TAP GAP….. Equity Poser 5/11……Respond by May 10,2011
Hip Hip Hip Hurrah ! Winner of the gauravblog hamper announced this Wednesday early morning,May 11,2011 ……thanks to quite a few of you for some very lively responses…most were skeptical …..but I’m going to give the gauravblog hamper to the most passionate,the most positive,the most optimistic response….you can view this as a contrarion call by me !……not to buy into Anil Ambani Group but to award the hamper to one who is in the minority but strongly defends his conviction that Anil Ambani Group of Companies,with Anil at the helm or not,will not only survive but will be great wealth creators….. Praveen Vishnu Shamain wins the gauravblog hamper for this Equity Poser…I was particularly impressed with his take that Anil Ambani Group of Companies may be takeover targets and will thus not only survive but create great wealth….. PVS please email me your postal address and telephone nos at [email protected] …well done
My own personal view is that Anil Ambani Group will see some more harrowing times before any likelihood of getting better….Value Investors will not invest in his group….too many Corporate Governance Issues and Account manipulations…..but Aggressive and Contrarion Investors may just find this to be a big,albeit high risk opportunity…increasingly so if the prices decline even further…..In fact since I posed this Poser end April,across all Anil Ambani Companies there has been a further decline in the shre price of 10% to 15% inside just over ten days…..There is no clear and decisive second face of the Group after Anil Ambani…..and with so many top heads already rolling in the 2G scam,there is a growing call for even Anil Ambani’s scalp…that will spell disaster for his group and his companies will register even further lows…..he is already facing huge problems in raising Capital,inability to reduce debt significantly in Reliance Communications as he is finding it difficult to monetise the tower assets at a good value (GTL went back on an agreed deal in June 2010 without assigning any reason…it would have reduced RCom debt by Rs 18000 crs) ,sticking to project implementation schedules,retaining or attracting top people to work for him,government animosity towards him for his aggressive anti government tirade through the media for favouring his brother’s group in the Family tussle between the two ,probably desperate times calling for desperate measures ……and Anil Ambani will not be able to get away on the 2 G Scam with a mutually agreed Consent Terms with the Government,like he did with market regulator SEBI in a Corporate Governance and Manipulation of Accounts Issue,by agreeing to a Consent order and paying up the stipulated fine of Rs 50 crs……it is Ironically Reliance Power, which has jammed shareholders badly, remains in the top 50 market caps List at Rank 43 today with a market cap of Rs 32525 crs despite being available at Rs 116,a shade above its’s 52 week low of Rs 110 ….Reliance Infra and Reliance Communications are available at well below Book Value and are quoted at Rs 596 and Rs 90 with market caps of Rs 15950 crs and Rs 18700 crs respectively…near their 52 week lows…Reliance Capital is at Rs 519 with a market cap of Rs 12818 crs and commands the best relative valuation among Anil Ambani Group of Companies
Many would like to see Anil Ambani battered and bruised after for his Reliance Power IPO seduced Investors to invest at obscene premiums all aided by media hype and unscrupulous leading merchant bankers who generated huge hype in January and Februray 2008 at the time of the IPO….criminal really….serves Anil Ambani right is the cry out there…..However the Group has companies which are engaged in scale operations and are even market leaders in many segments…it is therefore unlikely that when there is ‘Blood on the Street’ it would mean they Died…..Maybe Anil’s only practical hope to see his Companies grow back strong and regain Shareholder and Investor support will be to surrender them to another Business Group…If he wants to be the Phoenix that rises from the Ashes…being extreme here really…..he needs to come clean with all stakeholders….humbly apologise from the heart…and begin a process in earnest to undo the harm caused…then,believe me the same shareholders of his companies who are low on even Hope these days will hold his hand again and you will witness a contrarion call coming good….he cannot live in an Ivory Tower with shareholders as his subjects getting more and more poorer below !…a tongue in cheek reference to his plans to build an even grander house in Bandra,a western suburb of Mumbai,for his Nuclear Family than build by his Brother in South Mumbai
Would I invest in the Anil Ambani Group now ?….Not yet….Maybe later….Maybe….his troubles are far from over…2011 and 2012 will be defining years as problems will play out strongly and his companies will seek further Lows….I also hold a reserved and well founded negative opinion on some of his top management…his inner coterie for years now….they are causing more harm than good…no matter how much the Media glorify them….the same Media will not hesitate to villify them in the Future when the Going gets really really really Tough for this Group….Anil Ambani needs to cleanse his Group of such a coterie
Cheers and well done again to PVS for a avery passionate and optimistic response…I’m an Optimist myself…so I’m soft on those who are Optimistic themselves and look at the positives….I find myself increasingly drawn towards lending a hand to Anil Ambani to lift him and his companies back up !…even God gives a second chance !
Winning Response wins the gauravblog hamper….Five Hampers have already been won in earlier Equity Posers and shall be delivered to the winners before May 10,2011…you can check out the Winners Scroll
Will Anil Ambani Group of Companies not only survive but also create Wealth for you in the next three to five years ?
Some of his group companies are traded now as below
Trading today at Rs
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