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?

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

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

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 

Lok Housing at Rs 44!…down from Rs 400 in just six months!

Lok Housing has an EGM today to pass a resolution to raise funds upto US $ 200 million or Rs 840 crs…..If you had a look at the financials you’ll sell your wife and buy the shares!…PAT of Rs 113 crs on an Equity of just under Rs 43 crs for FY 08 March ending and an EPS of just over Rs 26…that’s a PE of under 2!…Interest burden too has dropped from Rs 52 crs in FY 07 to just above Rs 13 crores in FY 08

What’s happening ? With such a performance why has Lok Housing dropped from Rs 400 in Jan this year to Rs 44 today…is there a significant legal issue, inflated asset or liability non provision we don’t know about ? 

Amusingly the promoters have allotted themselves 35 lakh convertible warrants on May 22,2008 with future conversion of each warrant into one share at Rs 354 !…obviously if promoters exercise this conversion option…the conversion is not compulsory

There were strong rumours of a major group of shareholders dumping the stock…why?