General Discussion

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  • #11033
    Registered Boarder

    I am newly registered. I am reading posts since one year
    In conference call, in reply of value at which dilution taking place, MD
    Saying at pe of 1, it will not impact market price. But also telling something like once pe of 3,4,5- I cannot understand his statement.
    Any boarder, please share what MD wants to say?

    Registered Boarder

    Regarding Daum, SRK seems in no hurry to settle, and since lycos has already gone back to Daum, as such I myself do not understand, is there still a need to settle with Daum on this? What if both parties are Happy, Daum has got lycos back, and BCG seems have already made good use of lycos when it was with BCG.

    Registered Boarder

    I could not attend the conference call and heard the audio recording of the same. Overall it appears that the preferential issue allotment money seem to be used for some other purpose other than the stated purpose of closing debts. SKR indicated the agreed settlement amount is only 17 crores. But why is it not being paid off in full is a point that was completed left untouched.
    Similarly the BDO audit, Morgan Stanley originally was the lender for LOC, etc, are diversions and the core question of why things are not being expedited as far as LOC being concerned, especially when there is no hick up with the LOC process per se and CEO and CFO openly admitting that they have reached a ‘plateau’ and grow beyond that they need capital. They have been at this plateau for the last 3 years and the hungry and urgency for growth is something which has not been touched upon
    Biggest take away being that this PW is probably not the last of the capital raising/dilution move and definitely lot more is on the cards. If the value realisation does not happen with Axis and LOC, expect more dilution at low multiples like the PW. Also, w.r.t PW, SKR mentioned that all the info has been provided to the exchanges. So, we can expect the decision from exchanges latest by 21st March, assuming the clarification from BCG was provided only on 19th Feb. If BCG is indeed going slow on Axis and LOC only due to PW approval, then we should start seeing positive news flows around this from 22nd March onwards..

    Another observation is the dividend payment happening in such hush hush manner is due to Axis Bank and SKR mentioned as much. I suspected that and mentioned in one of my posts. But, trying to pull an Houdini act under the watchful eyes of Axis Bank would only wrath from them once they come to know about this. It shouldn’t have been done this way. Axis loan should have been closed with preferential issue money and dividend payout should have opened in an transparent manner through their registered share transfer agent, Aarthi Consultants.

    Registered Boarder

    @Logan and @Diana from last couple of concalls, the increase in number of retailers is claimed as if management is victorious.

    However I am still not clear if management want to increase their shareholding through PW, how increased number of retailers are helping them. Generally increased retail participation leads to elevated share price and share price didn’t appreciate. Is this the reason of sounding victorious.

    I heard the last 2 concalls and management was quite vocal on increased retailers.

    Can you throw some light on this.

    Registered Boarder

    @jay69 I agree. But my perception is at least at this moment retailers are entering the stock. So operators have to part their holdings and they cannot keep the price down indefinitely.

    Let’s see what happens after PW are approved.

    Registered Boarder

    @bhalothia9 (#11035)

    There are many reasons why the management wants to get back Lycos. One is from a business point of view and the other is from the market’s (valuation) point of view.

    1) Business

    If they leave it as it is then in the future, DAUM may again trouble BCG. It’s always better to close off a legal issue even if the impact is not big. That’s why most companies settle these issues outside the court. Even a small thing can hurt the company in the future. For ex – If BCG decides to acquire a company then the sellers will look at complete history of BCG. Their lawyers will try to find if the company has done anything wrong/bad in the past. Some will use for their advantage i.e. they’ll ask a higher sale price and some will not even agree to sell because that’ll hurt their reputation. Then there’ll be the worry of non-payment i.e. what if BCG agrees to buy a company in a 2-part deal and it pays the first part of the payment but later doesn’t pay the remaining amount? Sellers will see DAUM case and will think that BCG may repeat it again. People will think that BCG may not fulfil commitments. They won’t be ready to sell their assets. Then one more scenario is that DAUM may go and trouble the financiers like it did with White Oak (not Oak India Investments).

