Vivek Gautam Portfolio


(Tarun) #264

Actually moneycontrol is not listing this one.


(Vivek Gautam) #265

Can we escalate it to MC? How to do that? Many people missed buying it due to it being not available on MC as its the default site lakhs of Indian investors turn to.


(rishi_j15) #266

Hi Vivek,

I have kotak securities account even there SME stocks not found to purchase.

Regards


(Sd) #267

Hi Vivek,
First of all congratulations for having achieved extraordinary success in your investment journey.
ICICI direct also doesn’t allow trading in VSCL.
Luckily I found that Religare provides information. Do you still think that enough steam is left in it if one has horizon of medium to long term.


(bsahni) #268

Heartiest Congratulations Vivek ji for having a wonderful Investment Journey & you really deserve this outcome in terms of Performance too as well for your hard work & perseverance.

Very happy for you.

Regards,
Bharat


(Deepak Venkatesh) #269

Hi. It is listed on Moneycontrol now. Down to 100 from 105 yesterday.
All the best. I guess the lot size is 1200 shares for NSE Emerge platform at this price.

Regards
DV


#270

Hi Vivek,

Are you applying for Eris Lifesciences IPO?


#271

Also Vivek,
Are you planning to apply to Tejas Networks’ IPO? Both offers (Eris Lifesciences and Tejas) seem interesting. And I also plan to follow your strategy of deciding on the last day.


(RaghuK) #272

Hi Vivek,
CDSL IPO is opening today and looks to be attractive in terms both valuations and business. Can you share your views.

Regards,
Raghu


(Suneel) #273

Hi Vivek,
There are SME IPOs currently being offered, any views on these? Also please can you share the process for applying for SME IPO?

Thanks


(Sd) #274

Hello @Vivek_6954 ji,
Kindly share your views on Eris Lifescience.
Allotment is done today.


(Vivek Gautam) #275

Please be v choosy in SME IPOs. Most are very risky and avoid. ERIS IPO i found quite expensive n did not apply. IPOs are meant to be tension free investment ie no tension if shares allotted and a listing gain aleast is assured.

Even Au fin ipo is not cheap


(bvr007) #276

Vivekji , what’s your long term view on CDSL…had a nice opening on friday…!


(Vivek Gautam) #277

CDSL is one of the best stock to get listed in recent times.It had also left a lot on table. With next year EPS at 9-10 & huge opp size n increasing due to increasing financialization of savings,proposed inclusion of academic certificates,insurance policies it will keep on increasing.Its a superb combo of annuity & transaction business.

Its a cash machine duopoly throwing lot of cash n hence dividend which will keep on increasing.Its a buy n forget type of stock like Crisil IMHO. NSDL might not get listed as NSE stake is already at 24% while BSE had to reduce its holding to 24% from 50% due to regulatory concerns.hence scarcity premium will remain high.

Risks - remain valn shooting up due to scarcity premium,cagr slowing down,increasing competitive intensity with nsdl,co losing service tax case with GOI,govt further delaying its budget 2014 proposal for all citizens to have a single DP.LIC remain non cooperative wrt insurance policies etc

But positive outweigh negatives imho & I bought it on listing


My top 4 Picks
(Vivek Gautam) #278

Hope VPers were able to buy CDSL today morning in 243-250 price range. Its now again back to 263.

Retail & HNIs are lured into selling the stock only by sharp downward movement at times artificially created by operators.

Views invited on PEL,PSP projects,VSCL at cmp.


(Yogesh Sane) #279

Since 2015 when new accounting standards came into effect, CDSL has used Fair Value through Profit and Loss (search for FVTPL in its prospectus) to account for its financial assets. I have seen normally companies use Fair Value though Other Comprehensive Income (FVTOCI).

Source: CDSL IPO Prospectus

Becaue of this, CDSL’s operating cashflow has consistently lagged net profits especially over last 3 years

Source: CDSL IPO Prospectus

In 2017, out of 87 Cr of reported profits, 27 Cr came from FVTPL accounting. If interest rates rise, this part of the profits will be gone or substantially reduce. Recurring profits are only 60 cr. Based on this this P/E works out to be 45. In fact, if you strip out FVTPL items from profits, picture looks pretty bad. CDSL also relies more on fees from IPO and corporate actions than transactions compared to NDSL. These sources of revenues are more volatile than transaction fees. In bear markets, these sources of revenues will not grow.


