Horrible September of 2018

It started with IL&FS default .. and it brings back memory from the Satyam scam way back in 2008 .. the fact that these two are actually connected in some way provides little relief

Satyam scam was a Rs 6000 crore scam .. IL&FS has a debt of Rs 91,000 crore and is defaulting on it's payment obligations. Fortunately in case of Satyam entire 6000 crore vanished into thin air and in case of IL&FS it is less of a scam and more of a mismanagement. There are some assets that have been created over time and might help recover some of the debt but as it happens in most cases like these, there are going to be huge drawdowns and write offs. Govt moved into action swiftly after the default (ideally speaking it is 10 years too late .. as it should have put in checks and balances way back in 2008 after Maytas created one of the biggest crisis in Indian market.. until 2008 .. now it is IL&FS)

It is a bit too late. IL&FS crisis caused corporate bond yields to spike, liquidity freeze in the bond market. Hit the likes of DHFL, IndiaBulls Housing and many other NBFC's very hard. DHFL lost 40% plus in a single day. Over the month of September most stocks in the BFSI sector lost 30-50%. No discrimination was made between small and large, good and bad quality. The most resilient stocks like HDFC, Bajaj Finserv and Piramal Ent had their backs broken.

Goes without saying the plight of good quality stocks looked mediocre compared to what happened to stocks with questionable fundamentals, rumors, and manipulation. Infibeam lost 71% in one trading session. yes 71% in one trading session.

 Few other notable victims of regulatory action includes Yes Bank, Bandhan Bank, 8K Miles and many more ..
 

USD/Brent Crude
A market that was already weakened by rising dollar and crude had a lightening strike straight from hell

 

Good news is bad news

Currently even good news is working as bad news in Indian market. US markets and economy are firing on all cylinders. Unfortunately this will embolden FEDS to take up aggressive rate hikes which will further strengthen dollar and bond yields. Unfortunately that is not so good for equity investments and especially for equity investments outside US as you are earning terrific returns in low risk instruments and low risk markets then why invest in foreign high risk countries

Add to this continuous weakness in Emerging Markets and continuous outflows of FII/FPI from India. The draconian measures from Indian regulators, and Finance Ministry and PMO did little to help except add more oil to fire and more salt to the wounds of investors. (Read LTCG, KYC, and Indian origin foreign fund managers saga) .. the back and forth on these issues was even more pathetic. Market is good at absorbing bad news but doesn't do so well with chaos, confusion and loss of trust which creates panic. I had hoped that regulatory authorities and finance ministry would have known this .. but doesn't look like it. 

Anyways the market doesn't spare anyone .. including the govt .. they will have to take their share of hits for creating and unleashing absolute havoc in the market from time to time ..

Off-course the collateral damage here is much higher. Only the toughest and the most sorted will survive this. Market has become a war zone.  Make no mistake, blood will be spilled, lives will be lost and dreams will be crushed.  Everyone will have to go through the iron test ..

 

However note that this is not the first time and not the last time either .. this is how market cycles work. Periodically it takes out all the weak hands mercilessly and unapologetic.. Market was and always will be the place of only select few .. they are not the heroes .. they are survivors .. 

I would like to end this on a positive note .. for people like us who worship markets, there are no losses .. there are only lessons and an opportunity to grow bigger and stronger with every such cycle .. happy investing !

Continued Market Mayhem in October 

Govt goofs again!

When the going gets bad .. the bad gets going! Govt goofed again. Considering the impact of rising crude and upcoming elections both state and center, our dear govt decided to be extra generous to the public and asked the OMC's to subsidize the fuel retailing by Re 1 per liter. This was enough to send all the OMC's crashing down. 40-50% lost in couple of days. 1.3 Lakh Crores wiped out, further weakening one of the only steady pillars in the market. The scene was almost like govt is triggering a systemic demolition of the markets. Here are some tables and reactions

Regulator goofs again!

I am not an expert on macro economy but sometimes common sense works better than all the institutional expertise .. when INR vs USD was already gasping for breath what could have been the logic to surprise the market .. liquidity concerns? RBI surprises the market using status quo instead of hiking rates that could have helped somewhat to arrest the fall in INR. However market did not like it and it made it very clear. Check out the last hour reaction post RBI announcement. This is however a 50:50 chance decision .. the reaction on the other side could have been bigger on liquidity concerns .. we will never know. Current mood in the market is "Good news is bad news" and "Bad news is panic button being pressed hard" 

Hopefully we are mostly done now .. only time will tell .. but the next important events are the upcoming state elections and couldd be a difficult one for ruling BJP given the overall negative and pessimistic sentiments. 

