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

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Holding Companies

L & T Finance Holdings recovers to Rs 70 & up 44% from Low inside Two Months

L & T Finance Holdings recovers to Rs 70 & up 44% from Low of Rs 48.30 on February 12,2016….that’s inside Two Months…it also trades in the F & O Segment

It opened 2016 at Rs 65  when Sensex levels were at 27500 +  and closed January 2016 at Rs 58 only to drop sharply below Rs 50 to Rs 48.30 on February 12,2016 and in fact closed February 2016 at Rs 52

Today it’s up to Rs 70 on a day when RBI has dropped Repo Rate to 6.50% ~ cut of 0.25% as expected by the markets & therefore priced in earlier.The Sensex post Noon  & announcement of repo rate cut has corrected over 330 points and is below 25100 currently  but L & T Finance is up 7.4% to Rs 70 !

Have always had a soft corner for L & T Group even when they’re in soft times  & in midst of controversies like just  two years ago in mid  March 2014 when it was introduced for trading in the F & O Segment in mid month just when parent Larsen & Toubro offered a stake through OFS on the Stock Exchange Window at a Floor Price of just Rs 70 on SEBI allowing this route even though they had sold shares in the prior six months.The F & O trading pattern a day or two before showed insiders ( who must have known lower floor price before hand) short selling at Rs 85 levels  & SEBI investigation revealed parties who had never before ever done F & O having indulged in it to make several Crores of Profit

Had been disappointed with L & T Finance Holding’s inability to leverage strongly on the parent L & T Brand in their Finance Foray….This Listed Company should have been over Rs 200 by now inside 5 years  after it’s IPO at Rs 52 in mid 2011….Had recommended it strongly in 2011 & saw it’s price move smartly to Rs 95+ Highs in 2012 & 2013 only to slide back….then had recommended exit as was not enamored with top management who always wore a bored & disinterested look at analyst meets

Then came in Bain Capital in September 2015 to stir the shareholding in the company by picking a preferential post issue  stake of 5.27% through an aggregate of 95.66 m shares & warrants ( to be exercised from six to eighteen months from allotment)  @ Rs 74.This would infuse over Rs 700 crs into the Company.It  also created another Rs 600 cr exposure through a 4.95 % post issue stake by buying 85.2 m shares from parent Larsen & Toubro in market deals at @ Rs 70…the Sensex at the time was @ 26200 levels with the Share Price of L & T Finance Holdings in the Rs 67 to Rs 70 range read more

Essar Oil Delisting is Over or is It !? ~ Glitch or Golmaal !?

Essar Oil Delisting is Over or is It !? ~ Glitch or Golmaal !? 

Yesterday at 3.30 pm was the cut off time for all shares to be tendered in the Essar Oil reverse book building on BSE & NSE

The First criteria for the delisting endeavour to be considered successfull is that  at least a minimum number of 92,569,408 Shares be tendered  in valid bids from the 142489858 Equity Shares being 28.54% of the public shareholding that could

At  Closing 3.30 pm on Monday,December 21,2015  BSE & NSE showed aggregate cumulative bids for 101143045 shares

So then what’s the problem !?

1,98,99,305 shares from 8 bids all at Rs 262.80 are yet showing unconfirmed on the BSE Screen !

Seems there is a Glitch ! or was it a Golmaal !?….if so for what purpose ? …to derail the delisting effort !? If so ,why!?

Seems Ruias of Essar court controversy regularly….either they  follow it or it like a guided missile follows them !  

 The 8 Unconfirmed Bids for Rs 262.80 for 1,98,99,305 shares apparently is from the LIC Holdings of Essar Oil in their various portfolios

If you remove these unconfirmed bids then the valid bids aggregate just 81243740 shares which is short of the 92,569,408 shares requisite

BSE has referred the matter to SEBI for guidance as to whether they should accept the LIC Bids as confirmed and therefore valid….if they say ‘Yes’ and that it was a genuine issue by Stockholding who were unable to upload the bid as confirmed in time by 3.30 pm for LIC then we have the Discovered Price or Exit Price of Rs 262.80 provided this price is accepted by Oil Bidco( Mauritius ) Limited the Acquirer….they can of course offer an even higher price than this to garner more shares

