Interviewed at ET Now: On Splitting Airtel, The Upgrade of Persistent Systems and The Bank EPS Push

I was interviewed on ET Now Today, and here are the snippets. Plus, clarifications

Splitting Airtel’s business a good idea, but may hurt Indian shareholders

I believe that splitting Airtel’s business into the Indian and African units is a good idea, but it’s unlikely to happen because of the debt overhang.

Therefore, it would be seen that will the lenders agree on creating a new entity and pass on most of the debt to it. That would be difficult to push. Even if the telecom operator engineers a split, it might have to end up taking a lot more debt on the Indian entity and reduce the debt on the African entity. That would not be good for Indian shareholders as the debt was essentially taken to buy the African business.

In that context, I do not see a possibility of this coming in soon. If such a scenario comes, it will have a one-time hit […]

By |May 20th, 2015|Categories: Banks, Bharti, Video|Tags: , , |6 Comments

Infy: The Impact of Results on the Stock In The Past

As we approach Infy Results, we see that markets have been relatively benign about the company in recent times. While the stock shot up over 5% in Jan (after Dec qtr results) it is comparatively little compared to earlier times, where a 5% move was a bit on the lower end of the spectrum.

 

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Today, for the first time in a long time:

  • Infy isn’t the first Big IT company to announce results: we have seen TCS results (30% Year on Year down on profits), HCL Tech (YoY profits up 3.6%), Wipro (YoY profits up 2%)
  • Infy is releasing results mid-day instead of at 9 AM. So markets will not really move so much the previous day.

The stock is on a medium term downtrend, at a support level of the […]

By |April 24th, 2015|Categories: Infosys|Tags: |1 Comment

Who Bought Those SunPharma Shares?

After that insane 20,000 cr. volume in Sun Pharma yesterday as Daiichi sold a whopping Rs. 20,000 cr.  worth shares, who really bought them?

Turns out the buyers weren’t named Dilip Shanghvi (the promoter of Sun Pharma). While we don’t know the identity of all other buyers, we do know from NSE’s Bulk Deals reporting that three big investors bought into Daiichi’s selling. Here they are:

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By |April 22nd, 2015|Categories: Stocks|Tags: |10 Comments

Is The TCS Bonus a Way To Show Their Severance Payouts? Slowest Headcount Growth in a While, Stock Falls 4% on Falling Revenue Growth

We first thought the TCS results were okay. They made a profit of 5773 cr., they said, which looked okay over the previous year’s number of 5358 cr. (same quarter last year). But here’s the detail:

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The little * there is: * Figures are excluding One-time Special Employee Reward of Rs. 2,628 crore in Q4.

TCS has paid out Rs. 2628 cr. as a special bonus for the 10th anniversary of its listing. This means a week’s salary for each year served. Which will obviously help the longer term employees (and senior folks) a lot more than others.

Why should a company pay employees a bonus for the 10th anniversary of a listing? If it was symbolic, they should have declared a special dividend, one thinks. And ooh, there is no “special” […]

By |April 17th, 2015|Categories: TCS|8 Comments

J&K Bank: A Combination of Bad Luck and NPAs, Talks Big on MetLife. Back to Public Sector Valuations?

This is a very interesting story on J&K Bank. The bank’s been in the news for the wrong reasons recently: for one, it saw a big fraud that hurt its Dec quarter results. Now it’s been hurt because of the floods in J&K, which will definitely hurt its NPA situation after the major floods last year too.

J&K Bank’s NPAs have gone up tremendously in the Dec quarter, adding over 460 cr. to Gross NPAs, taking them to 2658 cr. on total advances of Rs. 46,000 cr. This is up tremendously from 725 cr. in the same quarter last year.

Much of these NPAs are as a result of floods, the situation in REI Agro and earlier, in HDIL (both of which turned NPA through HDIL has turned back into a standard account), and added to the NPAs were the losses due to the fraud.

This time we have fresh floods in Kashmir, which hopefully will not get serious. The J&K […]

By |April 3rd, 2015|Categories: Banks, Stocks|Tags: |6 Comments

March Shows Returns of -4.6%, 10-year Returns Will Fall Unless Sensex Goes Up 67%

The Nifty returns for March were lousy, giving us a -4.6% month at the end of the financial year:

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This takes the year’s return to just +2.5%, but at least we’re positive. March’s median returns have been horrible at -1.3%, and April and May too have seen lousy returns in the recent past.

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By |April 2nd, 2015|Categories: Stocks|Tags: , , |1 Comment

On CNBC TV18: Of Jindal Steel, Bank Headwinds and That Markets Haven’t Corrected Enough

I was on CNBC TV-18 today and spoke about Jindal Steel, Banks and the overall situation in the market.

 

 

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By |March 23rd, 2015|Categories: Banks, Stocks, Video|Tags: , |6 Comments

Government Cancels JSPL and Balco Coal Mine Allocations, These Stocks Look Lousy on the Charts

The coal mine situation has become intense again. The Coal Secretary, Anil Swarup tweeted on Friday night:

This changes  a lot of things. Gare Palma 4 (/2 and /3) and Tara were won by Jindal Steel and Power, and Gare Palma 4/1 was by Balco: (Livemint)

Balco had submitted a closing bid of Rs.1,585 per tonne for the Gare Palma 4/1 block while Jindal Power had submitted a closing bid of Rs.108 per tonne for the Gare Palma 4/2 and 4/3 blocks and Rs.126 per tonne for the Tara coal block.

The speculation is that these blocks were won through cartelization.

