MCX-SX launched the Equity & Derivatives Segment today with 700 members and 1116 Listed Stocks and their SX 40 Index

MCX-SX launched their Equity & Derivatives Segment today with 700 members and 1116 Listed Stocks and their SX 40 Index

The Launch Equity & Derivatives Segment of  MCX-SX ~India’s Newest Stock Exchange

Just returned from the launch of the Equity & Derivatives Segment of  MCX-SX,India’s New Stock Exchange at Hotel Trident in Mumbai ~ packed Regal Room and live launch functions in four cities beamed on the screens as were also the Live Proccedings

Met up with many,including Joseph Massey the MD and CEO of MCX-SX and Dr Bandi Prasad,President of FTKMC the knowledge arm of MCX, in our Capital Markets

Met two ex BSE CEOs but did not see any from the current top management of  BSE and NSE ! ~ MCX-SX is now their competitor ~Even the Invite Cover ,if you observe above, does not show BSE with a history of 138 years or NSE with a history of 20 years !  

A 5 Minute AV was shown highlighting  moments of Capital Market History and MCX-SX ~ A few  Short Speeches later  Finance Minister, P Chidambaram rang the Gong @ 4.15 pm to launch the Equity & Derivatives Segment of MCX -SX  and also launced the New SX 40 Index and even punched in a symbolic Trade ~ quite ironically it was a Derivatives Trade and he had just sounded an alarm in his speech of how concerned he is of the high level of Non Delivery Trades !

MCX-SX begins Trading on Monday

SX 40 ~ The Index of India 

The SX 40 is tagged as the Index of India by MCX-SX~ It is a free float based index with a starting base of 10000 as on March 31,2010.It has 40 top large cap Consitituents ~ all the 30 of the BSE Sensex except for the two S’s ,State Bank of India and Sterlite ! ~ Although  Wonder Why these have been excluded though it should meet their stated criteria of positive networth,free float of at least 105 and within top 100 liquid companies~ they also have  Industry capping at 20%( +/-) 2% band  ~ and with HDFC Bank and ICICI Bank the current weightage is already 22% for Financials (it’s 29.4% for Nifty and 26.4% for Sensex) and thus State Bank could not be accommodated ~ or probably not in the 1116 Companies that are listed and will begin trading on Monday ! ~ we’ll know Monday!

Interestingly SX 40 has Zee Entertainment as a constituent which neither the Nifty nor the Sensex has got !

Some noteworthy speech bytes…..largely verbatim but definitely in context

Ashok Jha ~ Chairman MCX-SX

“I am often asked why another Exchange when two already exist!? and my simple answer to that is because Competition benefits the Consumer”  read more

BSE plans an IPO next year ~ appoints 14 Investment Bankers for the Issue ! Phew !

BSE plans an IPO next year ~ appoints 14 Investment Bankers for the Issue ! Phew ! 

Valuation of BSE Shares has been a pet subject of mine right from 2008  when I actually began this Blog and I have updated my valuation views several times on my blog since then

I fact  few years ago a High Networth Friend & Client was approached by a Leading Broking House and was being strongly propositioned to buy BSE Shares from them at a high Price ~ He simply confronted them with my Valuation which was at half the price they were asking for !  My Friend tells me this broking house admired me at the same time while cursing me !

Have a look at my earlier BSE Shares Valuation blogs

George Soros Bets on BSE…Picks up 4% of its Equity for US $ 35 M => Rs 380/share…Let’s Update BSE Value

Sunday, August 22nd, 2010

Updated Valuation of BSE Ltd

Tuesday, December 8th, 2009

SHARES OF BSE LTD LOSING VALUE

Tuesday, August 5th, 2008

 

The latest Consolidated Results of BSE Ltd as on September 30,2012 show a  worrying picture of falling profits and contingent liabilities