Silver Linings

• One silver lining in all this mayhem was that promoters have started acquiring their shares. Pilani Investments did a basket buy on all the Birla group companies Century, Hindalco, Aditya Birla Cap. Significant buying was seen in across the board in mid caps also.  
• Another one being India decided to continue to trade oil with Iran despite possible US sanctions. If it manages to avoid US sanctions it is a net positive. Also US was forced to soften it's sanctions on Iran since many countries had indicated that they are not going to follow it. This would also lead to downward pressure even on OPEC oil price that has already fallen from $86 per barrel to a little over $83 per barrel
• A developing positive is the huge defense, nuclear energy and SME deals signed with Russia and bilateral deals between India <-> Russia and India <-> Iran to deal taking place in local currencies instead of using dollar denominated trades. Russia also expressed interest in investing in the infrastructure and energy sector in India
• Venezuela launching it's asset backed crypto currency instead of $ is another indication that $ domination has peaked off and the havoc it is creating in the world currency market is going to pass. Venezuela being a oil exporting country, if it stabilizes will bring additional oil supply into the market and further discourage OPEC cartelization
• SBI decided to purchase the asset providing some support to liquidity strapped NBFC's which will help tide over the temporary liquidity squeeze situation created by IL&FS fiasco

Relief Rally in Oct 2nd Week

There was a huge relief rally in Oct 2nd week. Few events that helped the same. US markets cracked especially NASDAQ and FAANG stocks, this was mostly triggered by fear of FED rate hike in Dec. IMF came up with a lower growth projection in world GDP over trade war concerns, this also triggered a fall in $ and oil. At the same time India got the crown of being the best Emerging market among Emerging Markets. I think there was some rotation happening from developed markets to emerging markets. Oil correcting from $86 per barrel to $80 per barrel was a huge positive. Regarding the liquidity problem triggered by IL&FS crisis, SBI and other large banks announced that they will buy good quality loan assets from NBFC's to give them some liquidity. This was a great boost to hugely battered NBFC and BFSI stocks. Results season had also started on a decent note. On the other hand few factors to worry included FED rate hike in December, Possible US sanctions over India's S400 deal with Russia and Oil deal with Iran, upcoming state elections in MP, Rajasthan with expectations of huge losses for BJP, general implications of continuing trade wars, Italy going bust the Greece way and a possible bigger than expected bust in US stock markets instead of controlled correction

Confluence of factors

2018 is interesting enough with some great lessons that needs to be documented for any investing career that is supposed to last long. What I mean by interesting can be gauged from the NIFTY midcap graph below.

LTCG
The whole tumble started from the introduction of the LTCG in Budget'18. Certainly a very poor move by the Govt of India that soured the mood for many large investors especially foreign investors with options to invest in multiple countries and India overnight started looking considerably less attractive investment destination. It was a sad moment because things had just started picking up and no one came out a winner from such stupid policy decisions. Investors lost wealth and there were no gains left to pay taxes on for a majority of the investors.
Now we cannot put 100% blame on the Govt and their stupid LTCG for sure. Soon afterwards started a confluence of multiple strong headwinds that shook the Indian market one after another and never gave it a chance to recover.

EM Exit
LTCG announcement was followed by a mass exit of foreign investors from emerging markets as a basket that included India. Why? Strong growth in developed markets like US made the riskier EM's less attractive. When you can earn at home why move the money around the world.
This was followed by increasing weightage for EM's like China in MSCI index, which meant reduced weightage for EM's like India which belonged to the same basket. Simply put India was left with a small share of foreign capital investment quota in a scenario where all the money was already fleeing back from EM's to US. The SGX Nifty controversy made matters worse for India. In a bid to disallow Indian instruments being traded more in foreign exchanges compared to local exchanges, India decided to stop sharing data with foreign exchanges like SGX and was perceived as anti free market and was being further threatened with lower weightage in MSCI as a retaliation measure.

We are just starting folks ....

MF Categorization Restrictions
SEBI introduced a new law that all MF can have only few broad categories in Large, Mid, Small cap and there can be no cross holdings, i.e a Large cap fund cannot hold even a small percentage in mid/small caps and if they do they must sell. Also they cannot come up with fancy categorizations to find a way around this. So you cannot call your fund something like Future Focus and hold stocks belonging to mid and small caps along with large caps.

Banking Mess and NPA's
Then came a series of NPA resolution mess. Indian Banks especially PSU had loaded up on several non performing assets for several decades on their books, however they were yet to recognize the fact that they have fucked up. New RBI guidelines (starting with Raghuram Rajan) went aggressively after the Indian banks to clean up their books. This lead to several decades of toilet being flushed from the banks in just last couple of years. NPA's soared from 3-4% to as high as 25-30%. Banks like IDBI, Bank of Baroda, Bank of India, Indian Overseas Bank went belly up. The list is really long and includes almost all the PSU banks. A special mention to Punjab National Bank that had handed over their SWIFT passwords to fraudulent loan takers like Nirav Modi to borrow as much money from the bank as they desire. After the scam broke out PNB swiftly lost over 50% of its market cap in few days. India's third largest bank was now trading in two digits. Several scams came to light after this one by one. Many of these fraud corporate had to make a run from India leaving the banks with very few options to recover their loan Nirav Modi, Mehul Choksi of Gitanjali gems and Vijay Mallaya deserve special mention here. Lakhs of crores of loan book had to be written off. A pretty alarming situation. Private banks were not spared either. A special mention to Chandra Kochar of ICICI Bank and Shikha Sharma of Axis Bank who provided their valuable contributions in destroying whatever little trust was left in Indian Banks.

