The BSE Notification dt 31st May-2018 on ASM is clear as to how the scripts will be reviewed . Relevant portion is given below for your reference
“Further, Securities which are placed under the ASM framework would be reviewed on bimonthly basis for the applicability of ASM Framework. Accordingly, review for securities in ASM Framework has been carried out and list of such securities which shall move out of ASM Framework w.e.f. June 01, 2018 is given in Annexure II.”
Most probably most scripts which went into ASM on 1st June-2018, should move out on 31st July-2018.
Seems the vicious cycle of pledged shares is hurting the retail investors in this stock very badly.
Can someone on this forum explain how they view the stock price unfolding in the next 2-3 months, assuming the demerger would take at least 6 mnths from now?
Is there any place where we can when they submitted last few quarters SHP ? Inspite strong results the price is continuously falling which may be due to frequent pledging and revoking etc. But this is the case even in previous qtrs where as the price correction is more this time. I just speculate that may be RJ has exited some poration (yesterday ET article on RJ holdings mentioned the scripts where he either increased / no change but did not find Prakash name there) and it may causing the fall.
Sorry if I am not supposed to raise RJ point here but just to want understand from experience people view. I hope they are not deliberately delaying the SHP disclosure.
PS: Invested @ 130 and this is my 3 post in valuepickr so not very familiar on what to write and what not. Thanks
Ya. Seems old case, but fresh chargesheets.
The firm as well as some promoter framed as guilty. The news mentions that ED has attached several properties of the firm as well as the individuals charged. Further proceedings on Aug 18.
Now that AGM is on 20th july, there wud definitely be some management clarification on this…
When should one say that you have not picked right? Is the question I am trying to answer. Definitely I am not been bearish only because of the recent news … or due to down fall. The results are good but heavy pledge is also concerning
Latest share holding is here. Jhunjhunwala continues . Mutual funds and Foreign portfolio investors also continue. It appears that only small retail investors like us panicking !
Yup you are right RJ holding & Mutual fund holding is intact and pledge shares are almost same.
Also, Co. has categorically denied that they are unaware about any charge sheet filed against the CO. on the clarification sought by exchange. Interesting to watch.
Just a food for thought, Promoters few days back had converted 19.80 lac warrants into equity @ Rs. 210 per share. Instead of converting,they would have purchased from open market as current price is significantly lower than market price but they honoured their commitment even when there was time to exercise warrants.
Also, coal block allocation is an old issue which everyone is aware even big groups like Jindals etc r involved. When govt officials itself indulge in such activities what corporate will do they have to get it things done by hook or by crook. Even big ministers name was there in CBI report. Reliance has not become Reliance by following clean policies which we all know ! When corruption is in blood of govt officials , no one can get things done without paying … Just think your own case in day to day basis.
Just a thought which came to my mind while discussing Prakash issue with one of my close friend and shared with you all… Let me know your views…I may be wrong
Just two questions that I have and had for some time now:
a) Is one not supposed to exit cyclicals when the P/E is low? For those who are invested why is it different incase of Prakash Industries?
b) With almost entire promoter holding being pledged at what levels will the bankers start mass dumping? Can looking into AR and the loans they have can give some clues.
Disc: No holding in Prakash but looking from sidelines.
Yup, pledging is the major concern- 78 percent shares are pledged & if margin call gets trigger then lending institutions may dump the share.
There is a structural shift in steel industry and it looks like steel companies will post good numbers for another 2-3 years as there is lot of demand in India. I think just forming the opinion on the basis of PE alone will not help and In case of Prakash main issue is Promoters image
In the worst case scenario of lenders dumping the share, what happens next? A hostile take over?
I know that wud be a painful process and share price could fall to any level. But the long term business would still remain or even that would be uncertain?
Steel is cyclical for sure but this cycle is different. China supply is going to be weak for the forseeable future which was chief reason for the last global downcyle at the same time India demand is going up. India supply is capped due to lack of investment after prolonged downturn. Just look at Prakash Fy18 AR they are being financed at 16-18%. Even IIFL housing finance is extending loans at 14%+. Which bank will fund steel capacity expansion in India after the mortal blow they have received from the sector. There is very little capacity addition planned over the medium term while demand should grow at GDP% +/- 2%. IMO, what we are seeing is investor sentiment cycle peaking not steel cycle. I agree with Jiten Bhai that there are few more years to go before steel cycle peaks.