  • The Networth is marginally gone up to Rs 2265 crs with Equity Component at Rs 10.37 crs (FV Rs 1) giving a Book Value of Rs 218 per share
  • The Profit has dropped to just under Rs 35 crs for the hy FY 13 while the full year FY 12 the profit was Rs 178 crs
  • Thus the EPS for the half year is Rs 3.35 and for the full year should be a simple extrapolation to Rs 7.It was Rs 17 for FY 12
  • The Half Year Profit has been impacted  significantly by the reversal of Rs 10.27 crs Prior Period Items of  Net Income and the Rs 65.28 crs for Liquidity Enhancement Incentive Programmes (LEIPS) for the revival  of  the Derivatives Segment.LEIP was  launched in September end 2011 and  the Full Year FY 12 debit was Rs 60.49 crs though the effective period was second half
  • Rs 134.50 crs has been treated as Contingent Liabilities for the demand raised by the Department of Telecommunication ,Government of India for revised VSAT Network License Fees and Royalty etc.BSE is challenging this claim 
  • The Consolidated Results include the performance of BSE Ltd and it’s seven subsidiaries ,one jv and one associate
  • The Operating Segments are Stock Exchange Activity and Depository Activity 
  • The Depository Activity contributed nearly Rs 120 crs Revenue in FY 12 in an Operating Income of Rs 538 crs ~ that’s a strong over 22% contribution
  • The Segment Profit shown in FY 12 from Depository Activity is a strong Rs 95 crs from an overall Rs 285 crs ~that’s a huge 33%
  • read more

    The Admirable Length that SEC goes to simply protect Investors in USA…Can we expect this from SEBI or even the BSE and NSE ?

    Thanks to Blog Reader Shahzad Vasaigara for this one…….and thanks Shahzad for ‘still’ reading my blog!   In July 2011,SEC had communicated a four pager to Nasdaq listed  and Beijing based,Yongye International Inc,a Chinese Company requiring them to reply to the points raised on the accuracy and adequacy of the Financial and Accounting Information that they had filed…quite analytical really and requiring more specific and better non conflicting disclosure….and clearly beneficial to Investors    http://www.sec.gov/Archives/edgar/data/1398551/000000000011041193/filename1.pdf    Likewise,surely in due course  our Capital Markets Regulator SEBI and the two major Exchanges BSE and NSE will be pushed to go deeper and more analytical into the Mandatory Filings by Listed Companies and require more information and clarifications on the disclosures….. in the best interests of Investors   Surely it will be sound and comprehensive inhouse  Objective and Subjective Analytical and Assessment Skills that will help SEBI regulate better and the Exchanges run more efficiently and effectively by requiring and insisting that Listed Companies and those seeking Listing comply fully with all Disclosure Norms….maybe such Norms need to be redefined to be made more comprehensive and even analytical……to meet the prime twin objectives of Investor Education and Protection…I have observed that over the years ,SEBI has really got more stringent and demanding on Prospectus Content and Disclosures by Companies who are planning a Public Issue of Shares….but More serious Work needs to be done to ensure timely,accurate and adequate Company Filings with Exchanges   ….what happens now for Secondary Market Listed Companies is simply this
    • Companies issue Clarifications,proactively or when sought, to the Exchanges where they are listed,  on Media Reports on them
    • Companies simply comply with the Listing Agreement and other mandatory requirements to file regularly with the Exchanges  any announcement on results,board meetings to discuss and decide on capex,expansion or diversification,changes in capital structure etc         
    Such Company Communications and Filings are displayed on Notice Noards and posted on the Exchanges Websites…..but like SEC,why cannot the BSE or NSE strengthen their process and actually go through ,as a rule and not as an exception,such communications from the Company with an analytical bend of mind and seek further information and clarification and disclosures if necessary to benefit Investors at large….that’s the end objective anyway !….what happens in reality is that most filings are simply filed away by the exchanges and not challenged for accuracy and adequacy at all !…Investors then have to look for and depend on Analysis by  Brokers and Blogs and by Reporters and Anaylsts in the Print Media and Anchors and Experts on TV…and believe me,quite often such analysis is paid for or undue favours given by the Company itself  for favourable coverage for itself or for reporting unfavourably on a competitor !….bias,vested interest,twisted interpretation,factual errors ,misrepresentation  and prejudice is then what you read and absorb and act on !…the risk ,therefore ,is higher   The First step really that BSE and NSE should really do is to freely make available on their website and in a user friendly format the last three Annual Reports  of all Listed Companies…The Listing Agreement requires a Print Copy  to be filed with the Exchanges by the Company inside a timeframe after the Year end….This latest Annual Report should be scanned immediately and uploaded on the Exchange Website…..Currently they are doing so but not all Companies on the Exchanges Website show Annual Reports available…and if so only for the last year or two…also one has to access the Company to access the Annual Report….A seperate Annual Reports database for all Companies from A to Z should be created for easy,convenient and quick access….This is a primary and basic need and requirement for all stakeholders,present and potential…and a bread and butter tool for all Fundamental Analysts   Years ago when I inquired from the Exchange MD at the time as to why Annual Reports were not available on the Exchange Website ,he simply shrugged…. such an Annual Report Database was being made available at a steepcost by one or two private vendors !…and the irony was that the Annual Reports were sourced from the Exchange itself!   I paid Rs 1 or Rs 2 for Prospectus and latest Annual Reports…my regular source were Investors themselves and even the ‘Pastiwalas’ who sold me these Reports by the Kilo !…it worked out Cheaper !   __________________________________________________________________________________________       Am reproducing below the communication,latest on top, between blog reader Shahzad and me recently on this __________________________________________________________________________________________   Sir,    Thank you so much for the kind words. Plz dont embarass me by asking me about it. You share so much superb info analysed by you with everyone which is so beneficial. Plz put it on your blog. Infact, since you are having such credibility and respect among high officials within the capital markets, i think you could also forward such examples to influential people who can then try and implement such rigid analytical practises in SEBI.    I know there are many issues to all this. But i am also an optimisist and believe, somewhere down the line it shud start and will definitely.   Thanks a lot! Shahzad

