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A Lion’s eye on the Bulls and Bears

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

Gaurav's Blog


June 2015

RBL Bank Ltd IPO @ Rs 200 & a Listing Market Cap of over Rs 8000 crs

RBL Bank Ltd (earlier The Ratnakar Bank Ltd) has finally filed it’s Draft Red Herring Prospectus with SEBI yesterday,Tuesday,June 23,2015

The  IPO will in all probability be in a Band of Rs 190 to Rs 200


FY 15 Year End Networth is @ Rs 2200 crs with Book Value @ Rs 75 levels with Equity at  Rs 300 cr levels.PAT was Rs 207 crs giving an EPS of @ Rs 7

The indicated IPO Pricing of  Rs 200 would mean PE of just under 30 times and a PBV of 2.7

Post IPO the Networth will move to Rs 3300 cr levels with Equity @ Rs 355 crs and Book Value rising to Rs 93 levels

The Listed DCB Bank @ Rs 129(FV Rs 10) is more or less similar in size to RBL Bank.In FY 15 it earned Rs 191 crs on an Equity of Rs 282 crs giving an EPS of Rs 7.2.The Networth is Rs 1534 crs giving a BV of Rs 54.PE & PBV are 18 and 2.4.Market Cap is Rs 3654 crs

Post IPO  of RBL  a similar 2.4 PBV if applied  on the post IPO BV of Rs 93 will mean a listing level of Rs 225…more likely Rs 250

Market Cap of RBL Bank on Listing should therefore be over Rs 8000 crs 


VLS Finance @ just Rs 36 because of a colourful past !~Relax it has Relaxo Footwears!

Promoted way back in 1986 by the  Mehrotra Family of Delhi, VLS Finance @ Rs 36 (Rs 10) has had a very colourful past !

A candid conversation ,which I had,with one of India’s top Bureaucrats based in New Delhi ,since deceased, in the 1990’s  was peppered with really aggressive and loud colourful language by him when it came to the VLS Group and it’s Promoters

In 1994 the Share Price of VLS Finance had recorded a high of Rs 855 !….yes Rs 855 !….. before crashing into oblivion to Rs 2 levels by 2003 !  

But Relax it ‘s Resurrecting through Relaxo Footwears !

…….but should a Minority Shareholder really Relax or should one Buy in? 

Relaxo Footwears ( FV Rs 1) is @ Rs 900 from Rs 800 a month ago and has declared a 1: 1 Bonus with Record Date of July 2,2015

VLS Finance’s Audited Consolidated Book Value is Rs 60+ as on March 31,2015  while Adjusted Book Value is Rs 180+ based on Current Valuations of the Non Current Quoted Investments of which Relaxo Footwears itself constitutes over 70% of the Value in the Quoted Holdings….assuming all such Investments  have been carried over from FY 14  with more added

In fact  Consolidated Non Current Investments at Cost have climbed from Rs 168 crs on March 31,2014 to Rs 211 crs on March 31,2015

The Haircut is a huge 80% between the Adjusted Book Value and the current market price

In fact the VLS Group holds 14.33 % of the Equity of  Relaxo Footwear as of March 31,2015 :

  • VLS Finance holds 4523528 Equity Shares of FV 1  => 7.54 % of the Relaxo Footwears Equity
  • VLS Securities( subsidiary & NSE Member) holds 4075000 Equity Shares of FV Rs 1 => 6.79% of the Relaxo Footwears Equity   
Promoters ,the Dua Family, of Relaxo Footwears hold 75% of the Equity in their Company We do not know the cost of the holding by VLS Securities but can safely assume that the  Consolidated Adjusted Book Value will be much higher than computed above if the holdings of VLS Securities too are considered.This means the Haircut is much higher than 80%  Interestingly VLS Finance seems to specialise in Footwear Domain Knowledge with it’s huge investment exposure to Relaxo Footwears and it’s Clientele that includes leading Leather and Footwear Manufacturers,Mirza,Liberty & Lakhani

The intriguing observation is that VLS appears to have invested in many listed  companies where it also has a Consultancy Client Relationship !

VLS Finance has shed it’s NBFC Status and is now a member of both NSE & BSE through group companies

Over a Month ago, I had covered it in greater detail on the SCRIP WATCH Module of my company website when it was lower @ Rs 41 when Relaxo Footwears was @ Rs 800…check it out

VLS Finance @ Rs 41 ~ Sheds NBFC Tag as Stocks Beckon ~ 20-May-2015

Now when Relaxo Footwear has moved up by 12.5 % in a month from Rs 800 to Rs 900 levels ,we see VLS Finance move down by 10% from Rs 41 to Rs 36 !

Is it that the Past of VLS Finance remains a Heavy Stone to bear ?

