Why there is no disclosure from the company about business after such a massive fall?
This is a bad sign
Why there is no disclosure from the company about business after such a massive fall?
Mum is the word. This is getting ridiculous. By now, they should have bombarded the media with their side of the story. Very, very concerning.
such a regular letter has come after 3 days of massacre and that too post market today. Seems to be the case of shutting the barn door (hoping) after the horse has bolted !! Wish they were more vigilant and had a sense of purpose, 3 days ago. Again, I am not even sure that anything will change due to this letter that is nothing short of saying ‘pl believe us, it is all fine’.
PS - frustrated investor
The stock price changes because of either there are more sellers than buyers or more buyers than sellers.
MRSS may become a much bigger company in 5 years or it may not.
Not even the management knows that.
And the stock fell because a few investors felt urgency to sell while there were very few buyers. Nothing else.
Vijayk… Very honest, direct and true reply… Add the fact that the early buyers bought close to Rs 10 and they are still making 15 times in 3 yrs…
Profit booking cannot be avoided.
The revenue recognition policy in the MRSS AR is interesting.
Typically revenue recognition using Percentage of Completion method is used in construction contracts which enable mgt to recognize revenue before the final product is delivered to the customer.
The recognition is based on how much costs have been incurred in relation to the estimated project costs. Obviously, management can change its estimate of the estimate of project costs and the really aggressive ones do to recognize revenue early. This was a real problem in real estate and different cos had different revenue recognition policies and freely altered them as and when they wished. Now there is one single unambiguous rule to recognize revenue in real estate.
Market research projects however are not long term construction contracts and a proper policy would be to recognize revenue when the service is delivered to the end customer and not based on percent of completion because it is left to the managements discretion how much of the work is really complete.
Good to see company highlighting about corporate governance
I think they have the minimum purchase of lot of 1200…that is quite difficult for retail investor to participate…
I suppose now they have reduced the lot size to 600.
Press Release about MRSS Inaugurates Office in North East of India.
Why you need to have office in North East for doing market research ? Is it for their holiday destination or what ?
I attended the AGM of both MRSS and Focus Suites. There were 6-7 shareholders in MRSS and raised a lot of questions. The management answered all in an elaborative manner. I am still travelling, if I get time I will share my AGM note.
P.S - Many queries were like sir itna loss ho gaya, kuch toh karo stock price ka!
Kindly share your valuable input for the queries and reply by management
Please also share updates for Focus suites AGM as well. Will wait for your updates.
I attended the AGM mainly to check whether MRSS have any real business or not or is the company floated mainly to syphon out money. The way the stock price dropped sharply from 400 to 60 within a year, solely from stock price chart it would seem like a fly by night operator. Here is my findings with AGM note -
Real Business or not - Yes, they have a real business. In one occasion, Raj Sharma told next time if you visit Delhi Airport, notify me prior, I will introduce with any of our field research guy and you can see how things work. Another investor told that he would be interested to do a freelance field research job for MRSS and Raj Sharma agreed and mentioned him to drop an email. Further, as I attended the AGM of Focus Suites so I have the opportunity to spend some time with Raj Sharma, from one of his phone conversations it looked like he was talking with some client discussing about business.
Preferential allotment - I told them that one of the primary reason of sharp stock price fall was the fact that the company allotted preferential shares to MD Sarang Panchal at Rs.315 which was 50% higher than the prevailing market rate of 200-220 and then while stock price crashed to 100, the allotment was cancelled. I directly told in personal chat that such thing shows the company is created with the intention of money laundering and creates huge negative impression for shareholders. He told that he was directed by merchant banker and don’t have enough prior enough knowledge of the capital market. I told them (both Raj and Sarang) unless Sarang steps in to buy the stock from open market till then the price fall won’t stop. The allotment was 315/share while the current price is around 60, so he should step in to purchase from open market. They told that they will look into it and take appropriate suggestion from regulators and bankers. (The point of merchant banker prompting preferential issue can be correct because nowadays many merchant bankers are guiding SME promoters in fraud by public issue in SME platform and then under the table settlement. Behind the promoters merchant bankers are the main culprit for whatever the wrongdoings are happening in SME platform). Raj Sharma mentioned about no further preferential allotment, no further FPO.
