General Discussion

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  • #13914
    Registered Boarder

    It’s good that people brought the bonus issue to Zee channel’s notice. This will make the management people to act quickly and will make them to avoid these type of mistakes in the future.

    It’s sad to know that they are not picking the calls of even business channels. From now on at least they should act like a large cap company, hire people for specific roles and reply to each and every call or mail.

    If they commit to something they should execute it. No one asked for bonus but they declared it. It’s clear that (as others have pointed out too) bonus was issued to make FPIs and other people to pay faster. They should’ve prepared properly to handle these things.

    Registered Boarder

    It’s clear that the delay is because of the extra preferential shares and more clear than that is that the company was not prepared to handle this properly. They anticipated more business so they’re acquiring MediaMint but why can’t they hire people to handle the bonus issuance? Temporary hiring would’ve worked. Even the CS (who’d have handled this properly like he did the last time) left and they didn’t hire anyone to replace him.

    Now this issue is on national media and an embarrassment for the company/management/promoters and also for shareholders like FPIs, Mr.Shankar Sharma, MediaMint people and us retail investors.

    They should hire a consulting firm which gives advice on these things. The CEO can’t handle all these things alone.

    Registered Boarder

    Msg as found in mmb by Black m,
    Any well informed long term members, kindly comment.
    # Dont guess anything without knowing the fact, management and RTA not answering for reasons,they cant say anything untill Forensic audits is going on.Since matter is under forensic audit they cant expend general reserves to issues bonus shares and those shares could be not allowed permission to list on exchange by regulators untill this matter is not clear. as i hope, before Board meeting the FA report will be out .. so stay alert…. dont take decisions on whats going on social media platforms and news channels..finally its your money and you should take care about it… #
    Thanks Black m, for this msg

    Registered Boarder

    I don’t think it’s because of the FA as FA doesn’t interfere with the operations and corporate actions like results, bonus, buyback, dividend etc. In the channel also they mentioned that the delay is because of the extra preferential shares (and the lock in periods that those shares have)

    There’ll be some confusions and one example I can give is – even though Mr.Sharma paid money for warrants conversion before the record date, they got approval to list those shares after the record date. So will they consider allotment from the company or listing approval by the exchanges? Maybe same with the shares for MediaMint people. If these people don’t get bonus shares then that’ll cause problems. If everyone remembers, last time they made plans to give bonus to FPIs and the issue price was set at a different price but later they changed it.

    My understanding is that they rushed this bonus issuance as they were not prepared to handle it and were too careless or negligent. I guess higher stock prices makes people lazy.

    In other companies that I have invested which have given bonus, no company had done any preferential allotments or warrants and the issuance went smoothly. (Even BCG’s last bonus went smoothly without any problem)

    Registered Boarder

    Thanks Logan, I am happy to be in this forum, as the info here are authentic and without any bias….looks like the management has become careless or RJ and management are playing this game for more accumulation. Either way happy to be invested in this share…

    Registered Boarder

    Thank you Logan for good explanation.

    Just another argument If I look back in history if a company is dubious or have bad management bonuses are issued to prep up share price and it is not delayed. The bonus shares are credited very fast.

    In our case it is delayed due to some reasons. The investors are panicking but personally I don’t know a single chor company where bonus issue was delayed. Hence if bonus is delayed that doesn’t mean bcg is a chor company.

    The other reason of not picking calls is management is not prepared for such large volume of calls and doesn’t want to disclose their problems with public and hence no notification was done.

    Registered Boarder

    Hi, Another reason for the public to panic is they sold their existing shares anticipating bonus shares to credited. Long term investors don’t see any reason for sure. Most of the guys creating ruckus to accumulate at lower levels
    May be the management is also involved to accumulate. Hope this drama should end by this month end. It’s just matter of time. Stay put.

    Registered Boarder

    There’s an update on bonus shares in BSE. Please check it.

    Registered Boarder

    I did not understand this clarification at all. Really dont trust the timelines, given by management. Was this a issue of preferance shares not getting subscribed/paid, even after bonus announcement?

    Registered Boarder

    Logan’s view which he mentioned in few messages earlier turns out to be true! In short that’s what this notification conveys indirectly, if you don’t understand

    Registered Boarder

    As per the notification released, full payment of the subscribed preferrantial issue was done according to the dates mentioned, before the record date. The delay/issue has been listing of these shares on the exchanges before final allotment of bonus shares (my understanding of the press release)
    Suresh reddy’s tweet “ do expect more updates from us in subsequent days “, sounds interesting.

    Registered Boarder

    I think we should appreciate Zee Business channel for getting the management people to act quickly. Though this bonus issuance incident should not have gone this far in the first place. Hope this will make them to avoid these kind of things in the future.

    Registered Boarder

    SKR in his below tweet

    mentioned that ” Do expect more updates from us in subsequent days.”
    Does he is indicating for updates on bonus only or for other good development/surprises too.??

    Registered Boarder

    There is a recording of SKR in a telegram group (v2w), where he is trying to clarify to an investor regarding bonus and SHP.

