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Every SILVERLINE has a Cloud !…from Rs 180 to under Rs 20 after Capital Reduction too!

In December 2007, SILVERLINE relisted at Rs 180 after  Capital Reduction of Rs 9 in every Original share of Face Value Rs 10 and then consolidation of ten shares of reduced FV of Rs 1 each to one share of FV Rs 10…..It was quoted at Rs 13 on the original Face Value of Rs 10 before suspension in 2007 for completing this reduction process…Therefore technically it should have opened at Rs 130,but actually opened higher at Rs 180 as BSE,for reasons best known to it,gave Rs 180 as the base price on relisting,instead of Rs130 that it should have given based on last closing price of Rs 13 before suspension to complete the capital reduction process.

It is now available at below Rs 20 after reduction and consolidation…this means under Rs 2 of original face value of Rs 10 !

After meeting the promoters in December 2007,I had asked clients to await performance promised…but did a quick u turn when I realised this was just not going to happen and sold off lock stock and barrel between Rs 120 and Rs 130…a few clients did miss out on selling but their exposure to SILVERLINE is very minimal in their portfolios. 

What a fall!…once again into oblivion,perhaps?…..Big Noises were made ,by promoters and even the advisors to the restructuring ,of a rebirth and achieving a turnover of over Rs 400 crores for year ending June 30,2008 and a profit of over Rs 60 crores on reduced capital of under Rs 40 crs

Believe it or not advertisments in Economic Times were placed by the Company and the Advisors seperately at the time of relisting claiming this upcoming performance !  

 Silverline has sunk shareholders with silver lightening speed…Token shares in Silverline Animation were given in the ratio 4:100 of original shares held in Silverline Technologies to shareholders when the Animation Division was demerged….Silverline Animation still has to be listed…it was to be in January 2008

This is the same SILVERLINE that was infamously manipulated to rocket past Rs 2000 in 2000. 

How many chances do you want SILVERLINE ?…just one more so that you can commit another breach of faith !

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How is HOV only at Rs 105?

Am I missing something here !

How is HOV Services only at Rs 105 ?

On  June 7,2008 it was on a 20% Upper circuit at Rs 120.45  and on June 10,2008 hit a 10% upper circuit at Rs 132.45 before reacting………All of this movement was on announcement of great results and an offer of US $ 202 million for it’s wholly owned subsidiary HOV Services LLC,and it’s Hong Kong Subsidiary…This offer is being considered and if approved will give HOV Shareholders an option to take cash of US $ 91 million or  Rs 170/share or One share in buyers company for every share held in HOV…They will continue to retain original share in HOV !

Does not this mean you buy HOV at Rs 105 today and get Rs 170 in cash back from them on approval and closure of the sell off of some of their subsidiaries to the promoters controlled company itself ! and get to retain the original share you bought too!?   

 

HOV came out with an issue in September 2006 at Rs 10 + Rs 190 =Rs 200 which was oversubscribed twice in the retail segment and thrice in QIB segment

 

The Company has earned a consolidated Rs 82 crs  before Minority Interest (MI) and Rs 54 crs after MI on Income of Rs 907 crs for ye March 31,2008 showing a strong EPS of Rs 43 (after MI)on Capital of Rs 12.50 crs ( FV Rs 10)

 

 

 

Important Questions to ask

 

  • What is the Valuation of HOV Services LLC and the Hong Kong Subsidiary and have adequate disclosure been made to HOV Shareholders on order book positions etc as the offer has come from a company controlled by the promoters and  some shareholders of HOV in other words is US $ 202 Million too less?

 

  • Full Disclosure should be made of the Names and shareholdings of all promoters and shareholders who are common to both HOV and the Company making the offer…this will reveal as to how much of the US $ 202 million will be returned to them at Rs 170/share of their holding in HOV

 

  • What is the Income and Profit contribution of the Subsidiaries for which offer received in the Consolidated Accounts ?

 

  • If Subsidiaries are sold what will parent HOV Services do as virtually all business is in subsidiaries?
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Exit IFCI at Rs 39 and take a loss says Expert on NDTV Profit!…No Way !

IFCI has dropped from Rs 120 levels late 2007 to below Rs 40 now and an expert on NDTV Profit today advised a holder whose cost is Rs 73 to exit the scrip and take the loss as it will not go anywhere from here! 