Only downside is big China recession or global downturn due to trade war. I have not seen any steel promoter or analyst who says that India steel prices should start major downturn. Of course, a bad coalistion in 2019 will hurt infra spend but housing should remain strong till 2022 and Prakash sells long steel for construction. We need to keep in mind that only Prakash is planning to expand its steel capacity over the next few years that too with capitive raw material. It is kind of unfortunate to see this pledging issue and CBI/ED hounding. It is the court which has asked ED/CBI to investigate wrong doing like 2G. It is another matter that they will find evidence in all these cases. To be clear I am not implying that he is clean but an NRN type of promoter can’t run steel and mining industry whether its India or Germany.
first of all ED has only filed a prosecution compliant against seven companies because of the pressure from supreme court for some action in coal block allocation case and now they wanted to file the charge sheet under the new PMLA other wise this is an ongoing registered case.
secondly the other companies like GIL, jeswal nesco werein there was direct nexus established only the court has already taken action in PIL case there is still no case made for the court to act.
Also recently the odisha goverment has cleared the iron ore mining for PIL even there all the pending cases are taken into account before such clearance is iisued.
then people repeatedly saying promoter has reduced there holding that is not correct earlier there holding was 6.22 cr shares on march 2017 and now also it is 6.22 cr there is some changes in the public holding by mukul agarwal and some institutions.
there is also one amarjothi vanijya pvt ltd ltd, soyuz tradecomm and makrana tradecomm put together hold nearly 8% all promoter related entities only.
the total debt inclusive of 18.5 million USD FCCB now stands at 850 cr. the pledge of approx 4.5 cr shares is the on;y means promoter can raise short term funds.
secondly they have not run away like other promoters vp agarwal has been standing behind the company for last 20 years and still feels with the steel market revival in india he should be debt free in two years.
this looks possible if they are able to maintian the cash flow like this financial year. they are not export related and all there demand is purely domestic only they should worry about dumping from china and korea.
so 1 million ton steel making capacity alone should have a replacement cost apart from the power plant and pvc opeation at the present price the market cap is less than 2000 cr and enterprise value of less than 3000 cr with EBITDA of around 650/750 cr works to less than 5 EVEBITDA.
assuming all the risks associated with the cyclical nature of the product and uncertianity in the cases the factors looks like already priced in at the present CMP
if we took take a long term look IMHO the present m.cap seems to give a entry point.
To start with my experience in cyclical is limited and most people on Prakash here will know a lot more than I do. My only cyclical play has been DCM Shriram in Sugar and it was scary. It made me realize I dont have a bend of mind that can handle cyclicals and not certainly in the middle of the cycle. From what I have learnt from seniors Cyclicals can be played in two ways:
a) Buying a huge discount to the book, something like buying a dollar for a dime (say quarter) and exiting at the book or a little premium to the same with a ton of patience.
b) Tracking the supply side which I think is difficult but done correctly the cost of capital can be avoided.
The following is not a rebuttal but purely from my learnings in last few years where I have tracked cyclicals.
Anyone playing a cyclical whether it may be paper/graphite /steel will have and seek reasons to remain stay put, more like confirmation bias. Has happened to me in Sugar where at some point of time I started tracking daily prices on NCDEX.
Look at the larger players like Tata/JSW/Mittal their cost of capital is significantly low, creating a huge disadvantage to players like Prakash. Prakash’s rates should not be used as a benchmark for the steel industry.
As I said I do not track the segment, in all likelihood Jiten Bhai and you are more likely to be right.
Go back look at FY17Q2/FY17Q3 sugar companies, the promoters/the analysts and some marquee investors too had no clue about Q4. My only suggestion is to not to take them too seriously.
Discl.: No holding in sugar/steel/graphite. The above are generic views and should not be considered an opinion on Prakash Industries.
