Logan

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  • in reply to: Shareholding Pattern – Analysis #10023
    Logan
    Registered Boarder

    Everything depends on 2 things. Execution from the company’s side and perception/sentiment from the market side. If the company takes good decisions then it doesn’t matter if retail investors hold more shares.

    When Tanla was trading below 10-20, it had more than 65k retail shareholders (share capital up to Rs. 1 lakh) and they held 45% of the company. Tanla also issued warrants etc but they were mostly to promoters and they didn’t dilute like how BCG is diluting.

    Recently, we saw how the price went up from 4.7 to 9 even in spite of the issuance of warrants. This shows that the market doesn’t care about dilution and all it cares about is actions from the company’s side. The market just wants the company to get past all the issues. All these years the company was struggling for value recognition but that is changing now, most of the market participants understand BCG’s value thanks to 2 things –
    1. Affle coming to the market.
    2. The COVID-19 pandemic which made people understand the importance of digital sector especially new age technology.

    Though I don’t give much importance to things like Axis and Daum, I understand how much impact these have on the sentiment and the valuation of the company. Nobody likes to come on board if a company has pending issues. Would anyone agree to live in a rented house if the owner/house had any litigation? Here also it’s the same. Good thing is that magnitude of the issues is not as big as how people are thinking about them.

    ICICI Direct wrote this about Affle – We believe the rally in Affle is just tip of the iceberg and can see sustained rally for many years. People are seeing Affle as a new age company but when they see BCG they see only India debt, pledged shares, Lycos-Daum etc.

    There should be a shift in how people see the company -when they think of BCG people should start seeing more of Brightcom and less of Lycos. That is when BCG will become famous. ICICI Direct and others won’t look at BCG now because of the market cap and low PE multiple but they’ll praise the same company when it reaches certain valuation.

    in reply to: New Research Report for Dec-2020 #9998
    Logan
    Registered Boarder

    @jmathew, Affle’s revenue is not 200crs, for FY20 it was 340crs and this year it may make more than 400 or 450crs.

    3+
    in reply to: General Discussion #9989
    Logan
    Registered Boarder

    Continued…

    That doesn’t mean profits are useless – in fact profits are very important for many things. It is because of profits that BCG didn’t borrow external money for doing normal business. Without profits BCG’s business wouldn’t have sustained and we’d have seen fall in revenues and profits. It is because of profits (converted to cash) that BCG could pay off the loans (more than 250crs) without borrowing – All the loans were paid by using it’s own money.

    Profits are very important for sustaining the business but you need cash/liquidity for growth or to pay off entire loan amount in one go or to pay for settlement with Daum in one go.

    in reply to: General Discussion #9988
    Logan
    Registered Boarder

    Simple way to make people understand the difference between profits and cash flows.

    If any genius starts doubting the profits of BCG then please ask him/her this simple question-

    You have Rs.100 with you and you decide to buy a share of a company trading at Rs.100 per share. After a year that share price goes to Rs.150. You don’t sell the shares and decide to keep it. Now the profit is Rs.50 but how much cash you have? Zero right? Does that mean your profits are fake?

    You need to pay loans of Rs.10, how will you do it-you don’t have any cash. You have Rs.50 profit but why can’t you pay just Rs.10?

    The only way to pay the loans is if you sell the share. Your profits will be realised only if you sell the share.

    In businesses also, there’ll be profits but not all of that will be in cash. The above example is very very simple but as we know doing business is complex and involves many parties. Companies buy many things on credit, for some they pay instantly which impacts the cash flows.

    With BCG, although it’s making profits, the company is not getting the cash from clients whenever it wants. Some profits are stuck in receivables, some are reinvested back into the business. If you want to continue business with a client then you have to agree to their demands and you can’t demand them to pay cash sooner. If you do that then you’ll end up losing that account.

    in reply to: General Discussion #9980
    Logan
    Registered Boarder

    @odysee, I don’t know about that particular index but in other indexes (indices), they see many factors like market cap, price of the stock (they’ll try to exclude stocks trading below 10), growth of the business, future aspects etc.

    Recently in the Dow Jones index, giants like Exxon Mobil (before that GE) were replaced by modern companies like Salesforce.

    With BCG, the good thing is that it’s in a growing industry. All the traditional advertising is shifting to programmatic. The market is very huge – global ad spend will be close to $700B in 2021 of which more than half will be digital according to eMarketer.

    This doesn’t mean BCG will be recognised just because its in that industry, it all depends on execution and if the CEO takes good decisions then we can expect a turnaround story like Tanla. If the market cap reaches a certain level then many parties will be interested. Most of the fund houses look for stability so they try to avoid small caps.

    in reply to: General Discussion #9914
    Logan
    Registered Boarder

    @manas18goel,

    Long term loans and advances: Advances to collocation centres, service providers such as algorithm developers.