Share jacking up and corporate frauds in mid/small cap
Then came the Vakrangee fraud. A company that had risen from Rs 10 to Rs 1000 per share. India's rural network poster boy was caught jacking up the share price of it's company. It got caught when it declared a substantial treasury investment in PC Jewellers that brought to light another mega scam in Indian markets, mid cap companies buying shares in each others company and jacking up share prices in collusion. After this several mid and small cap companies crashed. 70-90% loss in market cap examples became abundant.

ASM
Then SEBI introduced ASM or Additional Surveillance Measure leading to restrictions on trading of several midcaps. Many renowned and reputed companies got caught in ASM which lead to a mass panic exit from all counters. Dilip Buildcon, 8K Miles, Graphite stocks, one by one a large part of the midcap universe got hammered and started a bloodbath of lower circuits in the Indian markets.

Audit Compliance 
Indian Govt lead by Modi had made it clear that auditors and independent directors will be held accountable for company frauds. This lead to auditors of several companies resigning instead of agreeing to adjustment in accounts. Notable story here is of Manpasand Beverages

Policy disruptions
GST, e-way bill etc had lead to lot of disruptions in the SME segment leading to reporting of poor numbers and results in the previous quarters

There is still more...

Global Trade War & Currency weakness
Donald Trump wanted to even out America's trade balance with rest of the world which lead to a global trade war. Companies started imposing import duties on each other. Local manufacturing started taking hit. Businesses on the ground were now struggling for profitability and survival. The notable story in this trade war was China vs US. The two countries slapped each other with billions of dollars of tariffs and duties. Yuan tumbled over 8-10% from the start of the year.
Strong dollar made life even more difficult for countries like India which is a net importer, i.e pays in dollars but earns in rupees. For FII's also Indian market became worse because of forex conversion losses.

The Iran Saga
Donald Trump also does not like Iran. He imposed several sanctions on Iran a major importer of commodities and a major exporter of cheap oil and gas. This created havoc for the import export players and sent the crude price surging. By sanctioning Iran crude market is easy to control by Saudi Arabia that can then demand whatever it likes from crude importers. 

Poor Monsoon and Farm loan waivers
Poor monsoon this year is already sending jitters across the investing community and rural population. Huge protest by farmers on MSP and ensuing farm loan waivers for political gains by state governments is adding to the fiscal burden of the state and central governments and making the inflation more unpredictable.

RBI hawkish policy
Now when infaltion is unpredictable, RBI comes into action and has been steadily increasing interest rates making loans which is the lifeline of any business more and more expensive, just what we needed .. isn't it ?

Political Uncertainity
Add to this the political climate was aso heating up. Noises of Mahagatbandhan started becoming stronger after the Congress won the Karnataka election over BJP by forming an alliance with JDU. A minority party now ruling the state.

Investment sentiment 
And so the overall investment climate was bitter, people suffered huge losses. Technicals and panic threw the Indian market in the grip of bears. Bulls made a huge retreat. New investors got scared off. Mutual Fund inflows slowed down and everything went spiralling down. A point to note here is that all this is happening in the larger context where central banks around the world are tightening market liquidity by rolling back their QE program that started in the post 2008 world. While the markets have generally absorbed it well, at some point this might pinch hard.

Winds of change
Few things brought a turn around in the Indian market starting July

• All countries ignored the US sanctions on Iran and continued to trade with Iran as exception. Ultimately US had to soften it's stand on Iran
• Crude softened signalling a peak in crude prices. Iran has threatened to disrupt trade routes in crude if sanctioned and that remains a risk 
• Donald Trump tweeted about being unhappy with strong dollar which signaled a peak in dollar as it puts America also at an disadvantage since manufacturing is cheaper in other countries
• Developed markets were overheated due to huge inflows. The FANG stocks now have a market cap greater than the GDP of several countries. Apple is a trillion $ market cap company now. This should lead to some of the foreign investments coming back as they book profits in developed markets and look for value investments in EMs
• Trade wars have become a common news and seems to be fairly discounted by the markets
• Indian Bank NPA's seem to have peaked and a recovery is projected soon. Govt helped by using large capital infusions in several affected banks
• Congress lost and BJP got a huge victory in the vote of no confidence motion against the govt which reinforced confidence in the future prospects of BJP 
• The Congress debacle in no-confidence motion also helped to put in place regional leaders like the Shiv Sena and TDP in their right place who were becoming a bit too noisy for their own good. It also re-inforced that the winking Gandhi is at best a poor comedian and not a future PM candidate. 
• Quarterly Performance and results by listed companies has been generally good and signals future optimism
• Indian large caps held the investor flag high admist all the bloodbath.  RIL, TCS became the first two Indian companies to hit the $100 billion market cap. Few others who deserve a mention are M&M, Bajaj Finance Group, Consumer and IT stocks HUL, Page Industries, etc
• Major relief was given in GST by reducing tax slabs for several goods
• Poltical and policy uncertainties, global trade wars, and poor monsoon continue to be a risk 

Things are going to continue to be interesting atleast upto 2020 but we market players are not here only for the good times. We as much cherish the downs as we do the ups. That is what makes it thrilling, the bull needs a bear to fight and win ... so bring it on !