Essar Oil has got to be extremely anxious for delisting….in 2014 I had raised a stink when they set a floor price of just Rs 108….SEBI had to stop the effort…..however they allowed it this time around  with a higher floor price of Rs 146.05….in my view they should not have until the Rosneft Deal price for acquiring 49% stake in Essar Oil which is being negotiated was announced

Essar Oil is anxious that the delisting takes place before the Rosneft deal as otherwise that would have triggered of an Open Offer by Rosneft and would have disturbed the Equity Stake Holdings by Essar Oil Promoters & Rosneft leaving Essar Oil Promoters vulnerable

Whatever ! ~ even if this delisting is allowed with LIC’s bid being accepted at Rs 262.80 the shareholders who bid below this price or the exit price to be announced by Oil Bidco  will also get the Discovered  Price which will now be established at a minimum of Rs 262.80. Oil Bidco can accept this Price or announce a higher one as the Exit Price .It of course can reject it and the delisting would then not have succeeded read more

Essar Oil surges to Rs 200+ on SEBI Order for Delisting~5 Questions for SEBI!

Essar Oil surges to Rs 200+ on SEBI Order for Delisting ~ 5 Questions for SEBI !

Essar Oil again seems to be getting away !

SEBI should have shown some muscle and teeth and independence in ordering  either :

  1.  Compulsory Delisting of Essar Oil for the all the continuing  Corporate Governance Issues it keeps raking up heedless to minority shareholders concerns and even other warnings! or
  2. Delisting only post announcement of Price at which Russia’s Rosneft is negotiating under an understanding written agreement to acquire a 49% stake in Essar Oil ~ what’s the hurry by Essar Group to delist Essar Oil now before they announce Rosneft Deal price !

Instead Essar Oil Promoter Company,Essar Energy has received what it sought from SEBI …a relaxtion on timelines of two months from the date of  November 6,2015 the SEBI Order  for the voluntary delisting and  Five days instead of two days for the despatch of documents  to shareholders and permission to delist

Essar Energy ,who filed the SEBI Application for Relaxtion in timelines,of course has agreed ( like it had any other choice !) to :

  1. Revise the Floor Price in the Delisting upward from what it had declared in 2014
  2. Pay the difference subsequently ,if any, to shareholders who tender their shares in the delisting offer and which are accepted, between the Delisting Price & the Price negotiated with Rosneft for taking over 49% of the Equity
Essar Group states there is no agreement yet that has been arrived at with Rosneft on the Price and in fact had told SEBI they were willing to pay the above difference if the Rosneft Deal took place within a year !…what if they deliberately delayed it over a year !?…thus SEBI has rightly said no timeline for this should be there Just further reconfirms the manipulating mindset of the Essar Oil Promoters in depriving minority shareholders of a fair price for delisting ~ they are also grappling more serious accusations in the 2G Telecom Scam that’s with the CBI

If you recall Essar  wanted to delist at a floor price of just Rs 108 in 2014,even before they announced the Rosneft Deal being negotiated ! ~ I had raised serious corporate governance questions then and was quoted in the media for these ….fortunately SEBI put the Essar Oil delisting on hold at floor price of Rs 108

But now I have 5 questions for Prashant Saran of SEBI who has signed this Seven Page Order and I’ve re-read it  !

  1. Why do you not proactively consider Compulsory Delisting for Essar Oil for the ever growing Corporate Governance Issues so as to invoke a 10 year ban on it’s Promoters from accessing Capital Markets again?
  2. Why allow the Voluntary Delisting before the several complaints received  by you as cited in the SEBI Order have been resolved ~ particularly the Accounting & Non Disclosure in Accounts Complaints which you are referring to ICAI for investigation ?   
  3. Why allow the Voluntary Delisting before Rosneft Price is announced !?
  4. SEBI Order is silent on this ~ What is the status of  those Minority Shareholders who decide not to participate in the Delisting but wish to decide on this later for Essar Group to buy their shares out only after Rosneft Deal Price is announced  !?
  5. Don’t you think in interest of Investor Awareness &  Protection it should be made mandatory for SEBI to put up on it’s website the names of all listed companies where investigations are pending proactively or reactively on complaints or for any other reasons along with the details of the matters being investigated ?….this has been a long standing view of mine for several years as it will greatly help in managing investing risks before any SEBI Order is actually made

No 4 above is important now that SEBI has allowed the delisting  ~ The Order is explicit in that Essar Energy will be responsible to pay any difference between delisting price and Rosneft fixed price within a specified time of two months of public announcement  to only those shareholders who have tendered  their shares in the delisting and which have been accepted ! ~ what about other shareholders who have not participated in the delisting or whose shares have not been accepted in the offer  !? ~ they too should get the full Rosneft Price if higher than the delisting price ! ~ this cannot be assumed and needs to be explicit in the Order ! 