    In summary, what he’s saying is that there’s nothing wrong we’re having issue after the CS (Manohar) has resigned but he is still helping me as a consultant.
    Bonus will be credited by 19’th of this month and subsequently all doubts regarding the SHP will be clarified and explained.

    Couldn’t share the clip as the telegram group does not allow to either copy or forward.

    Here’s the link if anybody is interested …

    Registered Boarder

    Chris would you mind sharing what did SKR told about SHP in the call, we are unable to join telegram group thank you

    Registered Boarder

    Sorry the telegram group does not allow forwarding or copying any of the messages posted on it.

    So the gist is SKR calls the investor (who I think called previously and was maybe rude to the person answering the phone at the bcg office) and tells him that the bcg office is not equipped to take in a load of 3 lakh investor calls and that’s the reason they were unable to respond. He assured him that they would set up a mechanism to deal with this in a weeks time.

    He requests the investor to stop spreading unnecessary negativity and panic, he assures him that everything is fine and there is no problem at all. There is a chat about the zeebusiness coverage of bcg.

    Finally, the investor asks about the SHP and promoter holding to which SKR says that he will explain about it in due course and nothing is wrong, quarterly results and concall he be held as per schedule.

    Registered Boarder

    So, finally bonus has been credited will list in a couple of days for sure now, market looks like it might bottom out for now, but then again brightcom stock movement was always independent of market direction up until now.

    So upcoming brightcom notifications in order of most significance would be

    1. Audit report.
    2. Mystery of disappearing promoter holding.
    3. Update on Audio advertising acquisition.
    4. Quarterly results.
    5. Guidance report for upcoming year.

    So what do you guys think, please do add to the list which I guess can be used for clarification during concall, tentatively in the first week of June post quaterly result release.

    Registered Boarder

    Detailed SWOT analysis on brightcom. More importantly an unbiased view.

    Registered Boarder

    I have a small request, can someone who has subscribed to ET Prime please share the complete article on BCG? Looking at the synopsis, it’s either completely biased or the author hasn’t tried to understand the business properly (high receivables!!! please check The Trade Desk’s).

    Registered Boarder

    In an article published on ET Prime headlined “Stellar returns or just a mirage? How Brightcom’s fundamentals don’t support its valuation”
    Quoting some stements which need to be addressed
    “Suresh Reddy, its founder and promoter — a technocrat based out of Hyderabad, sold 90% stake in the company, which eventually reduced the total promoter stake by 4%, but warrants were also exercised. Hence, the total number of shares for the company increased by 16 crore.”

    “While the ad-tech business is on a growth path, the company’s fundamentals are shaky. Brightcom has huge receivables on its balance sheet that are worrisome. Around 56% of the total current assets are trade receivables and 34% is accounted for loans and advances. The present sales-to-working capital ratio works out to less than 2x, which shows that there is a lot of pressure on the running cost of the business. ……
    There is nothing wrong with this. It is a commonly followed practice because the company eventually receives its payment. But there is a maximum waiting period beyond which it makes little sense to keep writing in the accounting books as ‘receivables’. Account receivable days is the metric used to calculate the number of days before which the company receives its payments. This number depends on industry to industry.

    Pharma has an average 68 receivable days, for manufacturers like capital goods it is 77 days. IT, which is more of software services, has an average 62 receivable days. For the Nifty 500 companies, removing one outlier Vakrangee, the average trade receivable days number stands at 55. But Brightcom has 142 trade receivable days — this is two and a half times the total average.

    Not only that, Brightcom’s trade receivables, which was at around INR750 crore from FY12-FY17, increased slowly thereon until it shot up in FY20 and FY21.

    “High trade receivable days don’t work very well in the long term in terms of its impact on revenue,” says Abhay Aggarwal, founder and fund manager, Piper Serica, a Sebi-registered portfolio-management service (PMS).

    Loans and advances
    This metric falls under non-current assets in the balance sheet. As the name suggests, it is the loans or advances given to receive them in the future with interest. This number stands at INR720 crore for Brightcom for FY21, which is almost 20% of its total assets.”

    “Free cash flow or FCF is the cash available with the company after all the expenses for working-capital requirements and capital expenditures are met.

    Both trade receivables and loans and advances together constitute 62% of the total revenue. This is not just for FY21 but has been the case since FY18. And since the receivable days are long and loans and advances are huge, they have directly impacted the FCF.

    FCF can be negative for one or two years, but it cannot be the same for an extended timeframe. In Brightcom’s case, FCF has been negative for a decade. This means the company has not generated cash in a very long time.

    Summing up, the revenue numbers look inflated. Perhaps that is why mutual funds have not touched the stock, while long-term individual investors sold their stake at the very sign of ‘exit’.

    4.”Should one invest in this stock?
    Based on fundamentals, the company has a long way to go to command its present valuations. The fact that the business has not shown any growth in an environment where tech-related companies are growing at a rate of 15%-20% annually over the last five years, Brightcom shows little promise. The promoter has sold out much of its holding. This does not look good for new investors who want to buy the stock.

    With a Sebi investigation calling for a forensic audit and more questions about the growth of the business, investors need to be careful before they take any investment decisions.”

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