Bitter Lessons from Uniply Investments

The Golden Goose
Uniply industries was a great investment bet. A small player in the plywood industry space with great brand, great products and ambitious management. Great market scope with "Housing for all" initiative of the government and lot of commercial and office space developments along with huge FDI investments again thanks to the aggressive push of the central government in this direction.

And suddenly out of nowhere came a shocker news

The Ugly Swan
The company announced a diversification into Civil Construction work ??? While Civil and Mechanical work also has good scope with lot of infrastructure push in the country and  on a standalone basis is not a bad business, but when you compare it with the plywood business it sounds like a horrible decision. Plywood is a consumer business with high margins whereas Civil and Mechanical work is long gestation, capex intensive and low margin business. Uniply was trading at high P/E's that are suitable for consumer business and suddenly it announces a plan to diversify into Civil and Mechanical business, which commands much lower P/E's, makes the business way more complex to understand. There is doubt on the management ability to make a successful foray into a business segment that is already overcrowded with large, small and medium sized players of all types. It is a non-transparent and corruption ridden business segment.

The smart market and the foolish me
A great business was ruined in a single day. Market realized it, however I didn't. I realized it only after all my gains (over 30%) was washed away over the days following the announcement. However what doesn't give you profits, makes you wiser. I had read the announcement, somehow didn't register or analyze it properly, kind of ignored it thinking it was not a big deal. However it was. Once such lessons are absorbed, small losses of today can be converted into huge benefits in future as an aspiring value investor.

*Note/disclaimer: As always I try to share my most important lessons for free and with all the good intentions and do not intend to manipulate or profit from it in any way. Many of you have started investing in stock markets by following me and I feel responsible to share anything good I learn. However it is advisable for you to do your research & verification independently and not follow anything blindly. 

schemes of money making

Tube Investments, Zee Media, IIFL (Coming Up)

AB Nuvo (50% in 12 months)

scheme
AB Nuvo was merged into Grasim , giving 15 shares of Grasim (adjusted for 5:1 split, original was 3 Grasim shares for 10 Nuvo shares) for every 10 Shares of ABNuvo and further demerger of AB Capital from Grasim giving 21 shares of AB Capital for every 15 shares of Grasim

Timeline (12 Months)
Announcement: Aug'16
Nuvo merger with Grasim Scheme Record Date: Jul'17
ABCL demerger from Grasim  Record Date: Jul'17
ABCL Listing: Aug'17

Profit (90%)
Nuvo market price on Announcement in Aug'16: Rs 1400 per share (stock fell from 1500 to 1300 on announcement, taking avg of two)
Nuvo market price on Record Date in Jul'17: Rs 1887 per share
Grasim market price post ABNuvo merger: Rs 1300 per share (normalized for merger ratio =1300*15/10=1950)
Grasim price after ABCL demerger in Jul'17: Rs 1070 per share
ABCL listing price in Aug'17: Rs 237 per share

Investment 10 shares of Nuvo in Aug'16 = 10*1400=14000
Value of Grasim post merger with Nuvo in Jul'17 = 15*1300=19500
Value of Grasim after ABCL de-merger in Jul'17 = 15*1070=16050
Value of ABCL after listing in Aug'17 = 21*237=4977

Slightly complex due to multi step demerger and splits, etc but you got Rs 16050+4977=21027 for investment of Rs 14000 = 50% profit in 12 Months.

Sintex Industries (113% in 11 months)

scheme
Demerger of the custom moulding business and prefab business to Sintex-BAPL and Sintex Infra Projects, wholly owned subsidiaries of Sintex Plastics Technology (SPTL). The scheme involves issuance of equity shares of SPTL to the shareholders of SIL in the 1:1 ratio

Timeline (11 Months)
Announcement: Sep'16
Scheme Record Date: May'17
Sintex Plastics Listing: Jul'17

Profit (113%)
Sintex Ind market price on Announcement in Sep'16: Rs 78 per share
Sintex Ind market price adjusted for demerger of Sintex Plastics in Jul'17: Rs 32 per share
Sintex Ind market price on Record Date in Aug'16: Rs 108 per share
Sintex Plastics listing price in Jul'17: Rs 130 per share

Investment 100 shares of Sintex Ind in Sep'16 = 100*78 = Rs 7800
Value of Sintex Ind post demerger in May'17 = 100*32 = Rs 3200
Value of Sintex Plastics on listing in Jul'17 = 100*130 = Rs 13000

So you got Rs 16200 for investment of Rs 7800 = 113% profit in 11 Months.

