[nitin_asce]

One thing I could think of is to force PW investors to redeem their PW by paying balance amount before the bonus issue. The company might be seeking good opportunities and need funds. However if this is the reason than surely PW holders are not proxies of management.

@logan can you provide your views please.

[raviblk]

Thanks admin for the new thread

[akv84]

Hi all, can anyone explain what the mgmt mean by equity funding for which they are seeking approval on 28th… is it like they sell shares with them to a VC or large investors for raising money?

[ramganesh1982]

Hi admin,

Thanks for creating another discussion thread for value picks .. will add a few stocks for discussion

Regards,
Ram

[ramganesh1982]

Hi guys,

I have added a couple of stocks to discuss . Please share your valuable opinion

Regards
Ram

[sknatani]

Dear Admin, Mr Logan and Mr Kris
Thanks to all of you and many others who are contributing in this beautiful forum.

[mirzapur_wale_chacha]

Thanks @admin and all the members of this group @logan @diana for creating such a wonderful forum (unlike shitty moneycontrol) and giving confidence to covid investor like me.

[ramganesh1982]

Hi Diana,

Please share your thoughts on this latest move of providing bonus equity and fund raising decision using equity . Do you see this improving the sentiments? Do you see bcg sustaining this upside burst post exdate for bonus share allotment ?

Regards,
Ram

[radhutheoptimist]

Two weeks back BCG announced they would consider dividend… Now bonus…. Rights…. And ofcourse LOC approval… Aquisition…. Too many good news scare me from a company that struggled so much to pay nominal dividend, clear loans, have pledged shares and on going daun disputes. I am heavily invested in this and I am taking all news with pinch of…..err… Bucket of salt. Waiting…😃

[odysee]

Anyone who has invested in BCG has done so of their own accord, and after due diligence conducted by himself or herself. Each individual’s capacity may be different in terms of the amount invested, and the level of conviction and faith one reposes in the company. Large holdings or small, no one is forced to buy or hold on to their investment.
Now that one has seen the management take pro-active steps to bring about a positive change in the perception of the investing community, after having dealt with most of the troublesome issues of earlier years , and becoming debt-free, it is time we on this forum applaud the current actions and proposals being put forth by Mr Reddy and his team.
We also must take note of the fact that this is the first time in the history of this company, that the face of a subsidiary company ( and that too the largest and most profitable 100% owned subsidiary), namely Online Media Solutions, was exposed and presented to the public via a Webinar that was essentially meant for their client group entities; but we, the public, got an opportunity to listen in and observe. This, for me at-least, along with the introduction of ESOPS, is a true game changer, and heralds a new beginning in the way business will be handled henceforth.
Retail investors on this forum,, who continue to harbour doubts about the integrity of the management and the sanctity of the business of the subsidiaries, after the latest developments, would be best advised to seek investment opportunities elsewhere.

[Rishi_life]

I am sure, this bonus will also be issued to PW (definitely they will pay the full peanut price of PW) and o obtain one more free share….. My point is how much upside is easily achievable post bonus share.. further what will be the impact of TTD entering indian market and latest developments on Amazon and flipkart starting its own add tech ventures…@Logan @ Diana @ admin… please highlight some issue on this will help us a lot

[Follower of Logan Sir.]

@Rishi, very valid & Interesting question you have asked. I endorse it further. Logan & DH sir to answer the same. Logan Sir, Still not received a reply from your end for my earlier post of 23.06.2021.Awaiting for the same.

[bhalothia9]

Arunstockguru mentioned “ Brightcom actually can put you back to work from retirement,it’s that good” on Twitter, I do not agree with him, what do you people say?

[Follower of Logan Sir.]

OH My God, Sweeping statement from Arunstockguru, Equally nice is to sweep it under a nice Persian carpet at the earliest is my strong opinion. Cheers!!!

[Rishi_life]

I couldn’t find that tweet of Arunstockguru..can anyone post that link please..

[Logan]

@kris and @nitin_asce, in the previous conference call the CEO said that they have some plans to reward the shareholders and my guess is that bonus shares are that reward. This is “net” positive for us. I use “net” positive because there are negatives too. There is too much free float and giving bonus shares will increase that. Large free float doesn’t matter when the sentiment is positive but when a negative event happens then the operators will easily manipulate the prices. BCG doesn’t have a good name in the market and even for a small rumor people will panic. Till the price is at lower levels there’ll be negativity (and some people will be way too desperate to spread negativity because they think stocks should never sell below 1PE and if it does then the company must be fraud).

The company/CEO have to take drastic actions to make the share price reach a decent level and to do that they have to show the market that they are serious about the valuation of the company, and of course about the business. All these years, they were serious about the business and neglected valuation but now they seem to have changed. So things like ESOP plans, bonus, dividends, buyback etc are necessary to show the market that they are serious about the valuation.

Regarding raising equity funds, I’m not surprised by that. This company grew because of acquisitions and for that they raised money through equity. Maybe 1 or 2 deals they made through debt but mostly all fund raising were done through equity. All shareholders and potential investors should be aware of that and they should be ready for that (sometimes even at lower valuations). Now that almost all the issues are over, the management may have plans to grow the business like they did when the company was smaller. So if they can have similar growth rates then people won’t worry too much about dilution.

[Logan]

@Rishi_life, I don’t know whether PW allottees will get bonus shares or not. It’s better if we ask the CEO about this in the conference call.

