This has been a very hectic week in terms of corporate developments. Apart from the fact that the market went up considerably over the course of the last few months, Portfolios having moved significantly indicates that people are now waking up to the fact that this is not a false breakout. So even the long pending corporate developments are happening and let’s see how I’m bothered with them:
1. Reliance announcing the record date for demerger of its Jio Financial subsidiary is the latest one today. Anyone who has studied investing knows that the surest form of making money is a spin-off stock. The big institutions won’t own it for its too small for them and the retail will treat it as additional dividend which needs to be encashed. So after a while it might be a bit too neglected if it doesn’t go up circuit to circuit in the first few months of listing. In any case, it’s a pretty decent business and with Reliance’s money power, it can easily grow at 50% for long times to come for the base is so small! If you remember what Reliance did to Voda and Airtel, if it only does 5% of what it did then, a lot of money chasing Bajaj Twins can find its way to Jio Financial.
2. NSDL has finally announced its DRHP and BSE its buyback. How are they two related? Well, NSDL is a subsidiary of NSE and thus can only be listed on BSE, just like both CDSL and BSE are listed only on the NSE. It creates additional volume for BSE as the demand for this business is going to be huge and I’m sure it also retakes the CDSL stock. Now read this with the fact that F&O turnover on BSE has gone up over 13l crore, easily above the 8% mark on Friday combined volumes on NSE and BSE. Remember, BSE started with zero market share in derivatives( F&O) so anything above 5% is like a dream come true. It hits the top and bottom line positively.
Now add to this that the buyback price is ₹816/- which is almost in the range of lifetime high price for the stock. It values the company at 11000 crore while the stock traded at below 5000crore, as early as late March this year. This is a fantastic management returning money and rewarding minority shareholders lavishly. This reduces the share capital by 3.39%, which sounds small but in the long run, enhances per share valuation by a lot. I’m not selling a single share in buyback is certain!
3. TaMo announced an expected free cash flow of £400M plus, roughly ₹4100 crore in JLR for Q1, FY 2024. This means at the current rate, the company will easily do £2B in the entire FY, which means the company is only trading at 10x FY 2024 earnings and that’s a steal! Any company which is likely to grow its earnings from a loss to over 20000 crores will be easily valued at at least twice the current valuation! Why am I so bullish? Well, it took TaMo 8 years to cross its previous highs of ₹605 and the way it did on Friday clearly indicates a huge momentum building up on the upside. Don’t believe me? ITC crossed its 2015 high of ₹367 in February and it has gone up 30% without breaking sweat!
4. ISEC hasn’t even come out with a press release, leave alone media blitzkrieg to discuss and sell its delisting proposal. I mean, it’s the number one Investment Bank in the country and it can’t sell its own delisting! Give me a break! The only reason is that it’s all too non serious attempt to make the market realise what prized gem it’s stock is and the timing is amazing. Its stock was trading at IPO level when the news broke. Now in the middle of a new bull run, June quarter numbers will be bumper because the last June quarter was disastrous. So the market will say, why are you getting a premium company growing at 30% so cheap. And the share will get restated. In the meantime when it tries to pretend to take regulatory approvals, September quarter will be over and with such a market and a huge IPO pipeline, it’s numbers will be much better than June. The stock is bound to go up and react to numbers, once the reality subsides. Also, at the worst, at 0.67 times ICICI Bank, the shares should at least be worth ₹645. So if ICICI Bank goes up 10% with market, the price crosses ₹700. And then the management will quietly come and make excuse, oh that fund didn’t sell or LIC refuses to sell below 1200 and what not. And the delisting will be withdrawn! I absolutely am super bullish on ISEC and can empathise with the frustration of the management with the stock performance.
Look at it from the POV of the CEO. That guy has been at the helm since 2019, developed the app which is kickass customer interface, delivered the numbers but was first hit by Covid and then by a sharp pullback. So do you assume the CEO of the largest Investment Bank in India will convert his ESOPs which is 100% of his net worth at lowest price possible and exchange them with shares of ICICI Bank, trading at lifetime highs! You need to be a genius psychopath to assume this. I don’t buy this. This can’t happen. End of story! If delisting does take place at this price, my belief in common sense will certainly take a hit!
.
Life is all about Compounding! 