    I don’t know what plans they have once they get back Lycos, maybe they’ll focus on APAC region or maybe AI or some other thing. It may bring value to the business also. I think BCG won’t pay more than $16M to DAUM and also I don’t think DAUM is in a position to command/demand more than $16M.

    2) Valuation/Market

    This, according to me is like “It brings nothing but also it may bring everything” kind of a situation if we consider what value (Market Valuation) it may bring to the company. Before the announcement of bankruptcy of BCG’s subsidiary, the stock price was in 25-35 range (which is a somewhat okay valuation compared to the current valuation or the 0.5PE valuation). If DAUM case hadn’t happened and if BCG had closed off India debt then the price would’ve been at 5-6PE.

    Once the bankruptcy was announced, the price started going only in the downward direction. We in this forum are a group of individuals who have completely/thoroughly studied the company but the same can’t be said of the whole market or even all the retail investors who have invested in BCG. Many were more concerned about DAUM than they were about the business but that trend is changing a lot because of many reasons. One is the interest in new age companies/technology because of the pandemic.

    Before this forum was started, everyone talked only about one thing, that is – DAUM. People thought if DAUM is closed then everything will be alright. But now only a few talk about DAUM (maybe because of Axis case in NCLT). I’m really not that concerned about DAUM but I know how important that is to change the market sentiment. That’s why I wrote “It may bring everything”. Also, I use “may” because the market has changed so much in the last year. Present market is completely different from 2016-18 market. Now the market may give more importance to growth of the business than to getting back Lycos. We have believed all these years that once DAUM is closed BCG will trade at good valuations but we can never know that’ll happen for sure. After closing DAUM, stock price may go up but I don’t know whether BCG will trade at a good valuation.

    It’s really hard to say which is more important for BCG to get the right valuation it deserves. Some say closing off DAUM will do that, some say closing Axis will do that, some say PW approval will do that and some say growth in business will do that. So, everything depends on the CEO’s actions.

    Registered Boarder

    Dear BCG Investors/Experts, appreciate if anybody could share some info on the below;

    Was there any possibility that BCG have purposefully not disclosed the original profit amount during last quarter?

    I suspect that last quarter profit was much more higher than the declared amount and considering the following scenarios they might have declared the suppressed profit (if there is a provision to hide the original profit).

    1. Declaration of Higher quarterly profit leads sudden hike on the share price more than the PW price of 7.75 (But BCG has to keep the share price within the PW price level of 7.75 to avoid any conflict of getting PW approval from exchange.

    2. Personally I feel that BCG is purposefully not willing to settle the full payment to Axis as “single payment” (even though they have the potential to settle as single payment and agreed for the final settlement amount) and also I think that they may even delay the remaining pending payment of 6Crs until they get PW approval (if already they made 11Crs payment out of 17 Crs as per ConCall)

    Now everybody knows very well that the current share price is purposefully controlled by BCG management. Hence, personally I feel that this is very good opportunity for us to accumulate more before we come to know about PW approval and it’s a matter of time for the rapid rally (which is not too far). Please take your own call for any kind of decision.

    Registered Boarder

    Management bis jubilant because as the base of retailers increase two things happen

    1. Retail participation leads to investors being vocal of their acquisition thereby leading to a fresh lead of new investors gaining interest.

    2. Secondly and the reason the management is happy is that there aren’t many single large group of shareholders which can question them with authority and be susceptible to acquisition. As a large group of investors can join hands and bid for the company. Hence management’s are always happy to have many small investor like us.

    J One.

    Registered Boarder

    Jay69, hereafter no one think to hostile takeover of bcg as on enhanced post PW equity promoters and his 59 proxy entities will be having more than 80%. So need not bother about hostile bid to takeover

    Registered Boarder

    Per SKR, 6 crore should have been paid out to Axis on Monday,22nd Feb 2021 . I am not sure if this has been paid out and the company chose not to give any update through stock exchanges about this or this is one of those forward looking statements, which did not materialize?