I’m sure this is an oversight by SEBI !

Whatever !….my view remains on what SEBI should have done as expressed in the two options at the beginning of this blogpost !

I have been vocal on the corporate governance issues in the  Essar Oil Delisting Endeavour from 2014 and have been quoted in mainstream media for this…..read these past four  blogposts to get a sense of the attempt to short circuit the interests of minority shareholders

Essar Oil kissing Rs 200 ! ~ Exposes Delisting Duplicity !

Monday, July 20th, 2015 

Essar Oil on Fire at Rs 167 after delisting natak last year at Rs 108

Monday, July 6th, 2015 

Covered by Outlook Business for frowning on Essar Oil Delisting read more

Wow! A Full House NSE Training Fundamental Workshop !

Wow! A Full House NSE Training Fundamental Workshop yesterday !

Seems to get bigger & better every time !

Did the first one on August 8,2015 and had blogged on it  as linked below

Interesting Interaction at the NSE Equity Fundamental Training Workshop

Sunday, August 16th, 2015

Did this one too on “Interpretation of Financial Statements for Stock Analysis” under NSE’s Rapid Series at their NSE BKC Complex

@ 30 Participants,both genders aged 22 to 58 from leading Broking Firms,Corporates,Banks and even Individuals who had come on dot and stayed till 8 pm ! expecting to learn how to read financial statements and  market dynamics to assess risks and opportunities in Indian Equities

Common Question right from Manish Shah,who introduced himself  to me in the lift going up to the Class ” How are the Markets Looking “? ~ “Where will the Sensex & Nifty head in the short term”?

Had taken a Bull along ! really !…a smaller version of the Wall Street one….told the class I love four animals…Elephants (Lord Ganesha),Lions (My Zodiac Sign),Tortoise(Good Luck & of course Bulls (I’m always one!)….and you’ll always find them on my office desk !…in fact four bulls of various sizes !…and clients know my market view on simply seeing how the bulls are placed !…if facing them straight up  (↑)  as they sit across me,I’m very bullish…if slanted ( ⁄ )towards them,I’m bullish…slant inclination reveals how much !….if a horizontal view (↔ ) then indicates market will remain flat to rangebound and if the bulls face me vertically (↓ ) I’m bearish !….and slant facing me shows intensity of being bearish !

That got a few knowing laughs from the participants and set off the mood for the Workshop with humour being interspersed right through

Interacted on the Sensex Dynamics right from base year 1978 and in the last 20 years from November 1,1995 to October 30,2015 when despite nearly half of the @ 4850 trading days saw the Sensex close negatively the Sensex ran up over 650% !…but is that enough!…..the Opportunities & Threats that were clearly visible during the years right from 1991 when Modern Reforms set in to 2001 when Markets had bottomed  out on the ICE Age Melting to the Sharp drop in Interest rates from 14% to 7% in and around 2004 to post Lehman 2008 levels of 8000 in October 2008 and March 2009….showed them from current Sensex of 26657 how to assess fundamentally where we could be heading and the risks associated….discussed Passive Index Investing vs Active Investing and therefore the need for Fundamental Analysis and therefore the need to Interpret Financials & therefore the need to assess Value vs Price  & therefore this Workshop  ! read more

Cafe Coffee Anyone ! ? ~ Successful IPO at Rs 328 ~ Awaiting Listing

I’m sure most of us have had a Coffee at one of the Chain Outlets of Cafe Coffee Day (CCD)

It’s parent Company Coffee Day Enterprises Ltd (CDEL) just concluded a successful IPO and fixed the IPO price at the upper band of Rs 328

Most had recommended to avoid the Issue as the Pricing was very High

I  hold a contrary opinion and had recommended the Issue but not as a Stag as there does exist the risk of listing gains not being available

Here are some relevant extracts from the IPO note prepared by us


Subscribe but not as a Stag ~You Need Not Sit Out !