Bhagyanagar India (90% in 22 Months)

scheme
Demerger of Solar Division of Bhagyanagar India Ltd., into STPL. STPL shall issue 4 equity shares of STPL for every 6 equity shares held by the equity shareholder of BIL.
Demerger of Real Estate Division of Bhagyanagar India Ltd., into Bhagyanagar Properties Ltd., BPL shall issue 1 equity share for every 2 equity share held by the equity shareholder of BIL.
Reduction of share capital: Equity capital of Bhagyanagar India Ltd (BIL) shall be reduced to half

Timeline (22 Months)
Announcement: Sept'15
Scheme Record Date: Mar'17
STPL: May'17
BPTL: Jul'17

Profit (90%)
BIL market price on Announcement in Sept'15: Rs 18 per share
BIL market price on Record Date in Mar'17: Rs 24 per share
BIL market price adjusted for demerger in Mar'17: Rs 34 per share (half number of shares post cap reduction)
STPL listing price in May'17: Rs 4.9 per share
BPTL listing price in Jul'17: Rs 28 per share

Investment 100 shares of BIL in Sept'15 = 100*18=1800
Value of BIL post demerger in Jan'16 = 50*34=1700
Value of STPL after listing in May'17 = 66*4.9=326
Value of BPTL after listing in Jul'17 = 50*28=1400

So you got Rs 3426 for investment of Rs 1800 = 90% profit in 22 Months.

Star Ferro and Cement (54% in 10 months)

scheme
Star Ferro (listed) was a holding company for Star cement (unlisted) and decided to consolidate the two entities, since the holding company had no other businesses. Consolidation would lead to tax & administration efficiencies. Earlier Star Cement was paying dividend to Holding company Star Ferro & Cement (listed entity) which would distribute it to the shareholders. Post consolidation Star cement would be able to pay dividend directly to the shareholder. As per the scheme shareholders of Star ferro & cement would receive 1.33 shares of Star cement for every 1 share of star ferro & cement.

Timeline (10 months)
Announcement: Aug'15
Scheme Record Date: Mar'17
Star Cement Listing: Jun'17

Profit (54%)
Star ferro market price on Announcement in Aug'15: Rs 110 per share
Star ferro price on Record Date in Mar'17: Rs 140 per share
Star ferro price after consolidation: N/A
Star cement listing price in Jun'17: Rs 130 per share

Investment 100 shares of Star ferro in Aug'15 = 100*110 = Rs 11000
Value of Star ferro post consolidation in Mar'17 = N/A
Number of shares of Star cement post consolidation in Jun'17 = 100*1.33 = 133
Value of Star cement on listing in Jun'17 = 133*130 = Rs 17290

So you got Rs 17290 for investment of Rs 11000 = 54% profit in 10 Months

Star Ferro and Cement (Scheme announced in Aug'16, Star cement listed in Jun'17)

Max Financial Services (76% in 30 Months)

scheme
Max India’s board approved the corporate restructuring plan of demerging the company into three companies, each of which will get listed once the demerger is complete.With this, Max Life, the company’s life insurance business in which Max India holds 72 per cent stake, will be the first life insurance company in the country to get listed as Max Financial Services (MFS).The second company, Max India, will have Max Healthcare, Max Bupa Health Insurance and Antara Senior Living. The third entity will be Max Ventures which will be the investment arm of Max Speciality Films. Demerger ratio is 1:1 for Max India and 1:5 for max Ventures

Timeline (18 Months)
Announcement: Jan'15
Scheme Record Date: Jan'16
Max Ventures Listing: Jun'16
Max India Listing: Jul'16

Profit (26%)
Max Fin market price on Announcement in Jan'15: Rs 450 per share
Max Fin  market price on Record Date in Jan'16: Rs 524 per share
Max Fin  market price adjusted for demerger in Jan'16: Rs 366 per share
Max India listing price in Jul'16: Rs 200 per share
Max Ventures listing price in Jun'16: Rs 45 per share

Investment 100 shares of Max Fin in Jan'15 = 100*450=45000
Value of Max Fin post demerger in Jan'16 = 100*366=36000
Value of Max India after listing in Jul'16 = 100*200=20000
Value of Max Ventures after listing in Jun'16 = 20*45=900

So you got Rs 56900 for investment of Rs 45000 = 26% profit in 18 Months. Most of the shares ran up substantially post the scheme. At the time of writing (Jun'17) Max Fin reached Rs 600 and Max India Rs 150 and Max Ventures at Rs 100 per share giving a return of 76% in 30 months