    Sent from my iPhone

    On Apr 14, 2012, at 22:09, “Gaurav Parikh” wrote:

     

    Shahzad,
     
    Lovely to hear from you…this is a inspiring illustration of the depth that SEC in USA goes to in their endeavour to both Protect and Educate the Investor by requiring and ensuring good Corporate Governance and Full Disclosures and Performance Analysis from listed Companies
     
    May I reproduce your email to me on my blog with this SEC link and my comments ?
     
    Warm regards,
     
    Gaurav 
    —– Original Message —–
    From: Shahzad
    To:Gaurav
    Sent: Saturday, April 14, 2012 4:34 PM
    Subject: SEBI should learn a few things from SEC
     

    Hello Sir,

     
    Hope u are doing well. Have been still reading your blog. 
     
    Sir, i just went thru one SEC document in which they have raised many questions over the corporate governance and compliance issues of a Chinese agri company listed in NASDAQ. They have literally tried their best to make the company bow down, after doing proper analysis of their annual reports.
     
    The whole letter is very crisp and to the point. When i read it, i could really imagine some big Judge throwing continuous questions on the CEO of this company.
     
    I thought even you would like to read it. 
     
    Although, i have never come across any such document by SEBI, i think this one is a real tough one and i am waiting gor the day when even our regulators start getting strict in the markets for betterment of investors.
     
     
     
     

    Thanks & Kind Regards
    Shahzad Jimmy Vasaigara
     
    _________________________________________________________________________________
     
    PS : Just Spoke to  Another Faithful…and he reminded me that this was the reason why Reliance ,when it tried,was perhaps unable to list on Nasdaq when Infosys could !…inability to make adequate disclosure !!! ?
    read more

    Inspiring Listing by MCX at Rs 1400 Levels~ 35% + Premium to IPO Pricing of Rs1032…but will this level sustain ?

    Inspiring Listing by MCX at Rs 1400 Levels~ 35% + Premium to IPO Pricing of Rs 1032…but will this level sustain ?