Sitting Outside a Cafe Coffee Day Outlet

Further Lowering of Debt will significantly transform the Financials Dynamics ~ Low Floating Stock ~ It’s Not an Offer For Sale ~ 16.73 % Equity Stake in listed Mindtree worth @ Rs 2000 crs currently
Immediate Risk : Listing Gains may not be available as IPO Pricing is perceived to be on the higher side

Five Positives in our View

1. Huge Brand Recall & therefore Significant Brand Value ~ CDEL,through its subsidiary, operates the popular Cafe Coffee Day Chain of 1538 stores across 219 cities with a 46% Market Share.It has been recognised as the second best Indian Brand.This Intangible Asset is not in the Books but clearly is in the Premium sought in the IPO Pricing of Rs 316 to Rs 328

2. CDEL has a 16.73 % (10.41 % directly and 6.32% through 88.97% owned subsidiary Coffee Day Trading Ltd) Non Promoter Equity Stake in the listed Software Company Mindtree which is worth @ Rs 2000 crs based on Share Price of Mindtree ~ if monetised it will make CDEL free of net debt instantly and add Rs 250 crs + to bottomline on interest saved=> that’s an incremental EPS of Rs 12 itself !.CDEL had a net consolidated debt of Rs 2864 crs at December 31,2014. Mindtree quoted @ Rs 1400 (FV Rs 10) with a Market Cap @ Rs 12000 crs has just declared a very good Q 2 FY 16 with a Networth as on September 30,2015 of Rs 2243 crs and Book of Rs 267 and Annualised EPS of Rs 70 giving a PBV & PE of 5.25 and 20 respectively.It has also declared a 40% Interim Dividend. Share Price of Mindtree has gained @ 20% thus far in 2015 and holds potential for more

3. The CDEL IPO of Rs 1150 crs is a full fresh issue of Equity Shares and there is no offer of sale from Promoters and other Shareholders.Have a look below at the Pedigree of Non Promoter Shareholders and their pre IPO holdings and cost in CDEL

4. The IPO of Rs 1150 crs has already attracted 17 well known Anchor Investors who have committed Rs 334 crs at Rs 322

5. The IPO comprises just over 17% of post IPO Equity Capital of Rs 206 crs and implies limited floating stock read more

L&T Fin up 8% at Rs 72 on Warburg Pincus eyeing 25% Stake~Great if true!

L & T Finance surges up over 8% & past Rs 72 today after Economic Times reported  of Warburg Pincus eyeing a 25% Stake in it !

Great if true!…after all L & T Finance Management has been pretty lethargic ,I daresay, in skillfully leveraging the Larsen & Toubro Brand to scale greater heights in Operations that would have been reflected in the company’s Share Price soaring and sustaining past Rs 100 already instead of just flattering to deceive.Interaction by my Team with the Top Management at their Analyst Meets did not elicit great confidence ,optimism and hope

If Warburg Pincus does come in with a sizeable and influencing stake  one can expect more dynamism and rising expectation that they would do wonders with L & T Finance that they did in Capital First that they acquired from the Biyani Group

Warburg Pincus had acquired the listed Future Capital Holdings from the Biyani Group at Rs 162 in late 2012 and renamed it Capital First.Inside just over two and a half years the Share Price of Capital First  has soared to Rs 411 ,that’s over 150% from Rs 162.It recorded a high of Rs 464 in April 2015

I had blogged twice on this in November & December 2012

FCH now Capital First zooms to Rs 225 + with Warburg Pincus Group as new controlling shareholders at Rs 162 and Biyani out !

Thursday, November 29th, 2012Future Capital Holdings is now Capital First and it zooms to Rs 190 today as Warburg Pincus & Group acquire it from the Biyani Group and other Shareholders at Rs 162! Monday, November 19th, 2012

L & T Finance has issued a clarification sought by the Exchanges that in my experienced view reads like there is some definitive dialogue happening on this front taking place     

L & T Finance also quotes in the Derivatives Segment on NSE under L&TFH with a Contract Size of 4000 shares.July Calls for a strike Price of Rs 72.50 last traded at Rs 2.65.

Disclaimer : My Clients & I have an interest in L & T Finance 

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