Equity

Readings: Bank Elite, MFI, MoneyLife, 99ers

A Secretive Banking Elite Rules Trading in Derivatives by NYT. How the big bankers won’t let in the small guys into the market they control and keep opaque.

At Forbes, In India, Size Does Matter. On how the MFI industry has screwed itself by going national, rather than local. Yeah, that’s true of countries too – when they’ve borrowed from foreigners, it’s that much more palatable to say “let’s default”. And bankers, who only originated credit and packaged the loans they gave to other people. When you don’t know the person who lent you money it’s much more morally acceptable to default in a crisis.

Short Takes: The P/E Ratio

 

The What, How and Why of the P/E ratio in the context of Indian listed shares. The Price to Earnings Ratio is a way to value companies, instead of depending on purely their share prices. 

Deepak Shenoy talks about what the ratio is, how you can obtain it in India or calculate it yourself, and finally, why it is used. A quick introduction to the concept, and will be followed by more short takes on the P/E ratio's use.

(Click here to watch the video)

(6 minutes)

The P/E Ratio

The What, How and Why of the P/E ratio in the context of Indian listed shares. The Price to Earnings Ratio is a way to value companies, instead of depending on purely their share prices. 

Deepak Shenoy talks about what the ratio is, how you can obtain it in India or calculate it yourself, and finally, why it is used. A quick introduction to the concept, and will be followed by more short takes on the P/E ratio's use.

(6 minutes)

Mahindra Holidays: Too many members, Too few rooms

A quick note on Club Mahindra (MHRIL) .

Rooms: Where?

On September 30, 2010, they have 117,993 members. And 1,473 apartments.

Even if they use them 100% for members, with one week per member and 52 weeks a year, they can only accomodate about 77,000 numbers. 35% of their members can’t be accomodated – 1 in 3 won’t get a chance. Given that holidays are usually taken in bunches (not spread out evenly across the year), there are likely to be even more disappointments.

Their response…

The standard reply is that listen, people don’t qualify to take holidays immediately on membership. In a mail I was forwarded, the statement made was:

…members avail of financing plans from us for their membership purchase. In light of that a certain no. of EMIs would need to realized before the member becomes “Eligible” to holiday

Oh, that way.

But…

IB Report Takes 3 Stocks Down

Three stocks – KS Oils, Ruchi Soya and Karuturi Global have been hit hard by an Intelligence Bureau report that says these stocks were manipulated. An operator, Vimal Rathod, is suspected to have rigged prices, in some cases in collusions with promoters (allegedly).

Rathod bought shares to push prices up, it seems, and involved the money of C. Sivasankaran, the investor with some kind of midas touch. All these companies have been in the news at various times for fund raising or expansion. While Ruchi Soya and Karuturi Global denied having any links with these guys, KS Oils said an investor CVC sold shares to Sivasankaran.

All three companies have seen an EPS drop in the first half compared to last year

UFlex Dives 20%, Promoter Gets 4 Years Jail

Promoter of UFlex Limited, Ashok Chaturvedi was sentenced to four years in prison by a special CBI court, in a case of bungled land allotment in Noida. Former UP chief secretary Neera Yadav was also sentenced similarly.

UFlex is a packaging company and has recently benefited from the massive upsurge in polyester film prices, taking their profits up to 202 cr. in the Sep quarter, and 263 cr. for the half year. With the diluted EPS at Rs. 37 for the half year, they even projected an 800 cr. profit figure for the full year.

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