    Short term loans and advances: Advances to publishers, brand development in geographies, and new market development.

    Other current assets: Investments in products, databases, internal productivity tools.

    Loans and advances are given to publishers and receivables should be collected from the advertisers. The loans and advances are huge but that’s what BCG has to do to get good publishers, media space etc. If they don’t pay publishers on time then those publishers will go with other companies who will pay sooner. Also, sometimes you’ve to pay more in advance to get priority. The loans and advances are more but payables are less which shows that they don’t owe much to publishers which is a good sign but that impacts cash flows/liquidity. If you check TTD and Magnite Inc, both have huge payables and receivables (more than double the revenues). Since they are not paying like BCG does, they have more liquidity i.e. they’ll have more cash on hand which they can use for growth etc.

    Getting the Line of Credit (LOC) should allay concerns on receivables because the lenders will go through everything before giving the LOC. One more good thing is that BCG paid 190crs tax amount in 2019-20 which is not small. That’s more than half the revenue of Affle.

    in reply to: General Discussion #9845
    Logan
    Registered Boarder

    @vgsatwork, the industry that BCG is in is still growing, it’s not an old industry to give companies P/E of 5 or P/S of 1.

    When Magnite Inc was trading at 4 times revenue (P/S-4), Motley Fool website called it undervalued. Magnite has losses but it’s revenues are growing. Only thing that’s not working for BCG recently is that the growth rates are low but if you see the growth rates between 2010-16, they were very good and the margins are also better than many other companies. So BCG should get at least 3-5PS or 10-15PE. If the growth rates are higher in the future then BCG should get higher PE.

    If sold, OMS alone will get you close to 5000crs (P/E-20 or P/S-5).

    in reply to: General Discussion #9841
    Logan
    Registered Boarder

    @Rathi_b, thanks for your reply. Hope we’ll see actions soon. This is a very good time for tech company stocks, if the CEO takes good decisions then surely the market will reward the company.

    in reply to: General Discussion #9818
    Logan
    Registered Boarder

    @Rathi_b, what are your opinions on the issuance of warrants? Do you find it fishy or is it genuine? Did he reveal more details on that topic?

    What’s the need of warrants when they are certain that they’ll get the LOC?

    in reply to: General Discussion #9810
    Logan
    Registered Boarder

    Thanks @Rathi_b and team for your efforts. We all are eagerly waiting for your updates.

    in reply to: General Discussion #9797
    Logan
    Registered Boarder

    @Rathi_b, please ask him about the lack of details about few items in the balance sheet like other assets, other receivables, loans and advances etc. In the conference call he told us that complete details of all these items would be mentioned in the annual report but he ignored it.

    Only old investors know about these items and new investors and analysts will always read annual reports so it’s always good to mention complete details in the annual report or make regular presentations and update the investors.

    Also ask him why the company still hasn’t improved in communications with the investors. They won’t even reply to our mails.

    in reply to: General Discussion #9784
    Logan
    Registered Boarder

    Looking for the Next Trade Desk? This Under-the-Radar Small-Cap Stock Could Be It

    All the adtech stocks are gaining attention except BCG. The penny price of the stock is what’s making it not popular. The management’s focus should be on that (which even the CEO talked about).

    in reply to: General Discussion #9729
    Logan
    Registered Boarder

    Either it (the issuance of warrants) must be very good or it will be very stupid. The CEO has chosen to do it just before the AGM which means more scrutiny but without knowing why these warrants are issued how can we vote to approve it? The management team, the board lack basic common sense.

    For many years the company failed to gain value recognition but now thanks to interest in new age companies, material developments (and also because of Affle listing) there is value recognition but value realization hasn’t yet happened because of the pending issues. When we were close to it, Axis case happened and now when we thought we would get past all the issues (with the help of LOC), we have to worry about the dilution of shares. Though that dilution may provide the company with capital, it is really bad to dilute the shares by this much when the price is trading at lower prices.

    in reply to: General Discussion #9718
    Logan
    Registered Boarder

    @Raj, we have proof that a company which is controlled by someone who is allotted the warrants is trading shares intra-day. This is not a good sign for stability of the share prices, he can’t ignore that.

    We asked about G group and Oak but he didn’t answer because they were third parties but this person/company is directly involved.

    in reply to: General Discussion #9715
    Logan
    Registered Boarder

    We should talk about this Zuber Trading’s trades with the CEO. In AGM someone should raise this when they ask about the warrants topics.

    in reply to: General Discussion #9697
    Logan
    Registered Boarder

    @nitin_asce, compared to last year’s AR this year’s looks far better. They’ve given more information on the business, company structure, it’s history etc but they’ve ignored to give complete details on many items on the balance sheet like other assets, loans and advances, other receivables etc.