I say No way !…Oh It may fall lower from Rs 39…but the potential is very much alive and I see this stock recovering strongly as we roll into 2009 

I first recommended this stock in Dec 2006 at Rs 16 and then several times in early 2007 as it climbed past Rs 30…It was categorised as a SS 3 Scriptech Select Stock (SS 3 stands for Scriptech Sapling reflecting a strong turnaround potential)

Ofcourse IFCI did stand for I F….d the Country of India but then it showed very good prospects in 2006 to turnaround sharply as Value of it’s Investments held in NSE,etc surged sharply..It began showing operating profits and recommenced lending to the corporate sector….The government began the process of finding a suitable strategic Investor for a 26% stake and also invited bids…This process was messed up by the reluctance of the Government to be forthcoming on loan conversions by Institutions and also unwillingness to dilute management control alongwith diluting equity…many serious bidders dropped off and the only bid came from the Sterlite Consortium  and that too was conditional and low at Rs 80…Government refused to accept the bid and IFCI reacted sharply from 120 to Rs 60 …a level which seemed justified on improving fundamentals…It’s now dropped sharply below Rs 40…This is not a price to sell…In fact retain the faith and conviction in IFCI …rebidding process has already begun…early days yet…look for buying some more of IFCI at big declines…say at Rs 25 to Rs 27 levels which it may retreat to if Sensex corrects some more yet from current 13300 levels

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DLF to Buyback its Shares…SEBI should ensure it’s properly done

With share prices,especially of Real Estate Stocks arguably falling  even below the  Dead Sea Level (that’s below Sea Level and therefore sinking or drowning),Investors have seen quicksand erosion of wealth…DLF to shore up confidence has announced a Buy back IntentionThey plan to buy back their shares …this can be through Open Market operations upto a predecided Share price and Fund Size Limit or they can issue a tender invitation to existing shareholders to submit their shares for Buy backat a decided price.

There is no harm in this exercise except for the fact that DLF has just raised funds in 2007 through an IPO at Rs 525 per share…over 88% of the equity is with the promoters,whose holding cost is virtially free, and they need atleast 10% floating stock to remain listed…SEBI should ensure that only cash from operating profits are used to buy back shares and not cash received from premium in the IPO and other placements…this would not be correct as Buy Back of Shares was never and  could not be an object to the issue and it would be unfair to shareholders who supported the Primary Issue at a price of Rs 525 when the market price is below this

DLF can buy back less than 2% of the equity only but the outlay for this could easily be Rs 1500 crs  

Reproducing our take in “SCRIPTECH SCAN” on the DLF issue in June 2007 in the price band of Rs 500 to 550  

“One thing is sure,the promoter and promoter group stake of  87.43 % post equity will be worth Rs 82000 crores or US $ 21 Billion at top end of the price band.Chief Promoter,Mr K P Singh holds just 0.61 % stake in his personal name…that would mean he would be directly worth Rs 575 crs on this stake and indirectly worth much more as most of the promoter stakes are through Investment,Real Esate and Housing Companies…what a fantabulous bonanza,especially if you consider that the last Capital structuring was way back in 1989 when the equity was Rs 3.51 crs and the next change came only in March 2006 lastyear on Conversion of Debentures when equity shot to Rs 37.76 crs which in just two months in May 2006 shot to Rs 302.15 crs on a liberal bonus issue after a split in face value from Rs 10 to Rs 2.   In other words,the promoters have paid really nothing much in their contribution to the equity but they will be worth Rs 82000 crs later this month !   

In other words thay have nothing to lose really…only you have if the price falls in the short term to below Issue Price! “ read more

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Citi never Sleeps !

Citigroup has a new marketing Initiative with the tagline ” Citi Never Sleeps !”…how can it ? it’s busy trying to clear up the mess when it did !…it’s not allowing others to sleep too !…The sub prime loss and other credit loss runs into billions of dollars…the Indian operations showed a profit of just over Rs 1800 crs ,less than half a billion dollars…it’s going to take atleast five years and some radical cleaning up before Citigroup begins to regain some colour…right now it’s blood red and the Bank’s raising billions of dollars too often to just fund growing losses rather than growth 

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Apt Location of A leading Insurance Company’s branch in Mumbai

On the Main Road leading to Chandanwadi,South Mumbai’s Crematorium,is a branch office of one of India’s leading Private Insurance Companies……just a coincidence or deliberately planned location connected to their business !…their marketing line should read ” Cremate and Collect ”  

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