Whatever ! ….VLS Finance may simply not be bothered by it’s Low Market Price !…..It’s making Life Changing Gains on Relaxo Footwear,albeit notional as of now….that should keep the Promoters and Top Management happy

…..why bother about Minority Shareholders now  when it has never done so in it’s history ! read more

Riskless Profits through High Frequency Trading on NSE or Plain Cheating!?

Guys Check this expose by a whistle blower from a Hedge Fund in Singapore on how the  Operations on NSE were gamed by unscrupulous players and  20% profits shared with the  Tech Provider through Variable Manhours Billings for Managed Services….all faciltiated in collusion with NSE Data Centre Staff and the shocking hush up by NSE Management

Get acquainted with terms like Latency,TBT and  Multilegged IOC to grasp how it was a unlevel playing field

Many NSE Members manipulated  the System to take advantage of being first connected to a low load server or gain unfair latency by first being connected to a backup server when load balancers were in place

They received price information micro seconds before others who did not manipulate the system did and which helped them develop software codes to implement Two legged of Multi legged Immediate or Cancel Orders  to lock in Riskless Profits for themselves and their High Net Worth Clients through High Frequency Trading   

Have always held that High Frequency Trading made a mockery of Research & Fairplay and  a Level Playing Field through Tweaking Technology

The Whistle Blower  states that Riskless Profits were being generated by Gaming the System !

Love some of the Phrases used in the Expose  like :

” About Non Collocation persons well they were the people who were never even reached the stadium where the race would take place”

Well! the Risk was in getting caught and now that you, my friend ,Whistle Blower have blown the Whistle !

I hope SEBI gets ALL those who indulged in this at NSE….those who indulged can be accused of Insider Trading too!

That’s providing your detailed  expose of the ‘modus operandi’ checks out

Why do I get the feeling that it will and because it will , it will not be !

Spare a thought for those unsuspecting speculators who did not game the system….their losses were the riskless gains of those who did ! 

They would be well within their rights and justified to take legal action….this would hopefully force SEBI to act on the whistleblower’s letter to it as linked above

On a Lighter Note at least on this front of HFT ,the BSE must breathe a sigh of relief that it was not involved in such malpractice as Derivatives never had really taken off on the Exchange till recently !….Ah! perhaps BSE  may conclude that it was this NSE Unfair Advantage why Derivatives had never really taken off on BSE !







Nagarjuna Oil Refinery on upper circuit at Rs 4.70~Saviour in Sight?

Two year ago I had covered Nagarjuna Oil Refinery for a leading Broker on his request when he had excitedly come across to me to confirm if it indeed was a multi-bagger like he had been advised…he had already commenced buying it for Clients and himself and had planned to invest heavily into it

I had advised him against doing so as there were too many challenging issues the Refinery faced  despite having pedigree promoters that included the Tamil Nadu Govt and The Tata Group

Nagarjuna Oil Refinery Ltd  is the listed company whose FV Rs 1 Share hit and remained all day on upper circuit today on BSE at Rs 4.70.It derives it’s value from the 46.78% Equity holding in the unlisted Nagarjuna Oil Corporation Ltd (FV Rs 10) which is setting up a 6 mmpta refinery in Cuddalore and has been facing one set back after another over the years and after deploying Rs 6350 crs it’s survival and completion depended on Fresh Infusion of another Rs 10000 crs

Is there a Foreign Saviour in Sight ?

Check out this just posted comprehensive coverage on my company’s website in the SCRIP WATCH Module

Nagarjuna Oil Refinery @ Rs 4.70 ~ Saviour in Sight? ~ 18-Jun-2015

It is fatal to work 20 hours at a stretch day in and out even if young!

Is it worth working 20 hours at a stretch day in and out even if young!?

Was sad to read about the death of one as young as 22 and upwardly mobile Indian youth working as an analyst with Goldman Sachs in San Francisco

How Wall Street killed a 22-year-old Indian at Goldman Sachs

The reason for his death is yet to be out but this young man was fed up of burning the midnight oil day in and out and had actually resigned only to rejoin….a sad and bad decision that probably resulted in his death….he was stressed out totally

One should not be working like this for hours on end with sleep deprivation taking a toll…I have observed that in the past two decades many young have been falling a victim to stress and some of them fatally too losing their life to cardiac arrest

Reminded me of  the Motivational Author Robin Sharma and his bestseller ” The Monk who sold the Ferrari”….a hot shot lawyer who gave it all up

Working 15 to 20 hours a day in this afflicted modern age is vastly more fatal than having done so in the 1970’s and 1980’s

I put in long hours and even slept a few nights in office in KPMG in the Middle East in the 1980’s to complete work which had tight deadlines…..I was in my 20’s then.It seems like a different era then .

A 20+ year old  working round the clock today has his Life clock ticking faster !

Work Hard ! Play Hard ! ?

It’s not worth it

Do pay heed to this 30 second guidance from  the ex CEO  of Coca Cola,Bryan Dyson which I have carried as a page post on my blog for years


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