    Sensex too is up over 1.75% at levels close to 17500

    My Risk Profile and Valuation Sense cautions me to remain a spectator as MCX plays out on the BSE  and also refrain from advising on it till it settles down in the coming weeks….Allottments have been very poor given the huge oversubscription…Makes sense to book profit for such small holdings that will not carry any portfolio weightage…the other Option is to increase Holdings in MCX to give a proper portfolio weightage if you like MCX…this is where I’m currently refraining from advising whether you should exercise this option at these price Levels of Rs 1350…I thought the IPO Pricing Rs 1032 itself was at a sharp premium…The risk is higher at Rs 1350     

    MCX has had an inspiring Listing at Rs 1400 + levels as BSE began….Then it moved for awhile in the Rs 1380 levels

    Now past 11.30 am,it has further moved lower to Rs 1350 levels….recording a Low for the day till now of Rs 1332 and a morning high of Rs 1426….At Rs 1350 levels the Market Cap is Rs 6884 crs…The Volume has crossed Three Million Shares

    The Circuits for the Day are Upper Rs 1664.40 and Lower Rs 1109.65

    For a better assessement of Valuation vs Price check out a Detailed Blog on MCX I posted over a few days earlier at

    MCX IPO in the Price Band of Rs 860 to Rs 1032…Any Gains on Listing ?…is MCX a Long Term Wealth Creator ?

     

     Post Closing Update at 4.45 pm on First Day of Listing of MCX on Friday,March 9,2012

    On BSE

    MCX had sought Listing only on BSE

    On First Day of Listing ,MCX  opened very strong at Rs 1400 + recording intraday high in the early morning itself at Rs 1426 but closed lower at Rs 1297 with Trading Volume exceeding Six Million Shares after recording a Low of Rs 1282 after 3 pm on BSE….IPO Pricing was at Rs 1032

    Sensex however strenghthed even more closing up 358 points and  2.09% at 17503

    On NSE  

    NSE is a pre IPO shareholder for a few years now in MCX but has been at loggerheads with it on two counts…unfairly not charging or only tokenly doing so for currency derivatives operations so as to render MCX-SX currency derivative operations unviable …unfair competition….SEBI has levied a Rs 500 crs penalty on NSE which it has appealed against….also NSE was actively directing that NSE Brokers should not implement ODIN,the popular Brokers trading and accounting software of MCX Promoter ,Financial Technologies   

    Therefore MCX had not sought Listing on NSE….However ,under pressure from it’s members,NSE allowed MCX to be traded on it’s platform…MCX does not have to comply with any Listing Norms with NSE,like it has to for BSE read more

    MCX IPO in the Price Band of Rs 860 to Rs 1032…Any Gains on Listing ?…is MCX a Long Term Wealth Creator ?

    MCX IPO in the Price Band of Rs 860 to Rs 1032…The Issue closes tomorrow and has already been oversubscribed today

    Interestingly,and I’m sure it’s just a coincidence and not deliberate that the MCX IPO is being handled by Morgan,Citi and Edelweiss…Got it !? ….MCX and MC(E)X !

    So should you Apply ?…You will not be missing it really !…Methinks you can await a secondary market listing and see how the scrip plays out in 2012….the Issue is an Offer for sale and therefore No Proceeds will come into MCX…the IPO Pricing is on the higher side at nearly 5 book and 18 Current Earnings…I don’t see non linear growth in the immediate term,though MCX may just surprise

    The Question is why are you Applying ?…for Listing Gains ? or for Long Term Wealth Creation Prospects ?

    Let’s Examine Both……

    Listing Gains ?