    We requested them to make the annual report as informative as possible but they took only half of our request.

    in reply to: General Discussion #9692
    Logan
    Registered Boarder

    @drjaysee, the warrants will be accountable only after it is approved by the shareholders, exchanges. Remember PO allotment was approved by shareholders and BSE but NSE took more time.

    Regarding price movements, everyone has different theories. My theory is that it all depends on the basics of the stock market, which is supply and demand, optimism and pessimism, fear and confidence etc. Since BCG is a turnaround story (not the business but the price) everything depends on material developments.

    For there to be big changes in stock price, People need to be optimistic about the future of the company. When the price is this low and when the company is having few issues pending, everyone will be sceptical so only material developments will lift the price. If you check all the stocks that have gone up, all were battered before the rally and that rally sustained only when there was more optimism than pessimism.

    Many companies like Birla tyres, Alok industries, subex went up but the rally didn’t sustain because there weren’t material developments. Later subex went up because of a material development. Famous names like Reliance, Birla couldn’t stop stocks like Alok and Birla to fall more than 50-60%.

    Events like NCLT bring supply, fear and pessimism. Once that is done also we may not see demand, confidence and optimism because there is still Daum issue pending to be resolved.

    in reply to: General Discussion #9672
    Logan
    Registered Boarder

    @Sumeshnair2005, why would they give 65crs to the company if they don’t convert warrants to equity?

    If they aren’t going to convert the warrants later then they can buy shares worth 65crs from the open market now itself right? At this valuation with 65crs, they can easily get close to 25% of the company.

    Still the management team hasn’t told us why they want to dilute the company by this much. Instead of diluting, they could’ve easily gone for loans and pay interest.

    7+
    in reply to: Issuance of 34 Crore Warrants #9628
    Logan
    Registered Boarder

    @odysee, at this point without any information we can only speculate.

    This is just a speculation, not to be taken seriously.

    1) I don’t understand why they want to raise funds when they are seeking LOC. Maybe LOC is put on hold and they want to close off Daum settlement with the money raised by issuing warrants.

    260crs is still not a guarantee but they will get 65crs. 31crs was raised from po allotment and it is not yet used anywhere because of Axis. If we add this the total comes to 96crs. 96crs is $13M. Maybe $3M from internal accruals so totally $16M. When Daum is settled, the price may go up.

    2) If LOC, then 260crs is close to 1/3rd of the digital business receivables. Maybe 1st line is 65crs and instead of paying interest they are giving shares/warrants?

    3) I don’t think promoters have 260crs, so they will bring an outside party who may be is a stable investor. Part of the warrants may go to promoters and the rest to some entities. Looking at the past history of the price, the investors want warrants instead of buying from the open market. They look at the business and they want a piece of it but looking at the price they get two thoughts so they opt for warrants. Doing this will also give the company extra money. If they buy from the open market that money doesn’t come to the company.

    (These are all my speculative guesses and should not be taken seriously. I’m just sharing my opinions. When they don’t provide proper details, we make up these crazy theories).

    in reply to: General Discussion #9613
    Logan
    Registered Boarder

    @VivekRT, I also believe that. See I don’t give importance to Daum and Axis as they don’t impact the business much but I know how important they are for changing market sentiment. The sentiment will change only if these are closed. But problem is with their transparency.

    Suppose you have some health problem and you go to a doctor and the doctor tells you that you need a surgery. He won’t say what problem you have or he won’t say where he has to operate on but he only says you need a surgery. What will be your reaction? Don’t know how good an analogy this is but my point is it’s better to give all the details at the beginning itself so that no-one has any confusion.

    Obviously the company will update us later but my question is why can’t they update us now? This is a very big decision and impacts the company a lot. What will they lose if they update now? It’s not a sensitive matter also. For sensitive things like Axis and Daum, they need not take our approval but for this they need it and it’s better to tell us at the beginning itself.

    This is what Warren Buffett says about communication and it suits BCG perfectly:

    “If you can’t communicate, it’s like winking at a girl in the dark — nothing happens. You can have all the brainpower in the world, but you have to be able to transmit it.”

    The management may have good intentions but they should communicate well with the investors to gain trust. It’s the investors who will value the company. If they keep repeating these mistakes then the market won’t take them seriously. The price may go up to say 3-4PE but to get the right valuation the company deserves, the management has to be more transparent.

Viewing 20 posts - 381 through 400 (of 519 total)