Transport Corporation Of India (46% in 14 months)

scheme
Transport Corporation of India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on October 08, 2015, has approved the Scheme of Arrangement between Transport Corporation of India Limited (TCI) and its wholly owned subsidiary, TCI Express Ltd. for Demerger and Transfer of Express Distribution (XPS) . The Equity Shareholders of TCI shall receive 1 (one) Equity Shares of Rs. 2/- each of TCI Express Ltd. for every 2 (Two) Equity Shares of Rs. 2/- each held on the Record Date in the Company.
TCI was a holding company for several businesses and attracted a holding company discount into it's valuation trading at a P/E of close to 20's. However TCI Xpress that accounted for 30% of the total revenue and 37% of profit of whole TCI business deserved a much higher P/E when compared to peers like Blue Dart, Gati trading at a P/E of 40-80

Timeline (14 Months)
Announcement: Oct'15
Scheme Record Date: Aug'16
TCI Xpress Listing: Dec'16

Profit (46%)
TCI market price on Announcement in Oct'15: Rs 250 per share
TCI market price on Record Date in Aug'16: Rs 350 per share
TCI market price adjusted for demerger of TCI Xpress in Aug'16: Rs 190 per share
TCI Xpress listing price in Dec'16: Rs 350 per share

Investment 100 shares of TCI in Oct'15 = 100*250 = Rs 25000
Value of TCI post demerger in Aug'16 = 100*190 = Rs 19000
Value of TCI xpress on listing in Dec'16 = 50*350 = Rs 17500

So you got Rs 36500 for investment of Rs 25000 = 46% profit in 14 Months

TCI (Scheme Announced in Oct'15, TCI Xpress listed in Dec16)

At the time of writing (Jun'17) TCI reached Rs 300 and TCI Xpress at Rs 481 at return of 100% in 20 months

Sterlite Technologies (68% in 13 months)

scheme
Sterlite technologies announced demerger of the Power Products and Transmission Grid Business into  Sterlite Power Transmission Limited. Demerging the power business would give Sterlite Tech a pure play telecomm business with focus on OFSS segment. The scheme had two options for the shareholders
“01 (ONE) fully paid equity share of Rs. 2/- of Sterlite Power Transmission shall be issued and allotted for every 05 (FIVE) equity shares of Rs.2/- each held in Sterlite Technologies Ltd”
OR
“01 (ONE) fully paid redeemable preference share of Rs. 2/-  at a premium of Rs. 110.30/- per redeemable preference share of Sterlite Power Transmission Limited shall be issued and allotted for every 05 (FIVE) equity shares of Rs.2/-  each held in Sterlite Technologies Ltd”
The scheme was fairly complex to understand as there was no plan for listing of Sterlite Power Transmission in the immediate future.

Timeline (13 months)
Announcement: May'15
Scheme Record Date: Jun'16

Profit (68%)
Sterlite Tech market price on Announcement in May'15: Rs 70
Sterlite Tech market price on Record Date in Jun'16: Rs 96
Value of pref share in Jun'16: Rs 110

Investment 100 shares of Sterlite Tech in May'15: 100*70 = Rs 7000
Value of Sterlite Tech in Jun'16 = 100*96 = Rs 9600
Value of Pref shares in Jun'16 = 20*110 = Rs 2200

So you got Rs 11800 for investment of Rs 7000 = 68% profit in 13 Months

At the time of this writing (Jun'17) Sterlite tech is trading at Rs 153 per share giving a return of 107% in 24 Months

Crompton Greaves (100% in 30 months)

scheme
Crompton Greaves announced a scheme to demerge it's power & industrial business and the consumer product business into separate entities. The parent group had run into trouble with excessive debt and wanted to hive off CG consumer product business which some PE players were interested in. The demerger ratio was initially 3:4 but after investor objection it was revised to 1:1. This also lead to substantial delays in the implementation of the scheme

Timeline (19 Months)
Initial Scheme Announcement: Oct'14
Revised Scheme Announcement: Feb'15
Scheme Record Date: Mar'16
CG Electricals Listing: May'16

Profit (2%)
CG market price on Announcement in Feb'15: Rs 180 per share
CG market price on Record Date in Mar'16: Rs 146 per share
CG market price adjusted for demerger of CG Electricals in Mar'16: Rs 46 per share
CG Electricals  listing price in May'16: Rs 126 per share

Investment 100 shares of CG in Feb'15 = 100*146 = Rs 14600
Value of CG post demerger in Mar'16 = 100*46 = Rs 4600
Value of CG Electricals on listing in May'16 = 100*130 = Rs 13000

So you got Rs 17600 for investment of Rs 14600 = 2% profit in 19 Months. However after listing CG ran upto Rs 80 per share and CG electricals upto Rs 220 per share giving Rs 30000 for 14600 invested. Almost 100% return. In another 1 year from the demerger.