    Rs 3200 is being guaranteed for each Application Form for maximum in Retail….The Grey Market Premium of @ Rs 250-300 indicates Listing Gains of 20% to 30% with Listing in the Rs 1200 to Rs 1300 range   in the second week of March 2012…However such Gains have had a history of evaporating quickly on Listing,indicating pre IPO  and pre listing Grey market manipulation…remember Reliance Power fiasco in Feb/March 008 !?…coincidentally the Months are the same here !…so a question mark exits on sustainability of such Grey Market Gains in the Secondary Market….A Valuation Analysis later will provide some more clarity on this

    With reasonably heavy oversubscription expected,it is assumed the Price fixed will be the upper band Rs 1032……unlikely you will get any decent allotment…for example Retail Investors can Apply for a Minimum of 6 shares and in Multiples of 6 thereafter….therefore the maximum Application they can make is for 192 Shares @ Rs 1032 => Rs 198144….The Issue is an Offer For Sale by existing shareholders,including the Promoter Financial Technologies I Ltd (FTIL) for 6427378 Equity Shares of FV Rs 10….The Actual Offer currently is for 5500772 as 926606 Shares have been just placed with Anchor Investors at Rs 1032 as allowed upto 30% of Shares on Offer in the Qualified Institutional Bodies (QIB) Segment of 50%….Retail Investors Segment has  2162082 shares on Offer…that’s a Subscription of Rs 223 crs @ Rs 1032 in the Issue Size of Rs 663 crs….Expect Ten Times Oversubscription in this segment….that will give you an allotment of just 19 to 20 shares on an application of 192 Shares…A Listing gain of Rs 300 would indicate Total Gains of Rs 6000 on the 20 shares…that’s a 3+% return on Rs 198144 inside a month…the risks here are that the Gains may lower or even a possible Listing Loss on account of Lower than Rs 300 Listing Gains + Poorer Allotment on heavier than Ten Times Subscription read more

    MCX IPO Price Band ~ Rs 860 to Rs 1032 ~ Promoter FTIL’s Promoter Jignesh has a lot of Jigar…but should we make his MCX our Jaan !?

    MCX IPO Price Band ~ Rs 860 to Rs 1032 ~ Promoter FTIL’s Promoter Jignesh has a lot of Jigar…but should we make his MCX our Jaan !?….Grey Market Premium is hovering around  Rs 300

    Issue Opened today,Wednesday,February 22,2012  and closes on Friday,February 24,2012…

    The Town’s gone all over MCX IPO…they would have had a tempered response had they gone all over the 534 Page Red Herring Prospectus filed with SEBI….Real time Book Building Statistics on Day 1 reveal the issue has yet to be fully subscribed…it will be oversubscribed in the next two days,despite Sensex dampening down by over 283 points to 18145

    I’ve actually gone through the whole Prospectus and have jotted down over 20 pages of interesting notings…. Will blog in more detail on MCX later tonight or tomorrow through various interesting angles

    …let’s decide on the basis of Offer for Sale Pricing v/s Valuation and Future Growth Prospects rather than Hyped Sentiment and CRISIL giving a top 5 IPO Grading and  Lead Managers parading a Host of well known Institutions eager to get a slice of the MCX pie !,whether we can pay nearly 5x Book and 18x Earnings and hope to make good gains in MCX because it enjoys virtually market share monopoly,exccellent profit margins,scarcity premium and high growth potential

    …..As at December 31,2011 the Networth was Rs 1074 crs with Equity (FV Rs 10) at Rs 50 crs and Nine Months Earnings were Rs 217 crs giving a Book of  Rs 210.58 and a Non Annualised EPS of @ Rs 43

    ….A successful Listing will make MCX worth more than a Billion Dollars….is it really worth this much !

    ….well MCX is truly MC-Triple X ! to early Pre IPO Banking and Other Institution Investors who subscribed directly  at par FV Rs 10 in MCX in the Years 2004 to 2006 before the subdivision of FV to Rs 5 in 2007

    …Then in 2007 and 2008 the Promoter Financial Technologies (FTIL) sold some part of it’s holdings to several Corporates and Institutions at Rs 525,Rs 577.50  and Rs 559.21  for a FV Rs 5 Share…then on March 14,2011 last year the Shares were again consolidated back to FV Rs 10 and the very next day March 15,2011 a Bonus Issue of 1 : 4 was effected….While FTIL cashed in well in 2007 and 2008 the Investors who purchased from it have not really made any strong gains

    …more on MCX tonight or tommorrow