    But lack of update only affects the credibility of what the CEO said in conference call…

    Registered Boarder

    @vgsatwork, in my opinion SKR is not required to intimate the shareholders or the stock exchange every time an instalment is paid to Axis Bank. He has already informed the shareholders on Saturday 20th February about the settlement ( 17 crore) arrived at, and the fact that 5 crore had been paid the week before, with two instalments of 6 crore each to be paid – one on Monday 22nd and the second shortly thereafter.
    Let us see what is stated before the NCLT on 2nd March about the settlement of the case.

    Registered Boarder

    SKR and his team YSR, MM has to share the following event updates to the exchange as and when it happens.

    – Formal approval mail / letter from Axis Bank stating 17cr. is settlement amount and payment timelines agreed upon

    – Part payment receipt or confirmation from Axis Bank officials as and when it happens

    – Final payment confirmation from Axis

    – Pledged shares revocation

    – NCLT case update as and when it happens

    – Removal of lien on PO amount of 30crs

    Note that the very first point itself is not updated to the exchange. Assuming that it is discussed in concall doesn’t mean that all the 67k investors are aware of this update.

    Request everyone to please add to the list if I had missed any

    Registered Boarder

    In agreement with your line of thinking @jay69. Earlier too they had a one time settlement agreement with Axis Bank, and despite payment of various instalments by BCG, we know how that ended up. Axis and BCG would have to present a settlement agreement to NCLT on or before the next scheduled date of 2nd March(as of now). Or Axis would have to withdraw their case as petitioners. Not sure of the exact procedure to be followed.

    Registered Boarder

    IMO Any price sensitive information need to be informed to BSE immediately. Payments to axis Bank is a price sensitive information. Any large trades made today may be considered as insider trading. Everytime they seem to be goofing in such matters. 😯😯😯

    Registered Boarder

    Closure of Loan will be a price sensitive information. Not payment of 5 crores.

    Registered Boarder

    @nitin_asce, sorry for the late reply (#11117).

    The management will be happy because market sees value in BCG i.e. there’s value recognition in the stock. Now they have to do things that’ll help in value realization. Just because there’s value recognition doesn’t mean that value realization will happen. The former is easy to achieve but for the latter to happen it takes time and effort. Not all the times more investors will result in higher prices. That happens when others are not ready to sell their shares, if others are ready to sell and new investors buy then there won’t be any impact on the prices. There should be demand and optimism for the price to rise, not supply and pessimism.

    There are many reasons why retail investors go up in number. They will buy from others who dump the shares, suppose someone who held 1% of the shares decides to dump their shares, what happens is thousands of retail investors will buy those shares. Let’s see BCG’s case – on average, one retail investor (share capital less than 2 lakhs) holds little over 1500 shares. So assuming if that 1% (say 50 lakh shares) is absorbed by retail investors then more than 3000 investors buy those shares. 1 is replaced by 3000 but still the price will drop. Then are traders who aren’t long term investors buying the shares seeing some momentum in prices. There’ll be penny stock traders who buy more because small increases in price will make them more money. People think if there’s a turnaround in business then they can make good money.

    Why Value Realization hasn’t happened yet?

    Let’s say there’s a plot of land (let’s say few acres) in a very good neighborhood but the owner of that land has two cases against him (like DAUM and Axis) and the land (land litigations are very common). Many people won’t be ready to buy that land. So what happens to the price? Obviously it’ll go down. Rest of the neighborhood will have good prices but that one plot will be very cheap. People who buy that land when its cheap will make a killing but that depends on the severity of the cases. In the future, if the verdict goes against the owner then the new buyer will lose everything. The new buyer will have to fight in courts and the issue goes on and on. At some point in time, when many people buy those plots, the price of the land goes up but when there are no developments happening wrt the cases then the price will drop again. That is why material developments are very important. Many times they are like 2-edged swords. Sometimes they will be positive for the investors and sometimes they will be negative.

