General Discussion/Ask Queries

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  • #11035
    bhalothia9
    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.

    #11036
    vgsatwork
    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.

    #11113
    jay69
    Registered Boarder

    A very big and important milestone has been reached/achieved by BCG as it has crossed the 1 lakh accounts mark in its global business.

    Its a great moment for all the BCGians they should be happy & proud and also congratulations to the management and entire global personnel/staff of the BCG for this humongous achievement, sooner or later even the stock market investors will also take note of this feat and value the company at the levels it rightly deserves.

    #11117
    nitin_asce
    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.

    #11119
    jay69
    Registered Boarder

    @nitin_asce I was thinking about this topic for the past several days, a lot of people think that having a lot of retail shareholders as a larger percentage of shareholding group is good but most of the times (except few exceptions like RIL) a lot of retail shareholders in a company is not good for the upward movement of share prices because at every small rise (say 10-20%) there will be a lot of sellers which actually puts a speed breaker for further rally/rise which is not the case when a large chunk/percent is held by big institutions or HNIs if the holding of retailers are about 25-30% max the stock can rally much more faster and higher than a stock where retail holding is 50% or above.

    The management may be feeling proud and happy that retail shareholders are rising by the day (67000 according to latest concall) constituting about 65% of the entire shareholding but if the stock has to rise say 5x 10x or 20x from current prices it has to move to fewer & stronger hands which will not happen in a quarter or two if the company posts huge growth in sales/profits from current levels there will be huge churning which will lead to weaker hands selling and exiting at every 5 or 10 rupee rally in the stock, the day it reaches a value of say 75-100 Rs (for example) most of the shareholders holding mostly about 1000-2000 odd shares would have exited the stock, retail shareholders as a percentage in most of the companies have a holding of 100-1000 shares and higher the stock rises the number of individual/retail shareholders and their holdings in the company decreases substantially as most of the shares gravitate towards stronger hands i.e big institutions, HNI, PMS, FIIs.

    #11120
    nitin_asce
    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.

    5+
    #11121
    jay69
    Registered Boarder

    @nitin_asce At the moment retailers may be loading up at the current levels but if the stock prices doubles or triples from here in the next 6-9 months (for example) the number of retail shareholders will be much lesser from the current levels of 67000, due to the huge sale by the likes of OAK and later on by the goenkas etc a huge quantities of stocks are sloshing around in the market for the past few months if the floating stock currently held by small retailers starts shifting to strong hands like institutions or HNIs this excess liquidity/supply in the stock will reduce and this will happen only if the stock prices go up at least by 2x or 3x in the next few months for that to happen the company’s financial performance should have to improve along with the improvement in corporate governance, even if the performance is good but the perception is bad as is the case right now the stock cannot move substantially higher so for the stock prices to move substantially higher the company should improve not only its financial performance but also the corporate governance aspect.

    8+
    #11122
    Logan
    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.

    #11123
    drjaysee
    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.

    #11118
    jubailone
    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.

    #11125
    jay69
    Registered Boarder

    BCG promoters/management may be jubilant about increasing number of retail shareholders every month/quarter but at the same time they should also be worried/concerned about the high quantity of floating stock in the market or in the hands of the retailers as this will invite easy takeover bids if retailers are offered say Rs.20 or 30 by a rival company as it would cost them not more than Rs.500-700 crores to takeover the company and its management control for a 51% stake most of retail shareholders (who have invested for short term profit) will happily offer their shares though the company has the potential to rise even 20x or 30x from the current price levels.

    Since the company is having such a big sales and profits its natural for any rival to takeover the company when the stock is available at a throwaway price leading to a market cap being just Rs.400 crores for 100% stake which even private equity players, HNIs or every startups will easily takeover if the retail shareholders are offered an attractive price from the current prices.

    So the management/promoters should come out of their slumber and stop the game of deliberately using poor corporate governance methods or withholding prices at the lower levels in markets (if true as alleged according to few investors) for the smooth sailing of PW approvals etc. because it will prove detrimental to their own interests in business and also in markets as perception is a very important issues which cannot be easily earned once it gets damaged or eroded.

    *Disclaimer: This is neither a buying or selling recommendation so use your own discretion.

    #11126
    VALUEBUYER001
    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

    #11127
    vgsatwork
    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…

    #11128
    odysee
    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.

    5+
    #11129
    hw_tw
    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

    #11130
    jay69
    Registered Boarder

    @vgsatwork @odysee Even the previous payment of Rs.5 Crores to the Axis bank done in the past week was not informed to the stock exchanges separately so they may have paid the amounts as informed by the CEO during the recently held investors concall but they may present all the informations to the courts during the next hearing on 2nd March 2021.

    5+
    #11131
    odysee
    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.

    #11132
    radhutheoptimist
    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. 😯😯😯

    6+
    #11133
    lycos.rags.to.riches
    Registered Boarder

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

    #11134
    Logan
    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.

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