GauravBlog Logo

A Lion’s eye on the Bulls and Bears

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

Gaurav's Blog


Scooters India up @ Rs 75~BSE IPF Oct 2017 Report farcical?

Scooters India up @ Rs 75~You may have shunned it on reading the Oct 12, 2017 BSE Investor Protection Fund (BSE IPF) Commissioned Report

Why have I questioned it as farcical?

Well…who selects which Company should be covered in such Reports by the BSE IPF ? For in Scooters India the Performance really is secondary at this juncture,even though their Vikram Three Wheelers have got a market share in UP at least where they are manufactured near Lucknow  ~ what is moot is the proposed disinvestment & the assets,including land of 125 acres, that goes with the company  ~ Valuation is essentially ultimately a factor of Earnings &/or Net Assets

The Point is that any Report that the BSE IPF commissions to serve the Investors ,needs to be impactful & serve the purpose for which it has been commissioned

Their Initiative of course deserves applause & support

It is not,of course the job of  the Preparer to give a View to Buy or Hold or Sell the Scrip being commented on & their statement & disclaimer covers this in the report.They have rightly stated that this is not a recommendation & the purpose is to only make available publicly information to the readers in an easy to read format

As an illustration take this October 12,2017 Report on Scooters India covering the June FY 18 Quarter Overview

The Performance was clearly sub par & any reader would not have looked to seriously consider Scooters India in their portfolio…more so as it was also,I believe, in the double margin XT category then on the BSE…in fact if any held it,they may have considered to dispose at the Price levels of Rs 41 then

Then why is it on 5% upper circuits for the past few days & was Rs 75.95 today

Well there are three reasons for this & in my view ,it would have been great if at least the first should have been mentioned in the October 12,2017 report prepared under the Initiative of the BSE IPF

If the Terms of Reference for preparing the Report was merely to present the Quarterly Performance in any easy to read financial format through tables & graphs & a brief commentary on what’s gone up or down then BSE IPF needs to increase the scope so as to include all publicly available significant information to make the report meaningful

As I keep reiterating at my Value vs Price Fundamental Valuation Workshops that the Key to Fundamental Evaluation is RELIABLE,RELEVANT & TIMELY Information & Data & Good to Great Interpretation thereof

So is the Report Reliable? ~ Yes…it’s the company declared & notified Q1 FY 18 performance

So is it Timely? ~ One could debate that it’s not as Q2 FY 18 also had ended and the coverage on Q1 FY 18 was a month after the company notified the Q1 FY 18 results on September 13,2017

So is it Relevant ? ~ No…would have been if the significant relevant news of the Government decision to ready Scooters India for a Strategic Sale would have been at least mentioned

In my humble view,& I have urged the Exchanges to implement this vigorously in the past,Investors would be fantastically served if Companies notifications & clarifications are not just accepted at face value & are followed up diligently on full disclosures & transparency (there are comprehensive Corporate Governance Listing & Company Act stipulations)  & reports commissioned are impactful & there is integrity of purpose & not merely contractual obligations for the sake of it that are showcased & filed away

Agreed,the Volume of Work can be daunting what with the hundreds of Notifications & Clarifications coming in daily to the Exchanges…quite often when I read such,I have strongly felt there were more serious questions that arise that need answers from the companies & which are not forthcoming,inadvertently or deliberate.Therefore the Exchanges need to continuously follow up with the companies raising the right questions for them to answer

Welcome any thoughts on this

Disclaimer : Do not own Scooters India.This post is also not to cast any aspersion on BSE IPF or the Report Preparer. They are doing a much needed Service & their Initiative is welcome…However the Reports need to be more relevant & timely & incisive with all significant facts and impactful news laid out…That’s all…Scooters India Report was merely picked on as an illustration for this observation & should not be viewed as a Recommendation. 




Leave a Comment

Your email address will not be published. Required fields are marked *

On Key

Related Posts

Scroll to Top