The Great Indian Fantasy – BCCL Valuation
Corporate governance is tricky and imperfect even in the most developed and mature economies. Otherwise, there would have been no Bernie Madoff; public assurance in corporate America wouldn’t have been so viciously shaken in recent memory without Enron. The huge difference with corporate governance in India is that, in established economies, one expects the law to catch up with the crafty dodgers sooner or later.
It’s time Indian promoters discarded their hypothesis of quasi-immunity from not only shareholders’ scrutiny but also the law. Satyam has raised a lot of questions and saw some action. But a lot more needs to be asked, and answered.
Let us discuss the BNL & PNB now. I see an outlandish enthusiasm for the stock and investor interpret to evaluate BNL & PNB on basis of fundamental but they fail to forget that BNL & PNB is demand and supply and operator-driven stock, and thus don't not need to heed the fundamentals.
Investors have created myth and halo around these stocks, partly driven by the wicked rumor of BCCL listing and malicious valuation figures even putting figure of Rs 100000.00 thus implying a valuation of nearly 30,000 crore of BCCL. What kind of person in right frame of mind would justify this kind of burlesque valuation?
Some interpretation
Can BCCL justify a valuation of 100,000 cr basis its profit. Its turnover is 2500 cr and profit of 250cr in 2010, 248 cr in 2009 and 800 cr in 2008 respectively. It is certainly amusing that there is little or no countervailing argument coming from the opposite side what justify these kind of valuation.
| Name | Last Price | Market Cap. (Rs. cr.) | Sales Turnover | Net Profit | Total Assets |
| 295.00 | 11,625.50 | 1,923.71 | 772.22 | 2,015.01 | |
| 116.15 | 11,361.13 | 2,172.82 | 579.28 | 2,904.70 | |
| 76.90 | 8,182.95 | 1,436.55 | -189.70 | 1,139.02 | |
| 223.50 | 4,096.68 | 1,261.64 | 267.32 | 1,063.49 | |
| 970.70 | 3,944.42 | 545.68 | 133.89 | 1,757.11 | |
| 142.50 | 3,349.05 | 1,231.78 | 177.59 | 1,448.85 | |
| 105.80 | 3,346.11 | 1,115.32 | 205.83 | 880.30 | |
| 236.00 | 2,157.21 | 477.66 | 69.56 | 728.04 | |
| 42.15 | 1,526.07 | 244.41 | -49.25 | 838.09 | |
| 57.85 | 1,342.95 | 976.20 | 162.45 | 1,593.26 |
Certainly some from Hansraj BA (Pass) would have done those kind of a calculation. (Just kidding, don’t mean to offend anyone)
Some I am acquainted with informs that the BCCL Employee Stock Option valuation was prepared by Kotak Investment Bank and it valued the company at around 12000-14000 crore. I am trying to get this report and consequently request the readers to take this information with a pinch of salt.
I see that most people want to paint the earth green and blue. I mean are they are the ambassadors of optimism, failing to comprehend that we have some difficult times as well.
Satyakam Mishra
reachsatyakam@gmail.com
http://equityconnect.blogspot.
Comments of Satykamji are very thought provoking. Under prevailing situatin where highly liquid blue chips are available below 52 week lows and have prpspects of giving 40 to 60 per cent returns when the upswing resumes in equities, what is the fair rate for Bharat Nidhi and Pnb Fin with all its drawbacks of obscure transparency,illiquidity,and level corporate governance besides, high promoter holding and with strong financial musceles, and holings cocentrated in very few hands.
ReplyDeleteNone of the Media companies mentioned here has Investments , directly or through subsidiary companies , as large as held by Bennett Coleman And Company. Bennett Coleman apart from owning the largest circulated English Daily ' The Times of India " is probably the biggest Dot Com ( Internet sites ) player. With great foresight Bennett Coleman has ventured in to the Non Print Media of future ( Electronic like ET Now ) and Digital Internet sites.
ReplyDeleteSurely , the valuation of Bennett Coleman should not be over optimistic ( as happens in a Bullish Share Market ). The valuation should not be under optimistic either.
Mr Agarwalji is a true Stephenian. Perhaps he owns some stake in BCCL. But such snobish behavior is uncalled for.
ReplyDeleteI have never seen him taking criticism of valuation in right spirit perhaps he is fairly representing the alumni who are the egalitarian lot.
I wish the the Stephenian were humble and civilised and have an ear for the opinion of others as well.
Like Bharat nidhi another Holding Company "Farm Enterprises Ltd" latest Balance is received. Latest EPS is Rs75. But No divind recommended. It has reserves 50 times its Capital of Rs 47 crores. But price of this hidden gem Collection item has been knocked down by the dealers from its earlier high of over Rs1200 to around Rs 400 now during last few months.Bharat nidhi Traded at over Rs12000 is qouted at Rs around 6000 now and can easily come dwn to Rs4000 I seek openion /views of those who know in this regard
ReplyDeleteDear Mukul ,
ReplyDeleteI wish I owned some shares of Bennett Coleman.But I doubt if many non promoters are its shareholders.I do not have shares of any of Bennett Coleman's holding companies.
Also, I am a Non VIP Stephenian.
Regards,
pls,advice it is fruitful to hold bharat nidhi shares for future.
ReplyDelete