Category: Stock

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Stock

The stock that went up 200% in two months

Consider the stock price of this stock on NSE:

27 June 2012:    10.45

27 July 2012:      20.1

27 Aug 2012:      30.25

And the stock is (sound of drumroll): Ashapura Minechem

Now here is an interesting aspect to this whole jacking up of prices.

In these two months, the value of the total delivered shares on NSE is around 9.92 Crores.Now assuming BSE has the same volumes, the value of the delivered quantity on both the exchanges is approximately 20 Crores.

Now the market cap of the company has increased by 160 Crores in the interim.

So an investment of 20 Crores (actually a fraction of that much due to circular trading) can increase the market cap of your company by 160 Crores.

No wonder John Bogle said “We live in a world in which it is far easier to hype the price of a company’s stock than it is to build the intrinsic value of the corporation itself”

 

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Stock

Coalgate:Who benefits?

The impact of scams is always felt in the stock markets.For instance, in the 2G scam, stocks like Unitech,DB Realty, RCom etc were hammered out of shape.

The recent controversy over coal allocations is interesting from a stock market perspective.

If the coal allocations are cancelled, the list of losers is a long one (see here and here)

But will there be any winners?If a shortage of domestic coal looms,then imports of thermal coal will increase.India’s Coal import has touched 140 Mio MT in FY 12, representing a 50% jump over 86 Mio MT imported last year. Of the total imports, 90 Mio MT would be Thermal Coal.

So pure play importers of thermal coal could turn out to be big winners of the Coalgate scam.

One of the listed players in this field is Mercator.While I had blogged earlier about the shenanigans of their promoters,it seems like a good candidate to ride the thermal coal import wave.

(Disclaimer:Buy/Sell at your own risk and don’t chew my a** if it doesn’t work out !!)

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Stock

The winner of Bharti Airtel’s expansion into Africa

Recently, Bharti Airtel shares hit a six year low.One big reason was the under performance of its African operations.It admitted that its loss-making African operations, which it acquired from Kuwait’s Zain in a $9-billion debt-funded deal in 2010, may not meet its target of $5 billion in revenues and $2 billion in core earnings, for the year to March 31, 2013.

Now, there is another company whose stock is near its all time highs.This company has recorded its highest ever revenues and highest ever profits.

The company is Amara Raja Batteries.While both its automotive and industrial batteries segments are doing well, it has gained on account of its supplier relationship with Bharti.

According to its press release dated 28 May, 2012, “Exports in the industrial battery business have been growing significantly in the last couple of years aided by surge in demand through the expansion of Bharti Airtel’s networks in Africa. ”

So next time an Indian major makes a major acquisition overseas, look closely at its suppliers.The stock price action would probably happen there !!

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Stock

The old order changeth.Cognizant overtakes Infy

Cognizant is now the second largest IT player after TCS displacing Infosys.

For Infosys, which at one time, stood poised to overtake TCS, this is a bitter pill to swallow.

But for longtime Infy watchers, this was not a surprise.

Many watched in aghast as Promoters played “Pass the Parcel” with the CEO position.It seemed that they had decided in advance the sequence in which each promoter would become the CEO.Top class insiders such as Phaneesh Murthy and Mohandas Pai were jettisoned so that the promoters could continue at the helm of affairs.

While Kamath’s elevation as the Chairman of the Infy board was a welcome move, having Kris as Co-chair defeated the purpose of having an aggressive wise Chairman.It was almost like the Infy promoters were afraid of what Kamath would do and wanted Kris to keep a check on him.

For years, analysts, shareholders and well-wishers had wanted Infy to do something with its cash pile.of now 3.8 Billion $. But the company has remained mum.Insiders mention that every month, there are targets put up for acquisition but the management finds one excuse or the other to postpone the purchase.

Compare this policy with that of Kumarmangalam Birla who has acquired  22 companies in the last 15 years resulting in increasing the revenues by 15x.

Its clear that Infy is now run by tired old men with tired old ideas.Its time Kamath took charge and gave the management team something he is famous for-a good old fashioned kick in the ass.

 

 

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Stock

The dog that did not bark

Normally, any takeover news is a huge boost to a stock.

Today’s Mint had a cover story on Onmobile which said that there were multiple offers for Onmobile and the company was “in play”

Despite this positive news and the fact that today the markets were up by 1.13% today, Onmobile stock tanked by 1.5%.

A mystery for Sherlock Holmes to solve or another case of “sell on the news”?