Appointment of Daniel Foreman (UK resident) as a director - It can be looked suspicious or another way to syphon out money. Raj Sharma shared as follows - Daniel is a serial investor and holds a portfolio of tech companies in Europe. He will help in technology partnering for the company (MRSS aggregates technology partner for market research). Daniel is associated with various new age tech companies and he expressed interest to join with MRSS. The lengthy government process to acquire DIN and PAN for a foreign resident to join in the board of Indian company disappointed him a bit, but if things go well he would be interested to invest in MRSS in the future. (No way to verify anything about Daniel’s appointment but if he picks up stake in MRSS through open market purchase then that would be a big booster for the stock price and will eliminate many negatives surrounding the company)
Business prospects - He told that previous 100% growth is not feasible in the current year due to the higher base but the long-term vision to become No.1 independent market research company in Asia with 160-175cr revenue by 2021 is still intact. In the previous 100% growth journey, they committed some mistakes like stretching working capital, taking high-interest cost loan etc and now appointed CFO for fixing such issues. He didn’t provide any topline guidance for FY19. On the business front, they acquired around 20 airports contracts including some foreign airports (like Changi, Singapore) and looking for other airports in South East Asian countries. There were few bids for Government contract and positive about getting National Family… (can’t memorise the name but looks like some population count type government contract)
Migration to main board BSE - All the paper works are complete, a bit delayed due to Daniel’s induction in the board. Surprisingly, Raj mentioned that many shareholders told him to wait for few months for migration as it might increase price volatility further for the quarterly result release! Similarly, many other told him it will benefit the company. I told him no matter what you do, you can’t satisfy everyone around you. So, instead of depending too much on shareholders contradicting opinion, just go ahead for mainboard BSE listing as almost paper works are done. The management then agreed somewhat and seems migration to mainboard will happen within 2018 end itself.
My personal investment position - I first invested in MRSS in December 2016 during FPO time and the stock price went up 7 times from there within 1 year. I did some profit booking and also invested at 200-300 level in many parts which is currently showing a big loss. I will continue holding as I sensed there are some real business going on. I might be wrong but my point is while we invest in SMEs for 200%, 500% gain then we must have the appetite for 100% loss. The downside is limited to 100% but the upside is unlimited. Very few selected SMEs (may be less than 5%) among all listed SMEs will offer huge return and the majority will go zero. Thus SME investing is suitable for investors those can tolerate/manthe age loss of capital. The disturbing point is many investors keep saying the management that I lost this amount, Why the price is falling, do something to move up price and so on. Even Raj Sharma told me that many investors called him in the last few months for doing something to resist stock price fall! (The mistake of Raj Sharma is he kept distributing his personal phone number and email whoever asked him). A promoter should not distribute his phone number among shareholders.
Overall, the management is quite open and answered every sort of questions from shareholders. But it seems too much listening of shareholder’s opinion costing trouble. So far so, Raj was telling that last year AGM was in Bangalore city and many shareholders told to conduct near airport as it takes 2-3 hours to travel from airport to city, so this year they conducted it near airport but surprised to see very low attendance compared to last year! I told him it is all about stock price, if the price keeps moving up there would have been more buyers more attendance and vice-versa.
The current stock price of 60 translates trailing P.E of 4-5 which is nothing unusual as during the 2011-2013 many microcap companies were traded at such P.E which turned multibagger by 2016-17 like Caplin Point Lab, Avanti Feed etc and many other vanished too. I might prove correct or wrong but I will continue holding as I sensed some real business with quality but moderate growth prospects and as I have the appetite for 100% downside. Further can’t comment anything on stock price, do your own research before taking any investment decision.
Thanks a lot for sharing such detailed notes.
Was there any discussion around business performance in this term and any views about having multiple entities in the same business segment.
Good to see management confirmed everything is good and they are clean.
Are you buying now ?
Whether things are good or not will be proved after 1-2 years. Right now, there are no way to conclude it. I am neither buying nor selling just holding. One of the reason of such price fall is surely too much promoter’s attention to shareholders. Whoever asked the phone number of Raj Sharma, he shared it with all. Many of those shareholders are now panicked and questioning him directly in phone call and he replied like I can’t do anything with the stock price as I did nothing while it moved up from 10 to 400. Such comments are adding fuel in fire. He also kept saying that he don’t have prior enough knowledge of the capital market and still learning (not sure whether it is true or not)
I am interested to know exactly who are selling over the last 2 months. If all the selling comes from retailers then fine but if any selling is coming from promoter’s or any associated party then only it would be a real danger!
I will share the notes on Focus Suites in another thread, that’s also a very interesting experience!