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

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May 2011

Huge Insider Trading in Sabero Organics as Promoters Chuganees sell out to Coromandel International this morning ?..BSE and SEBI need to quickly investigate and Leading Newspapers need to quickly highlight

This morning Sabero Organics hit upper circuit on BSE at Rs 97.90 as news officially broke that that the Promoters Chuganees were selling out in toto their full 42.22 % Equity to Coromandel International (CI),a Muruggapa Company at Rs 160 a share + Rs 38.47  non compete component too => Rs 198.47  

http://www.expressindia.com/latest-news/Coromandel-Intl-to-buy-Sabero-Organics/797511/

CI will also offer to buy out another 31 % of the Equity from the remaining shareholders for a   total stake of 73.22 %

But this sell out by the Chuganees was known to insiders a fortnight earlier this month….look at the trading pattern below on BSE from May 16,2011  to date….clear case of Insider Trading……Sabero was languishing below Rs 60,low volumes and number of trades and then a sudden burst of Volumes and Trades and intermittent upper circuits from May 16,2011

From Daily Turnover of Rs 20 lakhs to Rs 30 lakhs the turnover bursts into Rs Crores from May 16,2011…in fact in just 12 trading days from May 16,2011 to date May 31,2011 the BSE Turnover aggregated Rs 127 crs + in Sabero Organics…could have been more if upper circuits were not hit…..standing out are the Tuesdays May 17 and May 24….38 + lakh shares aggregating Rs 29 crs + and near 28 lakh shares aggregating near Rs 25 crs respectively…and today too is a Tuesday when the announcement was made….Insiders probably are great ‘bhakts’ of ‘Siddhivinayak Lord Ganesha’ ! 

So who leaked the sell out by Chuganees to the Muruggapas at thrice the market levels of Rs 60 before the announcement this morning…..only three root sources could be there….Someone close to or in Sabero Organics,someone close to or in Coromandel  or someone close to or in the Investment Banking and Valuation team who are advising and involved in the deal…and as deals have to be put through Brokers,it is logical to assume even involvement of Brokers in this……..

incidentally the Valuation of Rs 160 is simply terrific…thrice the market price levels of Rs 60……wonder who did this and what is the basis….and is there some hidden agenda in such a high valuation to market price ?

With insider aggregate BSE turnover at Rs 127 crs + and aggregate Volumes of 1.56 crs shares for last 12 trading days and observing weighted average prices and daily volumes,I can safely observe that in just twelve trading days already Rs 40 crs + profits at the BSE have been accumulated  with the promise of this figure likely to cross Rs 100 crs in the coming days read more

Blog Viewer Queries and my responses…..Birla Power Solutions at Rs 1….Tulsyan NEC at Rs 46…..Marg at Rs 90+,Sanghvi Movers at Rs 110+,NIIT Tech at Rs 180+….Sabero Organics at Rs 97 +……Deccan Gold at Rs 20+…Garnet Constructions at Rs 12

Blog Viewer Queries

  • Birla Power at Rs 1
  • Tulsyan NEC at Rs 46
  • Marg at Rs 90+
  • Sanghvi Movers at Rs 110+
  • NIIT Tech at Rs 180+ 
  • Sabero Organics at Rs 97 +
  • Added later…..Deccan Gold at Rs 20+
  • Added later…Garnet Constructions at Rs 12

Thought I would give my brief observations on all of the above queries from blog viewers…..am reproducing both viewers queries and my brief responses  as this seperate blog post for wider and easy viewing

BIRLA POWER SOLUTIONS AT RS 1

BSReddy Says:

May 29th, 2011 at 7:34 pm 

Dear Sir ,
What about Birla Power Solution Ltd ,which is near Rs 1 /

 Gaurav Parikh Says:
May 29th, 2011 at 9:55 pm

Hi B R Reddy…thanks for your response…this specific blog post listed ten scrips between 20 and 30 and what you think they would be in 2012 if sensex is between 20k and 30k….A few years ago I had cautioned on Birla Power Solutions….I had a quick relook at it at par Rs 1 as this is the FV too …..Volumes are currently 15 lakh shares though average six month daily volumes are 75000 shares…. 52 week high/low is Rs 2/Rs 1…but margins and profits are very low…profits are in a few crs though sales crossed Rs 230 crs last year and will have crossed Rs 250 crs for FY 2011…amusingly it declared a 1:5 Bonus last year as well as a dividend of 7.5%…it carries debt of over Rs 100 crs while funds tied up in Debtors and Inventories last year aggregated over Rs 175 crs..Sales were Rs 238 crs….currently manufacturing portable gensets and engines for gensets it now plans to enter the field of power generation through two subs Birla Energy Infra Ltd and Birla Urja Ltd…it needs funds…has constantly….has raised Authorised Capital to Rs 425 crs….With Profitability in single digit Rs crs and Equity at Rs 215 crs,don’t expect any dividend for FY 11 that just passed….if they do foolishly declare one,they will have to dive into GDR proceeds of earlier years to distribute,if any are yet available….while I feel the downside is 75 paise,any uptick from here will be more on momentum,hype,sentiment and anticipation and blind faith in a Birla Company rather than on fundamentals…Yash Birla Group companies do not command much respect or premium on the bourses or in business…another of his group companies is Birla Shloka ….it is just Rs 15…it has a 52 week high of Rs 94 and the FPO in Jan 2010 was at Rs 50 for a FV Rs 10 share….if you wish to make monies in Birla Power, don’t depend on fundamentals to support upmoves from Rs 1….more likely on collective hype and hope…Cheers !

TULSYAN NEC AT RS 46-RS 49

AMIT GUPTA Says:
May 30th, 2011 at 3:50 pm  

whats your view on tulsyan NEC

Gaurav Parikh Says:
May 31st, 2011 at 12:05 pm 

Amit……Tulsyan NEC suffered from a very high Debt…over Rs 220 crs last year from a Total Capital Employed of Rs @Rs 285 crs…recent 2:1 Rights Issue at Rs 49.50 will triple Equity to Rs 15 crs and move Networth to Rs 120 crs…this will reduce Debt Equity towards 2:1…..Consolidated Turnover is Rs 876 crs for FY 11 but bottomline is a mere Rs 9 crs because of the high Interest outflow of over Rs 32 crs…they also faced huge Power cuts…40% in FY 10…affected capacity utilisation…they also faced some price hurdle to source sponge iron….they have since bought out a 35000 MT Sponge Iron Manufacturer Chitrakoot and are setting up a 35KV Thermal Power Station…Steel sales account for near Rs 700 crs of the turnover…rest is poly packaging synthetic division sales…it is a dividend paying company…65% + equity is held by the Promoters….I see little downside from here….Trading Volumes are low….would keep it as a ScripWatch rather than ScripSelect right now…Interestingly Market Cap is only @ Rs 70 crs on enhanced capital with share price in the mid Rs 40s levels…it remains a small company in this sense…sold 1.5 lakh ton of Steel and @ 12000 t on Packaging…has over 1500 employees …..will get re-rated only when Debt levels drop significantly to Rs 100-Rs 150 crs range and therefore Debt/Equity to 1:1….Keep a watch …..Cheers read more

Ten Scrip Teases between Rs 20 and Rs 30…any seducing you from these ?

Few forecasts of a Sensex of 30000 from mid to end 2012 have been made recently by known entities in our capital markets…that’s over 60 % inside 18 months from current levels of 18200 as we near the end of May 2011

Got me wondering …if 2012 sees the Sensex between 20000 and 30000,then what would these Ten Scrip Teases priced currently between Rs 20 and Rs 30  be priced next year

These caught my eye on any one or combination of the following criteria

  • Limited Downside from here
  • Defensive Plays
  • Strongly Recommended by Known Brokers
  • Turnarounds
  • Sector Potential

Any of you have any favourites from these ten scrips below…and any targets for them inside 18 months ? 

I must disclose that currently I do not own any of these but some of my clients may own a few  based on my advice with appropriate limited exposure and weight in their Equity Portfolio based on their risk profile

Scrip

Closing Price in Rs  

May 27,2011

Volume

2W Avg Q

Alok Ind

25.15

19.22L

16.75L

GVK Power

21.65

11.81L

9.45L

NHPC

24.80

13.20L

6.54L

Geojit BNP

23.20

0.21L

0.27L

Andrew Yule

24.00

0.36L

0.33L

Emami Infrastructure

29.30

0.14L

0.20L

Entegra

23.85

3,386

9,442

Deccan Gold

20.30

0.30L

0.31L

SJVN

21.20

0.36L

0.71L

Noida Toll

25.45

0.70L

0.49L

 

Cheers !

