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There’s been a strange situation at the FIPB (Foreign Investment Promotion Board). In the recent  meeting in April , they approved a few FDI proposals (where approval is required). But many seemingly okay proposals have been rejected or deferred. Sharekhan – a leading brokerage in India – has been on the block and it seems, has a potential valuation of over Rs. 3,000 cr. This has been acquired by its managers, along with other institutions, and now foreign financial companies were looking to buy in. Specifically, Baring PE was looking to buy Sharekhan’s stake, according to VC Circle; but the FIPB decided to reject this transaction. This is very strange, because it’s not like Sharekhan was some kind of prized asset of the country that should be protected from foreigners. If it was something else like “valuation was too low” then my take is that the government shouldn’t be bothered – a company like IDFC is well versed enough to understand what price it can sell at.… (Read On…)

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A tweet by @_devesh_ brought this genius tidbit yesterday, from the Q4 2015 results of Globus Spirits :   It says: As at March 31, 2015, Fixed Assets include intangible assets aggregating to Rs. 2164.95 lacks (March 31, 2014 – Rs. 2885 lacs) under the head “Knowhow and New Brand Development” representing intangibles internally generated by the Company through expenditure on advertisement and promotional expenses . Such recognition of expenses as an intangible assets is not in accordance with Accounting Standard (AS 26) “Intangible Assets”. Had the Company complied with requirements of AS-26, Fixed Assets as at March 31, 2015 would have been lower by Rs. 2,164.95 Lacs (March 31, 2014 – Rs. 2,886.60 lacs) , the Depreciation and amortisation expenses would have been lower by Rs. 721.65 Lacs, Net Profit for the year would have resulted into Net Loss after taxes of Rs. 742.45 lacs in case of consolidated financial results and Rs. … (Read On…)

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Nifty results continue to be HORRIBLE. I can’t even begin to tell you how bad the situation is, but see this today. Three Nifty companies announced results. And they were like this: BHEL saw consolidated profits fall 59% Tata Motors saw consolidated profits fall by 56% Tech Mahindra saw consolidated profits fall by 39% This is just serious suckage. At this point, this is simply the worst quarter I’ve seen in recent times with respect to results and profit growth. 38 Nifty companies have announced results and this time, they’ve dropped aggregate profits by as much as 55%. If you remove that big one timer by Sterlite (Vedanta), you still have a huge 21.1% drop in aggregate profits. This is not a scorecard you want to see from an economy that has quoted at 20 P/E for the last year or so. Even RBI is starting to say the worst is yet to come .… (Read On…)

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State Bank of India announced results today and they started off well, but ended badly. First, their profits were up 23%, to 3700 cr. from 3071 cr. The rest of this content is only available to premium members. Register for a premium membership today ! Apart from this content you will get our proprietary research and weekly newsletter too! Already a subscriber? Log in now !… (Read On…)

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We’ve written about IMPS – India’s Instant Payment Service – in the past. In 2011, I made an “instant” payment to my friend Shyam. I hit send on my machine and it was on his netbanking immediately – and this is between two different banks! IMPS has changed substantially. First, more banks offer it now. There are 84 banks that offer it , versus a handful in 2011. Second, the concept has expanded. From the basic structure of using a “Mobile Identifier” or MMID, which you had to get from your bank, you can now use IMPS to transfer to any other bank account, using the IFSC Code and Account number . This is brilliant. I’ve been paying my household help using this concept. The money is transferred instantly, so they can see the money in the account immediately – if they are at an ATM, they can get the balance right there and then.… (Read On…)

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After a great response to our post on the Nifty P/E and EPS growth yesterday , we’ve been requested for a similar post on the CNX 500. This is a larger index so it’s more “broad” as a representation. And it’s even worse on performance. (Remember, the Nifty EPS Growth was 2.77%) The P/E ratio of the CNX 500 is at 24.3. This is very close to all time highs. And the EPS growth is an abysmal 1.64%. The only good thing is that was about this bad last year around March, after which it moved back up substantially till December. Post Jan 2015, as the results of the December quarter trickled in, EPS growth has been falling and now, it’s just looking to fall below zero again. For the CNX 500, the valuation exercise is futile to trade – firstly, there isn’t a tradeable instrument on the CNX 500, and then, you have ZERO evidence that high valuations and low EPS growth are reasons to short.… (Read On…)

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This is a post sent to Capital Mind Premium subscribers, a result analysis of a portfolio company.

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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 in terms of profit. … (Read On…)

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