Greenply Industries (178% in 11 months)

scheme 
Greenply decided to demerge it's laminates business from the plywood business in the ratio of 1:1 with the following rationale, "the nature of technology, risk, competition in each of the undertaking of Greenply is distinct from each other hence it is considered desirable to demerge its laminating business to Greenlam Industries"

Timeline (11 Months)
Announcement: ~May'14
Scheme Record Date: Nov'14
Greenlam Listing: Mar'15

Profit (178%)
Greenply market price on Announcement in May'14: Rs 500 per share
Greenply market price on Record Date in Nov'14 : Rs 1110 per share
Greenply market price adjusted for demerger of Greenlam in Nov'14: Rs 940 per share
Greenlam listing price in Mar'15: Rs 450 per share

Investment 100 shares of Greenply in May'14 = 100*500 = Rs 50000
Value of Greenply post demerger in Nov'14 = 100*940 = Rs 94000
Value of Greenlam on listing in Mar'15 = 100*450 = Rs 45000

So you got Rs 139000 for investment of Rs 50000 = 178% profit in 11 Months

At the time of this writing (Jun'17)  Greenply is trading at Rs 283*5 (split 1:5) per share and Greenlam at Rs 800 per share = 343% return in 3 years

commonly misunderstood

Do I make posts that are intended to manipulate people/friends for personal gains?
No, I don't. I share concepts & ideas and not stock tips

Do I manipulate my friends and groups for personal gains?
No, I have offered time & advice free to several friends to help them plan their financial future better and free them from unnecessary financial stress which most people grow with especially in a struggling country like India. I have a particular hatred towards such unwanted stress in life. Financial future planning is something you have to start early and you can save lot of pitfalls from the experience of someone like me who has probably fallen and risen from almost every pit. I consider it a disease that dwarfs our growth potential as a country, because people are busy with basics and risk averse and are usually brought up in financially conservative family background. Until now no-one has come back saying that I ruined their life. Mostly I have received good feedback which is satisfying.

I don't see anyone thanking you
These things mostly happen on personal messages and not on public walls

What do I gain from this?
Nothing, I believe stock market is a place of abundance and there is enough for everyone so there is no need to compete. I learned investing the hard way through lot of painful mistakes but had the opportunity to correct myself by following legends like Buffet, Damani, Kedia, Ramdeo and many others. So in a way I am contributing back.

Do I support political parties and personalities that would benefit me in the stock market?
No, I support political parties and personalities that I believe are pro growth & welfare oriented and that would lead to growth in stock market as a side effect.

Why do I regularly post against few politicians?
Because I believe they have harmed the world beyond repair by funding, supporting & breeding terrorist groups that have spread like plague around the world which I consider will be a major threat in the future and especially for the future generations.  I think I have the right to vent my anger at these assholes. I don't care if they are male or female or straight or gay or transgender or religious or atheist or alien or whatever. I give more weightage to results and outcomes instead of people behind it.

What do you feel about public opinion about you?
Being misunderstood is not always bad, on the contrary.. :P

What is the basis of my belief?
I read. I read several hours everyday. Over the years I have tens of thousands of reading hours. I usually make sure that I follow credible sources of information that are fact based, on the ground reports, direct interviews, research documentaries, real time information, whistle blowers, regulatory filings, legal proceedings, etc I collect information from several sources and am capable of tracking and correlating large amounts of information over long periods of time, decades. From Ramalinga Raju to alleged chemical weapons use in Syria, I follow everything all the time and endlessly. My beliefs are based on these and it keeps evolving with time.

You could still go wrong?
Yes, I verify my theories from the market.

Am I profit driven?
What the heck? Again ! No, I practice minimalism. I use and need very small amount of money to survive & be happy. I am a truth seeker and passionate about it. Markets as a whole also tends to converge towards truth inspite of all the rumors and manipulative elements who are very active in the market. Being a truth seeker helps me align with the market on the right side. 

Can I trust you?
No, I don't want anyone to trust me. I don't like dependencies & dependents. I can teach you how to fish. I cannot guarantee you a fish everyday. So you don't need to trust me. At best, if at all interested you can take pointers from me (available free) and do your own research be it politics or economics, whatever is your area of interest.

Do I have any kind of biases?
yes, I am allergic to bullshit & hypocrisy

I don't like your posts, why can't I criticize?
You are most welcome to criticize my posts and me. Only request is that you must make it constructive and factual and not arbitrary and damaging, which is also fine. It's just that if you do such a thing, I will write one more blog and post it :)

India Value Migration Story

Tremendous wealth is created when you can spot a value migration story and bet big on it. Few examples from the past that you will easily recognize

• Scooter to bike migration (Bajaj to Hero Motocorp) 
• Single screen to multiplex (Shanti cinemas to PVR)
• Photographic film based camera to digital camera (Kodak to Canon/Smart phones) 
• Landline to mobile migration (BSNL/MTNL to Airtel)
• Doordarshan to DishTV
• Manual work to Software automation & services (account books to Infosys/Wipro)

One would assume that such opportunities are rare and difficult to spot, but right now in India, several of these are evolving right in front of your eyes and moving fast. India is like a haystack of multiple value migration stories, then why are you looking for the needle instead?

Value migration happens over a long period of time as masses of people slowly migrate from some product, service, or habit to a new product service or habit in phases. There is also a compounding effect in the migration as more adoption drives even greater adoption and it starts slowly but once it catches pace, it happens very fast. So you need to spot it and position on it while it is still in nascent stage.