And this is how these stocks are, technically – weak, and likely to hit near term lows. Here’s Jindal Steel for you:

image[…]

By |March 22nd, 2015|Categories: Stocks|Tags: , , |4 Comments

Suckered: NTPC’s Awesome Bonus Debenture and How The Government Gets 9,700 crores Without Selling a Single Share

NTPC has decided to graciously give “Bonus Debentures” to all its shareholders. If you own a share, you get a debenture free. (It’s not “free” really, because nothing ever is, but we’ll get to that).

The concept is that you get a debenture for no further payment. Why? Because you see, the government has a bloody deficit.

What? What’s the connection between the government’s deficit and NTPC’s bonus debentures? Deepak, are you getting senile, old man?

I object to being called senile in my old age. I was senile when I was much younger. But we digress.

NTPC’s Doing What?

From the press release,

  • NTPC has truckloads of cash and “free reserves”. 72,418 cr. worth of free reserves – basically, accumulated profits over many years.
  • They have 824 cr. shares out there.
  • For each share, they will issue one debenture (for no payment required) to the shareholder.
  • Each debenture has a face value of Rs. 12.50.
  • That means debentures worth Rs. 10,307 cr. will be issued.
  • NTPC will redeem – […]
By |March 13th, 2015|Categories: Stocks, Suckered|Tags: |19 Comments

On CNBC-TV18: Discussing Suzlon and Bharat Forge with Anuj Singhal and Ekta Batra

I was on CNBC TV18 two days ago, talking about Suzlon and Bharat Forge and so on:

Some of the things I’ll add more on:

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By |February 20th, 2015|Categories: Stocks, Video|Tags: , , |Comments Off on On CNBC-TV18: Discussing Suzlon and Bharat Forge with Anuj Singhal and Ekta Batra

Introducing The Modi Index by Capital Mind

Ever since Narendra Modi was appointed the PM candidate by the BJP, speculation has been rife that he would come in and change India dramatically. What he has done till now might be debated, but it’s a given that his arrival, and the sweep of the BJP of the elections, has charged the stock markets. With the Nifty nearly touching 9,000, up over 37% since Jan 1, 2014, it’s almost like a Midas touch.

But what if we evaluated his first speech and found the sectors he really liked, and chose stocks in them to buy? Our analysis threw up four sectors:

  • Power
  • Railways
  • Capital Goods
  • Tourism

We chose, in hindsight, of course, three stocks in each sector. For Power, we chose PowerGrid, NTPC and Reliance Infra.

For Capital Goods, L&T, Bharat Forge and BHEL.

For Railways, BEML, Texmaco Rail, and Container Corporation.

For Tourism, Cox and Kings, Jet Airways and Indian Hotels.  (We thought about Spicejet, but would you really think a Spicejet would be a Modi […]

By |February 18th, 2015|Categories: DataViz, Stocks|Tags: |3 Comments

Q3 Results: Nifty Companies Y-on-Y Profits Decline; Quarterly Performance Shabbiest in FY 2015

It’s that the time of the year again where companies release their Q3 results. Capital Mind has been following the announcements very closely and we have been tweeting some of the more interesting ones via our Twitter handle @CapitalMind_In (Follow us now for the wonderful tweets and insights). We have also been periodically sending out detailed reports to our Premium Subscribers, intimating them of the results of companies as and when they announce, along with a sector-wise breakdown of performance via Revenue Growths, Profits Growth and EPS growth.

Back to the focus of this post. It is mid-February already. The Budget is less than 2 weeks away and everyone, from the noted economist to your resident retiree armed with a newspaper and tons of well-researched opinions, is keeping their eyes and ears open, waiting with bated breath to see what changes, if any, will be ushered in this time. Taking the equity markets as a microcosm of the economy, we can […]

By |February 17th, 2015|Categories: Stocks|Tags: , |Comments Off on Q3 Results: Nifty Companies Y-on-Y Profits Decline; Quarterly Performance Shabbiest in FY 2015

60 cr. Fraud at J&K Bank Takes it Down

In the J&K Bank Results yesterday there was this little tiny footnote:

12. During the quarter ended December 2014, fraudulent transactions on account of discounting of fake LC’s were detected at two business units of the bank. Amount of Rs. 60.25 crores outstanding against such fake LC’s has been classified under loss category and fully provided for.

The results showed a massive increase in provisions to 220 cr. which is Rs. 60 cr. more than the last quarter (provisioned for the fraud above). Which is strange because it best the question: they haven’t seen any further NPAs in the quarter?

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The fraud, according to Kashmir monitor, is in two places: A branch in Ghaziabad and Rajender Place in Delhi.

As per reports the entire Delhi zone is under scanner for purchasing fake letters of credit (LC’s) to the tune of whopping Rs 150 crores. […]

By |February 10th, 2015|Categories: Banks, Frauds, Stocks|Tags: |2 Comments

Coal India Offer Rescued by LIC, Just Like The Old Times

We mentioned in the Coal India OFS analysis that we didn’t see the demand for the offer as very much and the issue might need to be rescued.

This government, like earlier ones, might be calling certain companies to come in before 3:30, such as those named Life Insurance Corporation of India. New emperor, same clothes? This day will tell.

And it turns out that fated call did happen. From Economic Times:

Life Insurance Corporation and other domestic institutions bailed out the government’s biggest disinvestment offering by picking up a substantial chunk of Coal India’s shares in the offer for sale (OFS) that concluded on Friday. The insurer is believed to have invested more than Rs 10,000 crore, helping the new government’s first major disinvestment offering sail past the finish line.

They managed to sell 22,000 cr. worth shares. 10,000 cr. out of 22,000 cr. to LIC alone? That’s a lot. And it was a major chunk of what Insurers bought:

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By |February 2nd, 2015|Categories: Stocks|Tags: , , |8 Comments