My Speaking Engagements in 2011 on Indian Economy & Equities

 

My Speaking Engagements in 2011….in order from the most recent

 

 

Sr

 

 

Date

 

Host

 

Topic

 

1

 

Wed, May 25,2011

 

Rotary Club of Mumbai Cuffe Parade

 

President : Rajesh Thakkar

 

Utsav Hall,Samrat,Churchgate,Mumbai

 

 

Vision India 2025

 

2

 

Fri, May 20,2011

 

IFEN (ICFAI Univ)

 

Khilachand Hall, Indian Merchants Chambers, Churchgate, Mumbai

 

 

Equity Research & Portfolio Management

 

 

3

 

Sun, March 27,2011

 

The Bombay Catholic Sabha

 

Hon Secretary: Capt Mascarenhas

 

Good Shepherd Church, Versova,Mumbai

 

Union Budget 2011

 

4

 

Thu, Jan 20,2011

 

Mehtas Equity Group

To celebrate their 17th Foundation Day

 

Founder : Rakesh Mehta

Director : Prasant Bhansaali

 

Arun Chambers Terrace, Tardeo, Mumbai

 

 

Outperformance through Equities with a Trading Perspective

Sensex closes below 18000…on it’s way to 16000?…what should you do?

Sensex Closed own 333 points at 17993….now below 18000…on it’s way to 16000 ?

Ominous noises…FM says increasing NPAs worrying…RBI Governor warns the fiscal deficit will be  higher…Higher Interest rates will impact Corporate Earnings going forward….IPO Debacles…issues withdrawn and listings below issue price….FIIs flows see sawing between inflows and outflows this year…net outflows @ US $ 3 Billion this year 2011 with the Sensex down 12%

In Brief what should your Equity Portfolio Approach and Strategy be now ?……

Short Term Traders and Speculators….High Risk to adopt Long Positions in the Short Term…..Shorts a better idea…but do keep an eye on FII Flows…the trend is your friend and currently it’s weighted down…both momentum and sentiment

Long Term Equity Investors…..Stay Invested but review your Stock Selections and be true to your risk profile and be disciplined in asset allocation and portfolio rebalancing exercises…Exit and Avoid or keep to a minimum high risk  selections less they play out the risk of permanent erosion in value

Those with Equity Investible Surplus available….Stay in Cash awhile…Selections will be available cheaper in June and July 2011

‘The Economist’ apologises to Indian Subscribers for the delay in the distribution of their May 21st edition as Indian Customs have held it up for incorrect India Map….check out my reply to them

‘The Economist’ apologises to Indian Subscribers for the delay in the distribution of their May 21st edition as Indian Customs have held it up for incorrect India Map

This is the email I received this Sunday afternoon from ‘The Economist’….check out my prompt  reply to them below it

The Economist

 

May 22nd, 2011
 


This week’s
print edition



Click here
to read
this week’s issue.

Dear Mr Parikh,

We deeply regret to inform you that there will be a delay in delivery of your subscription copy of the May 21st issue of The Economist.

This issue’s cover story is on the India-Pakistan border dispute and features a map showing the disputed territories. India does not allow us to show the current effective border, requiring us instead to show only its territorial claims. As a result the map has been obscured. This delayed the customs clearance and we were unable to get our copies into India as per our regular schedule.

We apologise sincerely for any inconvenience this may cause.

If you wish to catch up with this week’s issue of The Economist, all articles appear on our website at www.economist.com. If you have not yet registered for full access to our website, you can do so here: www.economist.com/register.

If you have any comments regarding this or any other aspect of your subscription, please feel free to contact us on +91-22-40779216 or e-mail [email protected]. Once again, we are sorry for the delay.

Yours sincerely,

The Economist

 

I promptly replied to them as below

For decades the West has it’s own agenda and has continued to hold this bias,arrogant too, and shows scant respect for India’s sovereignty and correct territorial borders…your magazine continues to play this out and the incorrect map is merely an extension of this bias…nothing new really…..your apology for the delay in delivering the May 21st edition is worded such as to blame India for the delay…..In fact India would even be right in banning you,but continues to graciously allow circulation with a stamp put on the map that it incorrectly depicts India’s borders

 Methinks you need to review your mindset and actions in this regard and reverse this bias….Oh ! I will continue reading your otherwise excellent magazine….we are fast maturing as a nation and your stoking a fire to affect our sensibilities by printing ,now and then, an incorrect map of India will no longer really bother us as it did earlier…it will probably bother you more…in the end a troubled conscience always does   

Cheers ,

Gaurav A Parikh,
For Inspiring Investment Insight into Indian Equities, visit www.gauravblog.com

Subsequently BBC has carried a story of how The Economist accuses India of hostile censorship on this issue…check out http://www.bbc.co.uk/news/world-south-asia-13529512

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