Other Comprehensive Income
(Sreekanth) #280

Hi Yogeshji…a nice writeup…

Correct me if i am wrong, the FVTPL accounting should not have any impact on the EBITDA from operations…hence true cash flow from operations should remain unaffected by the FV of finanacial instruments…

Secondly you mentioned that CDSL’s operating cashflow has consistently lagged net profits especially over last 3 years… I think the Operating cash flows are also impacted by the huge amount of tax outflow paid by the company:

I feel the taxes here includes the profit on investments and other income so shouldn’t this also be adjusted? (will result in about 12-15crs tax savings with the assumption of tax paid as % of PAT of 37-40%)

Further:

“CDSL also relies more on fees from IPO and corporate actions than transactions compared to NDSL. These sources of revenues are more volatile than transaction fees. In bear markets, these sources of revenues will not grow.”

I have taken the segment wise data from CDSL AR for the past 9 years, except for the Transaction charges which has seen more volatility (though this is compensated by new revenue streams) majority of the high revenue streams have shown a steady revenue base (also considering a bear market phase).

Also on the IPO revenue stream (have to check why they have shown data from 2014 maybe they commenced operations from this phase) there has not been a year where a dip has been seen.

Lastly while I agree the valuations remains steep, we also need to consider the following factors while investing: Debt-free, cash generating co (Cash/Investments per share of ~Rs.25) with strong margins and no fixed capex requirements and likely sustainable business growth in forseeable future (they have been appointed custodians for Sovereign gold bonds and GST e-suvidha schemes).

Regards
Sreekanth

Disclosures: Invested


(Yogesh Sane) #281

Taxes recognized in P&L are added to operating cashflow and taxes actually paid are subtracted. Unless these two numbers are substantially different, there is no impact on net operating cashfow. As per your screenshot, CDSL recognized 70 Cr of taxes in P&L in last 2 years and paid about 69 Cr cash as taxes. Difference is recognized as deferred tax in balance sheet. Since the difference is very small, taxes is not the reason operating cashflow is smaller than net profits.

Usually, non-cash P&L items (like FVTPL items) is the main reason why operating cash flow lags net profits. Even in case of CDSL, they could have sold their investments and bought them back and recognized the profits as gain on sale of investments (instead of FVTPL). In that case, all that would have been reported as cashflow from investing activities. I think it is conservative to recognize all MTM gains and losses as other comprehensive income for all non-financial companies.

The only issue is since CDSL has large financial assets (and that in turn is because it is a highly profitable company), non-operating income is a large % of total profit. In situations like this, a Sum of the parts valuations is more appropriate. Company should be valued based on its operating profit first and market value of financial assets is then added to arrive at total value.

Regarding revenue, CDSL is trying to attract companies by lower transaction costs and higher one-time costs (sort of front loading of revenue). My hunch is that during bear markets where new issues, FPOs, bonus, splits etc are lower, it can impact revenues. since CDSL has high operating leverage, a drop in revenue will flow directly to bottom line.


(Manojreddym) #282

Hi Yogesh ji nice write up,

I dont think its fair to remove entire gains from FVTPL as that amount may include two portions one is interest income on debt and fair value change due to decrease in interest rate. Moreover for a company which has income from investments its unfair to compare PAT with operating cash flows may be we have to compare operating profits post tax to Operating Cash flows

Here Exceptional items was reversal of provision for contribution for investor protection fund and it should be cashflow neutral it only lead to outflow of tax.

I feel recurring profits should be

Disclosure: Invested


(Sreekanth) #283

Hi

The recurring profits should be purely from the operations and not from investments. The logic is income from investments is not core revenue generation… secondly the 6.5% risk free rate assumption also will vary depending on where the investments are made , interest rate risk factors etc…so operational cash flow should be function of ebitda from operations (not considering interest income) + tax effect of core operations + changes in working capital movements…