    Material Development that was Positive – Subex

    Even though people saw value, the price didn’t go up until share capital reduction happened. Before that there were small increases in share prices like 3 to 6 to 9 and then fell or stayed at that level but a greater impact happened (price went up above 30) only when a material development happened.

    Material Development that was Negative – Lakshmi Vilas Bank

    In this case, retail investors lost everything. Even though a different company came and bought LVB which is a material development, retail investors didn’t get anything. There are many such cases that have happened.

    Registered Boarder

    Generally, markets hate court cases and legal issues (and also debt sometimes). Markets hate these things because they bring uncertainty with them. We can never know how long a case goes on for. We are seeing that in Reliance-Future-Amazon case. Even the biggest companies are not getting a clear picture on what will happen. Till markets see less uncertainty, there’ll be volatility and retail investors should to be ready to digest that volatility. Operators enjoy uncertainty and they also enjoy volatility. Combination of these two things will make operators very happy.

    Thankfully, with BCG, in my opinion, the two legal issues that are there aren’t as big as people believed. From now on, hopefully, we will see value realization happen.

    We have come a long way actually, we have seen uncertainty, we have seen volatility and we have seen the combination of those two things also. Few years back there was lack of trust on the numbers, then there was uncertainty with DAUM issue – now we have a somewhat clear picture but 3-4 years back that was not the case. Then, before the pandemic, and before Affle came to the market, most people didn’t really understand the business properly. When I say business I don’t mean people don’t understand online/digital advertising part, what I mean is the business model of the company i.e. payment cycle – high receivables, low payables (even now many don’t get it properly), cash flow issues of the company (still now we can see people commenting 400crs profit but can’t pay 40crs etc), the need to invest heavily in technology etc. People used to say why can’t BCG pay more than 50% dividend? Thankfully all these have changed a lot in the last 1-2 years. Still there are people who don’t understand many things but that percentage is very small compared to the past. Now we have less uncertainty compared to the past – there is reduction in pledged shares, 2 bank loans have been paid off and the other is almost done.

    (Sorry for such a lengthy reply – most of the times my replies will be lengthy because there’s no easy way to explain many things in short)

    Registered Boarder

    @Logan thanks for your reply, I think one of the biggest takeaway which I could personally take from BCG since last FEB is that lot of issues have been resolved or getting resolved. Doubts are much lower and confidence is much higher.

    I think axis is almost done and PW & daum is pending but i hope it will also be closed in 2-3 months.

    Now the company will get Cash from PW around 260 crore and then LOC is also in progress i assume it will also be couple of hundred crore as a minimum.

    So we are looking at at large amount of cash at this moment although usage of this cash is not clear. This looks exciting but we have some bad examples of similar situations in stock market as well where cash was not put to good use.

    Lets hope for the best and wait few more months so that all legacy issues are resolved. But very exciting times ahead.

    Registered Boarder

    Dear @Logan/Experts, yesterday Vipul Organics has allotted the 7,00,000 Warrants at an issue price of 111/- per warrant (including premium of Rs. 101/- per warrant) on preferential basis. They have just sent the request to exchange and waiting for the approval. But the current price is 149 (may be it will come down like BCG – Went to 9.5 during PW approval and came down to 7.75 levels). How do you see this and we are all discussing that BCG’s current price is controlled only for the reason of pending of PW approval. Appreciate if you could share your views which would be a great eye-opening for all BCG investors. This is just a possibility to find out the cause for price suppression on BCG. Thank you

    Registered Boarder

    Dear @jay69, thank you very much for your swift reply and appropriate clarification. I believe, the current situation is indirectly giving opportunity for us to learn many things…Every stock has its own time and hopefully, BCG will show its real value soon…

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