Bro, I don’t think it is necessary to have a post on VP in order to have a stand on promoter integrity. If one is following this company from last 5-7 years, one can see so many red flags, not just one or two.
Cash flows can be manipulated; I don’t look at those in isolation. What is most important for me is the promoter actions. If they have been questionable in the past, i refrain from investing in such companies.
A short note i posted to someone, where i mentioned some of the red flags (mainly promoter actions). If one sees balance sheet and stuff, there are many more.
“[10:46 AM, 5/30/2018] Mridul: I looked aksh opti lil more in depth. The issue here is that promoters have not been trustworthy n hav used every trick in the book to sabotage shareholders. For instance fccbs, insider trading (penalty imposed for non disclosures), delay in commissioning capex (~18 month delay), subsidiaries making losses despite assurance of improvement from last many years, deworsification into fiber services resulting in write-offs, Dubai venture making losses, mkt not sure about 85 cr lens manufacturing diversification seeing history of diversification being deworisification. They import preforms from china, prices of which have been on upward trajectory from last 2 years. Low ebitda margins - Despite repeated assurances and claims of them being cheapest oc provider they have been unable to pass of rm price escalation to the clients. Two, losses in subsidiaries is ever pulling down their product business. Capital allocation track record isn’t anything to speak about. Overall, i feel, mkt is not rerating this company despite so much capex coming live as mkt wants to actually see them walking the talk. Their history doesn’t enthuse confidence. On positive side, it is very well placed technically. And spot prices for optical fiber being very high, they can make a killing if the story plays out as people r expecting. But to me, what matters is promoter integrity and their past. People usually do not change!
[10:46 AM, 5/30/2018] Mridul: By the way, they have subscribed to warrants at 42 sometime back.
[10:49 AM, 5/30/2018] Mridul: They r still claiming depreciation on investments made in service business like voip etc to claim tax benefits. Don’t want to write-off those investments for this reason.”
PS: This is my point of view and i reserve my right to be wrong. I take an investment call based on promoter integrity, which i think is the most important thing. A ‘smart but not so ethical’ promoter tend to work for himself rather than for his shareholders.