Can anybody have details of concall held on yesterday? It can prove helpful in understanding the current issue…
Margin contraction is due to blending of revenue from two sectors namely service sector and product sector.Product sector is high margin business which is facing heat due to softening of prices in optical fibres. Services sector is low margin, asset light business whose contribution in revenue is increasing and this is the reason why there is contraction in margins is happening.
I think management has done a great job in blending it’s revenue from services sector otherwise the scenario will be worst than this.
This situation can clean up other optical fibre company whose revenue model totally depends on product sector namely optical fibre.
My gut feeling still allows me to remain invested in business for 3-5 years to create a value and to full the basket with more oranges near 190.
Opinion may be biased as I am invested.All views and criticism are welcomed.
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Please listen to Bloombergquint interview today by CFO:
Couple of things,
- Money is an enabling provision no immediate plan to raise the money, but incase right opportunity comes they want to be ready. They have been doing this for last many years.
- He believes at current rate lot of players might be cleared out - which will be good for the sector as a whole and such things have happened in the past too.
- Margins will be impacted due to pricing issue + service mix. I expected them to be more transparent in dealing with this issues, rather than just putting it under the rug. I think Mr Market does not like this ‘all is well’ attitude of managment, when things are clearly not right.
Disc invested.
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Does any one notices bulk buy deal of approx 24 lacs shares of Sterlite technologies at 181 rupees by BNP Paribas arbitrage fund.
As per my understanding arbitrage funds make money due to difference in prices of present and future prices of stock…But Sterlite is only cash traded counter and does not participate in F&O…Can anyone help me in understanding the whole scene…
Fund Details
This product is suitable for investors who are seeking an investment in a diversified portfolio of equity and equity related instruments, including use of equity derivatives strategies and arbitrage opportunities with exposure in debt and money market instruments.
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INVESTMENT OBJECTIVE
The primary investment objective of the scheme is to generate income and capital appreciation by investing in a combination of diversified portfolio of equity and equity related instruments, including use of equity derivatives strategies and arbitrage opportunities with exposure in debt and fixed income instruments. However, there can be no assurance that the investment objectives of the Scheme will be realized. The Scheme does not guarantee/indicate any returns.
Any latest update on pledge issue? I believe that market will respect this stock only if pledging issue is resolved. Comments / suggestions are welcome.
Sir…what I want to know is still unclear to me…
My unanswered questions are as follows…
- Does Sterlite technologies wants to come in F&O segment?
- Whether fund buying in this counter reassure investor community confidence in Sterlite technologies?
When stocks are bought under p-notes it comes under the name of Bnp Paribas arbitrage fund. As the name is not in f&o it can’t be bought by arbitrage funds. This is some FII buying through pnote
[https://www.bseindia.com/xml-data/corpfiling/AttachLive/c4a76ce9-ef06-47a6-874c-8ef757ac400d.pdf](http://“in-principle” agreement with their lenders, expect the removal of Pledge of Shares of STL to get completed by end of July, 2019)
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What is the meaning of an “in-principle” agreement?
The share pledge either continues or get removed removed - what is the need for an “in-principle” agreement unless some covenants of the previous agreement have been breached?
It seems the margin was triggered and like Essel/Zee group, the Sterlite group has reached an agreement with the lenders to not sell the stock.
How you infer such things from this announcement? Can you explain what circumstances lead you to have such opinion? Initially I considered this announcement good for company, as it will results in depledging of share.
Is there something , which we are unable to read between the lines?
I can think of two scenarios ::
- Maybe the price action was negative so bankers would have asked for higher collateral and hence the need for this discussion
- Lot of clamour has been raised by shareholder of STL to remove this pledge and that might have been another factor for promoter group to actually thinking of depledging.
I guess the in-principal agreement would be more to calm both the investors and bankers that they will be realsing pledge by July and hence no need to either panic or do a margin call.
But these are my own conjectures and not necessarily the real event.
Overall if pledge is removed that will lead to removal a major overhang on the stock.
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Check this out from the latest quarterly transcript
Management says that the margin requirement against pledged shares is tested every 3 months.
Last testing was in Feb-19. Which means next margin requirement test was in May-19.
Unless there is a breach in covenants, there is no need for an “in-principle” agreement.
A firm agreement is always backed by a cheque/cash.
A “in-principle” agreement only shows intent.
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Sterlite Technologies Promoters removed 100% of pledge on company’s shares. This is what had been weighing on the stock in the recent past.
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Not correct entirely. The stock started falling as soon as spot fibre prices started falling. Some hopefuls, incl me, thought it is a temporary issue due to China Tele orders but the fall has been rather sharp. This pledging issue was just a made up one and not many serious investors sold because of this. It was easy to blame since it was visible but the main issue was underlying weakness in fibre prices which has not gone away.
Disc: no holding now
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Hi Sumit, Is there a way to check the current prices?
Sorry, I have no access to spot prices but this is a B2B transaction and difficult to know the prices. This is one reason I let it go at loss since quite a few folks in the market seems to have access to the pricing environment either by talking to concerned people involved in bidding or specialized subscriptions etc.
Not directly this company but the same group. Gives a good view on the how the situation has unfolded.
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How is this post related to Sterlite technologies? Please share the motives behind sharing this link?
very clearly mentioned that this is not related to the company but belongs to the same group. The way things have unfolded and the management action provides insights into management behaviours, which is one of the most important aspects of analysing a company.