Category: Excerpts

Hat Tip: Divyeshbhai

Source: Samir Arora

The important thing to first understand is what constitutes a good management – I think this is one subject I believe is grossly misunderstood.

I think in most cases (not all), it is nothing more than a perception which changes with the Stock price.

Most analysts link good managements to the stock prices of their companies – I am talking this from my experience of last many years.

What I experienced is that when these stocks were trading at low valuations & low prices, there was not much interest of analysts and brokerages & these were brushed off as companies with management issues.

If everything else in the company looks OK & the management does not talk to the analyst or conduct Investor or Analyst concalls, such managements were labelled as being Investor unfriendly.

When the price moves up 5 to 10X from those levels, you start seeing analyst reports & suddenly the management quality would start looking good.

For me, a good management is one who is focussed on the business – Has skin in the game aka high promoters stake – allocates capital diligently – shares the wealth with Investors in the form of share buybacks & dividends.

Even companies which may not pay dividends (because of high Dividend distribution tax) but uses the earnings for regular Capex & scaling up a business without Equity dilutions. This too enhances shareholders value.

I think not making impressive investor presentations or not conducting Investor Meets and concalls are factors which are unimportant for judging a management as far as I am concerned.

–said Ashish Chugh

Expectation of loan waiver has prompted farmers across states to stop repayment of money owed to financial institutions. This adds pressure on banks that are already grappling with a record pile of bad corporate debt.

Several bankers TOI spoke to confirmed that there was a rising trend of farmers refusing to clear dues, an issue that was also flagged at a meeting on Monday convened by the finance ministry. The total farm loans are estimated at a little under Rs 10 lakh crore.

While it is early to quantify the extent of loan delinquency by farmers, bankers say that in some states, the default rate has increased by up to 50% in recent months. “Farmers are emptying their bank accounts so that we cannot deduct the payment due from them,” the head of a large bank told TOI.

–from TOI