India’s market is growing and that’s why these days some big and small players are trying to grow their business here. BCG started online advertising business here many years back but had to stop because it was not profitable. That time things were different but now they have changed a lot (especially because of JIO’s impact almost everyone is getting internet at low prices). People are spending more time online (shopping, browsing etc) and they are streaming more content also so there’s a good opportunity here. As mentioned in one of the articles (THE HINDU), the company may start something like B-LOCAL in our markets next year.

Regarding other companies starting adtech business, Amazon’s is not new and it has been in the industry since many years and it is one of the top dogs of the industry (others are Google, Facebook and AOL). These big players have 70-80% of the market share. Even though the competition is cut-throat, the good thing about the adtech industry is that it’s growing and there are many opportunities like in CTV, audio streaming, Gaming etc etc. In CTV, mostly smaller players are dominating which is a good thing.

As for Flipkart, BCG is concentrating more on the western markets and I don’t think Flipkart starting adtech business will affect that much.

[Follower of Logan Sir.]

Thanks Logan Sir for your reply. CI SIR, Welcome to you Sir on this forum. The way you have articulated even a novice like me can come to an understanding with regards to the company. 3 Salutes to you Sir & Koto Koti Pranam. Keep mentoring us from time to time. Thank you very much for all that you do for fellow investors. Thank you once again. Respects & Cheers !!!

[conservative_indian]

Dear Logan, I agree with you in letters and in spirit about potential of Brightcom. Company resumed dividend which is a very strong signal to sceptics who were concerned about free cash flow of the business as for years BCG failed to translate P&L Profit into Free Cash Flows thanks to mounting receivables. Company initiated Positive Press to change perception of the company. They started work on new verticals to generate Alpha for all stakeholders. Contrary to popular perception, I strongly feel that there is no free lunch. And there is no free thing without a cost.. not even Bonus. This Bonus issuance reminds me of naive Anil Ambani who issued Bonus in RPower immediately upon listing at the time of 2008 crash. Did that boost confidence of the stakeholders? Rpower moved from that Listing high to bottom at 1. I learned a lesson that juggling equity numbers will be a short-term steroidal shot for stock movement but real push comes from the qualitative improvements in Balance Sheet. When company is working on fundraising thru equity route, the last thing they could do is issuance of Bonus. At some point in time, they will work on ADR for Nasdaq listing. Equity dilution will be inevitable then. SKR would raise his holdings thru that route the way The Ruias did in Essar Oil. And above this, PW conversion is a loose cannon.. It can do even more dilutions. The best thing which is need to the hour is LOC breakthrough. This will open up headroom for faster revenue growth. I expect this event will add topline by 40-50% over 6-8 quarters and that will expand Free Cash flow by 8-10x which is already reduced to trickle. So, Cash management is the core issue hurting both Topline and stock valuation. We are at cusp of 5G era and I expect BCG to play a strategic role in it. What it requires is War Chest overflowing with cash just like Tanla and Subex are doing and 3i is following these steps very soon. I think management is held hostage to Anil Ambani Syndrome… On a brighter note, I see current momentum has more steam left… may be 30s, post results and 50 in next 2-3 quarters. Good Luck!! NOTE- Please find enclosed a link to my previous post published in October 2020 for your reference.. https://brightcominvestors.com/forums/topic/technical-analysis-discussion/#post-8812

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[Logan]

@conservative_indian, I agree with you on bonus shares not being a free lunch (they’ll have to re-adjust the equity and reserves which impacts the balance sheet and more importantly the EPS). If I think only about the bonus shares then I’m really not okay with it but if I consider all the other things (the past, present and the future) then it looks “net” positive. It’s more like a necessary evil and a good example of a catch-22 situation. If he doesn’t take drastic action(s) then the price may not go up and the price not going up doesn’t benefit anyone and we’ll be in the same situation for many years (To get out of that you need drastic actions and taking those actions may cause some problems later).

For some reputed investors to come in, the price (and the market cap) have to be at certain levels. Also almost all investors were frustrated with the stock’s performance and to lift their spirits and to restore their faith and more importantly the trust, some action has to be taken .

The difference between BCG and other companies (like Anil Ambani’s) is that BCG is too conservative on debt and even if they have/had very big ambitions, they didn’t get carried away by their success (business-wise not valuation-wise). Other companies shot for the moon and took on bigger debts than they could handle and later struggled for many years (some are still struggling). BCG’s management (mostly the CEO) took some not so good decisions (like merging with LGS and starting Lycos LIFE) but they made sure that those things didn’t have big effects on the business. Even with having free cash flow problems, the company stayed in the business and paid all the debt. They have paid maybe more than 300crs debt from the company’s cash flows. 300crs is a big amount for a company that competes in one of the toughest industries. The negative side was the total time it took to close off all the debt – 7-8 years, which under normal circumstances would’ve been fine but the valuation (below 1PE) made everyone feel frustrated. What other companies do is, they borrow more to pay the old debt and the cycle goes on and on and they end up being bankrupt.

To get more efficient and to improve free cash flows, the revenue has to reach $450-500M. All these years I didn’t know how they could improve cash flows when the revenue reached that figure. I thought more revenue means more receivables, more expenses which results in cash flow issues but now I figured it out. The CEO talked about this in the last conference call, he said that the amount that they have to spend on technology (Capex) will remain the same even if the revenue increases. So now almost all the profits are reinvested but later after reaching that figure they need not commit all of the profits and hence there’ll be more free cash. This is a business that needs more investment in technology or they’ll go out of business. For example – both Google and Apple are changing their privacy policy, if BCG doesn’t adapt to that and say this current technology is sufficient then after few years (maybe even months) they have to pack their bags and go home.

[Author]

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