Current value migration stories in India

• non-tax compliant society to tax compliant society (91 Lakh new taxpayers registered, double digit growth in annual tax revenue)
• cash to cashless/less cash society (paytm, UPI, digital banking)
• Power deficient to power surplus & rural electrification  (coal block allocations, Uday/Ujala schemes, 24 hours power even in summers)
• Migration from savings based society to investment based economy (from gold, land, cash to increasing interest in equity markets)
• Migration from uninsured to insured society (healthcare, savings, old age, high value possessions, travel, etc)
• Migration from a cash in locker society to a fully banked society (increase in money velocity & leverage, Kotak 811)
• Migration from unorganized to organized sector to create huge global mammoths and consolidation through mega M&A deals (Cairn-Vedanta, Vodafone-Idea, HDFC-Max, SBI Associates merger)
• Migration from basic spending (roti, kapda, makan) to discretionary/luxury spending society (BMW, Harley Davidson)
• Migration to brand conscious society (Tailored clothing to Levis/Van Heusen/Jockey)
• Migration from poverty ridden to poverty free society(several govt schemes skill India, employment generation schemes, one nation one market, DBT)
• Migration from fossil fuels to renewable energy sources (solar/wind energy available cheaper than fossil fuel based energy sources)
• Tubelight/Filament bulbs to LED based lighting
• Migration from BS-III to BS-VI, electrical vehicles (Climate change, Paris agreement)
• Privatization & FDI in large sectors like defense, railways (Pipavav/Reliance defense, L&T)
• Low oil price commodity cycle (subsidy based pricing to market pricing)
• Developing commodity market (dabba trading to the most advanced commodity exchange MCX, GIFT city)
• One nation one tax - GST (inefficient tax based planning vs business efficiency based planning)
• One nation one identity -  Aadhaar (Easy tracking, efficient authorization)
• Corruption friendly to corruption free society (demonetization, e-governance, etc)
• Traditional bank loan based funding to Private Equity, REIT, InvIt for infrastructure and real estate, startup financing
• small kaccha projects to huge infrastructure, housing, smart city push (Huge development in some states like Andhra Pradesh)
• Paper companies, non-transparent, low corporate governance companies to credit rated & internationally certified businesses especially in the SME segment (CARE, ICRA, CRISIL)
• Chor real estate companies to highly regulated professionally managed, consumer friendly companies (RERA)
• Import into India to Make in India (good progress in manufacturing sectors like textile, chemical, auto, electronics)
• Conservative, Risk averse business to strong visionary businesses like Reliance Jio, Patanjali
• Leadership position in low cost space research & exploration (ISRO)
• Job seeker, labor & hard work oriented professionals to startup inclined professionals & innovative smart younger generation
• Alcohol drinking is sin to drinking is a sign of luxury & class society
• Coalition govt to single party, consensus majority and power mandate central govt (Congress to BJP)
• Improved rating & ranking on several parameters like ease of doing business, investment destination, tourism destination (pending credit rating upgrade)
• Developing/Emerging economy to developed economy

Negative Value migration:

• High salary & employee cost in less efficient PSU companies make them more uncompetitive and less attractive for investment. However increasing middle class income will be drivers for consumption

book your fucking losses

It is that time of the year when you need to book your fucking losses to make some money! YES you read that right. It's March, end of financial year. Once we cross March 31st we need to pay tax on a the short term capital gains made last year. We tend to do a lot of profit booking but we hold on to stocks that are loss making. So we end up paying tax on all the profits generated and we make more losses on our loss making investments by holding on to them. That is double loss!
So book your losses adjust it against the profits and then pay tax only on net profit. Save lot of money and thank me someday :)

Note that you can offset your short term capital gains only with short term capital loss and not with a loss in  a long term investment. But still this is a good time to review those long term loss making investments also and dump them down the drain where they belong ... unless you are in love with the psychopath who has kidnapped your portfolio and is one day going to shoot it down. And unless you are harley quinn "daddy's little monster" I suggest you you look for these little monsters in your portfolio and weed them out .. and reduce your tax outgo by doing the same before 31st March in the next 5 days

Pay your taxes

If you don't declare your capital gains, I strongly suggest start doing it else the taxman is surely coming to your door sometime soon (Aadhar, KYC, digitization and single view dashboard of all records, they can catch you easily if they want to). Modi and Jaitley are one of the smartest politicians and they know people are making money in the stock market and they would want you to contribute some of that back for Nation building (not unfair at all). So unless you are harley quinn and don't give a shit ..start declaring your short term capital gains religiously. Once you start declaring it, you would want to save on it. To save you need to book your fucking losses. And trust me you will gain much more by getting rid of these loss making investments using tax planning as an excuse to convince your heart into taking this difficult decision, than you would lose by paying your capital gains tax. 

So let's do some accounting jugaad because in real life harley quinn is just a dream !