence….Christmas Spirit….Confectionery….Chocolates,Cheese and Cherries…..Cupid…..Couple…..Chinese for her and Cauliflower for me !

….and for Channel Addicts ! …read Stock Addicts!…Cairn or Castrol ! ?…Carol Info rather than Christmas Carols ! ?…maybe a Cox and Kings or a Country Club now too !?

Cheers !…Merry Christmas to all

Lloyds Steel @ Rs 9/10…Turnaround from Treachery !?

The Lloyds Group (Finance,Steel,Real Estate) has destroyed all stakeholders this past decade and more….Promoters,Guptas, have surely a lot of ‘gupts’ that they may never disclose….Several years ago,and during the mess they had created,I happened to be introduced to one of the sons,at a dinner party….this guy was nonchalant about the severe anxieties that shareholders and depositors were experiencing…in the mid 1990s the group had invested in real estate at high prices with short term debt,in the hope of making fast gains….realty crashed and so did this Group….Debt Default was inevitable…..and this Son merely stated “Real Estate Prices will rise again in a few years …so let the shareholders and deposit holders wait ! ” I had moved away from this guy,lest I got into an argument with him and embarrassed the host 

One of the Group Companies,Lloyds Steel, became a BIFR Case.Now over a decade later,this company was on upper circuit today at Rs 10+ with nearly a million shares in volume on BSE….so what’s the story ? Turnaround for this treacherous scrip ! ?….

There’s an EGM on New Year Eve,December 31,2009 for preferential allotment of warrants to the Promoter group companies….the conversion within 18 months of allotment will triple the promoter stake from 18% to 54%….Settlement of Debt of over Rs 1000 crs was being continuously negotiated and some success was achieved in Q2 of FY 10 for a part of it….so fresh infusion of Funds,Settlement of Debt,significant revenues of nearly Rs 500 crs from the Engineering Division, which services a blue chip clientele,all augurs well for Lloyds Steel

I daresay,Looks Like the shareholders of Lloyds Steel may well be rewarded in 2010 for their forced penance for their sin in investing in Lloyds Steel in the past !……Promoters,obviously have little money to infuse Equity upfront…so they are resorting to a big preferential allotment of warrants that will convert to millions of shares for them to triple their stake to 54%….making them the biggest beneficiaries of any turnaround !

Keep an eye on Lloyds Steel in 2010 


Santa Claus Rally is On…..

Dashing through the Snow

On a One Horse Open Sleigh

Over The Fields we Go

Laughing all the Way

SENSEX’s on the run

Making spirits bright

Oh ! what fun it is to ride

on a one horse open sleigh !

Hey! Jingle Bells……  

FM,Pranab Mukherjee played Santa Claus declaring that India should register a GDP Growth of 7.75% this year…..Sensex triggered off a Santa Claus Rally surging 539 points today and crossing 17000

Is this just the trailer for 2010 ?

What do you think ?…you wanna know what I think ?…watch this blog in the days to come

Cheers for the Season

Raj Karo Rajkot ! India just beat Sri Lanka in a Thriller of a Cricket ODI by 3 runs in a record run feast of 825 runs in a single day !

India win a Rajkot Cricket ODI Thriller against Sri Lanka by just 3 runs in a batting feast

825 runs were scored today in Rajkot with 24 6s,evenly between India and Sri Lanka and 80 4s,with 43 by India and 37 by Sri Lanka…thus 464 runs or 56% of the runs scored came through 6s and 4s 

Swashbuckling Sehwag cracked a fantastic 146 runs of 102 balls to provide the platform for India to record their highest ODI score of  414-7 after being put into bat by Sri Lankan Captain Sangakkara…at one stage it looked like India would post 450 as they were going at nearly 9 an over…their previous highest was 413 against Bermuda ! 

All thought the match was over in this first Innings itself….but then came Dilshan…he knocked 160 of 124 balls before our best bowler on display today,Harbhajan, bowled him….Bhajji got the dangerous Jayasuriya too,luring him out and Dhoni effecting an easy stumping….Sangakkara powered 90 of just 43 balls…..After 35 overs it looked like Sri Lanka would comfortably reach the Victory target of 415,aided also by sloppy fielding and dropped catches by India…but key wickets fell at crucial times……allowed India to get back into the match…Lankan Batsmen pressed the panic button…two runouts….. needing 11 of the last over with Nehra bowling it,Sri Lanka lost hard hitting Mathews and they managed just 7 runs giving India victory by just 3 runs…last ball they needed a 4 to tie and a 6 to win…they got just a single

Inexplicably, Sri Lanka who were scoring at over 8 runs an over throughout,managed just 28 runs,losing 3 wickets, at just 5.6 runs average in the last Five Overs….This sudden drop in the scoring rate at the end cost them the match 

Both Man of the Match Sehwag and Dilshan missed a glorious chance to be the first in the History of ODIs to score a double century….Zaheer Khan will like to forget this match…he takes over from Srinath for having the worst bowling analysis in ODIs….Srinath was smashed for 87 in his Ten overs in a World Cup Match….Zaheer was smashed today for 88 runs in his 10 closely followed by Nehra whose 10 overs cost 81 runs…but Nehra became a hero,bowling a successful last over

The Five Match series is set up well with this thrilling first ODI  with India taking a 1-0 lead

Rajkot is going to celebrate tonight..The famous Patel Ice-cream Parlour is going to run out of Stock in all flavours of their signature hand churned ‘ Sancha’ Ice-cream read more

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