Recall the story of the brahmin who once while carrying a goat on shoulder came across four miscreants in the way.............
PART III
This is the most mysterious IPO of this century.
I have already tried to evaluate its intrinsic value.
But most important thing is that its enterprise value is negative at this price point. How ?
The enterprise value of a company which is the liquidation value is represented as :
Market cap + debt and debt equivalent - Cash and cash equivalent
= 6 lac cr - say 10.7= - 4.7 lac (as per LIC calculation it is slightly positive).
To make it a zero enterprise value company, price of share value should be at least1693. Once we heard its price to be about 2100 now 949.
The significance of a negative enterprise value is that the company has failed to reflect in the market cap i.e the perspective of the market (here negativity is in the perception of the promoter). So share is under constrant for any reason.We know the reason here.It is not weak but weakened.
Howsoever, responsibility vests in the promoter. It is the callousness of the promoter of the company . Such company comes with the tag of a distressed company. Intention of the promoter is also questionable.
Thus dropping the price from higher level to here has made it weak , and from a toy of momentum players to value seekers .
Now take some important points:-
1.Is it appropriate time ? Everybody will say "no"
2.Best discovery of price is possible at a good time .
3. Better price which reflects in market cap , signifies further upmove in future.
4.Distressed seller never to higgle, it should be sold at the first instant.
5. 2100 expected price almost was clear to everybody , GMP was - 32,
now at 949 GMP is in minus . Does it indicate that so much lower price has weakened it to this huge extent ?
6.With the news in the market that LIC shares coming in the market, price of pvt. company shares dropped 14 to 22 % within some days (as I shown in an earlier post) but this time even in a worse market they are firm.
Does it mean 2100 price was bad for them and 949 good ?
May it be a camouflage move by the interested persons ( unko to bhatta baith giya cholo inko sath cholo)?
7. LICHFL was strong at that time as is naturally found but now at lower price of the IPO it is sinking.matlab isko bhi gala daba ke rakh diya .
8. By the time a shoe company (ego juta) blocked over 50000cr,
LIC blocks 49000 cr . Are Ram Ram, humko iye biswas karna hoga ki inko ego juta ka bhi aukat nehi ? Dekho kahan lake khada kar diya !
9.By the time Rainbow, Delhivery (fv =1), Prudent etc have come out with sky kissing valuation. Only a few have detailed knowledge /idea of these companies.
10.At 2100 price point people were enthusiastic about LIC but now in 949 bahut ko nind chut giya ? Kiyu bhai , niche me mil raha he, iye he na taklif.?
Dekho achha share agar kisi karan niche mil jata hai to o bechne ke liye nehi he. Agar tasalli nehi he bech ke nikal jao.
11. In case of Ruchi many were worried who will buy (1% to 14% free share).
They have experienced who buys.
12. In this case question is who will sell. There wil be abundance in buyer.
It is not advisible to buy share of a distress promoter.
Lekin ye banda dushra he apna ghutne for majbut he, kitna kosis kare ghutne tikane ke liye. It has a great public image which is to be translated.
Now how it can list !
1.Operators know that the price is much less than what actually had to be.
2. They know that this company has great image in the public.There will be no shortage of buyer if some confidence is built.
3. They know that everybody knows that its very cheap and sold at a distress and the long term story of it.
4.They know that negative newspread has dispelled the listing gain mongers.This alongwith behaviour of the promoter and its wings , helped for very low subs for nonparticipation of weak hands.There is a mass scale rejection consequent upon stringent implementation. It creates a feeling of missing bus for many who will try to buy on listing day. So shares are mostly in relatively stronger hands. And also there is a concentration in fewer number of hands.Rejected persons and all who have belief in its long term story will try to buy it on listing.
5.For any share to be played on the upside, its listing above price is required otherwise sentiment becomes negative. Even if it lists below, it has to spring up the price and sustain above it .It is the essential requirement. If it sustains below price for quite sometimes sentiment becomes negative.This is all about our experience in this subject.It is also correct that any experience may be challenged by this mysterious IPO.
6 .All pervading negativity including GMP is artificial and created for grabbing it . If operators have intention for playing it on the upside, they will never allow negative listing.So its my firm conviction that it will be tepidly positive to surprise listing even may be beyond our expectation depending on the mode of play.
Khoda na khasta, agar negative listing ho hi giya to samaj ligiye ye ek dushra mouka lene ke liye, don't see IRFC , see RVNL.
Bazar ka unch nich se inko jada sampark nehi he, lekin thoda bahut madat inko liye faldaye hoga.
Infine, BM SURANA SIR,
Sari hisab kitab, numerology, astrology, thikuji , kusti, history, ,Ramayan,Mahabharat , feelings mere samaj ki hisab se apko sri charan me nivedan kor diya.Bas aab apko oonth ka karbat ka intejar me hun.
Mangal ko din sabko mangalmai ho eye mere monkamana.
Achha rahe , khus rahe ,bahut paisa kamaiye
Best of luck
Disc : It is a compilation not any advice.
Zerodha (Trading & Demat Account)
Top Contributor (200+ Posts, 100+ Likes)
RHP
IPO Mentor (600+ Posts, 800+ Likes)
IPO Guru (2600+ Posts, 4900+ Likes)
