Arihant Capital Markets

I like the stock particularly after reading the thread .it seems to be rightly poised for good growth.the fact that they are continuously getting new customers makes me feels that their marketing is good.risk is also very less considering the bull cycle we are in and the low market interest rates.but concern now is rapid swings in market price in both sides. Continuously hitting upper and lower circuits.so panicked and sold out my holding, seems like too many ppl are in the stock 4 some quick bucks.

Interested but looking 4 the right price to enter

1 Like

Wonderfully Explained. Thanks. Appreciate the amount of effort that you have put into it. Huge Cheers from me.

1 Like

Thanks @pandi.rao. Sorry for the late reply.

I have not done very detailed study of AB Capital. As per my initial analysis, it indeed is a value play for long term, as it will be a proxy/ surrogate for our growing economy and it has businesses lIke MF and Insurance in its kitty. For the same reason, I am currently invested in another large cap Edelweiss. However, I have the perception that, the IPO was priced somewhat expensive. Though the price has corrected from that level now, I would like to wait and watch for more time.

Also, my personal preference currently is to include more micro/ small/ medium caps in my porfolio, instead of large caps as I am observing that the market is willing to take more risk nowadays and my hope is that current flood of domestic liquidity will push up the prices of quality (and undervalued) micro/ small/ medium caps in a more significant way.

Also, for all the reasons mentioned in my earlier post here, Arihant still looks to be an extremely undervalued stock to me, as compared to all its larger peers. Please do not consider this as a recommendation from my side. I just provided my opinion based my best knowledge, since you have asked.

1 Like

Thanks madhavikkutti for the details and your thought on the stock.

Can any one though some light why the Promoter taking 1.45 Cr as commission.

Following is the break up for Mr Ashok Kumar jain( Managing Director) salary:
Basis :- 48,00,000
Perks :- 77,052
Commission: 1,45,00,000
Total:- 1,93,77,052.
Mrs Anita S Gandhi( Whole time director) - Basis salary 31,92,000.

Ashok and Anita salary: 2,25,69,052.
Source: FY 17 Annual Report
Consolidated basis company makes Net Profit 16.68 cr and pays 1.94 cr as remuneration to MD.

MD alone takes 12% of net profits.

Is it not too much?

Is other members has any details for this?

4 Likes

That looks like a lot,particularly the commission part

If you are keen on calculating salary as a % of profits, the right profit figure to use is PBT (and not Net Profit). The remuneration of the CMD for FY17 is 7.7% of the PBT of Rs 25.1 cr.

However, a bulk of the FY17 remuneration is commission. Owing to the commission for FY17 being significantly higher than FY16, it can be concluded that the commission is dependent on crossing a certain hurdle in terms of turnover or profits. I would not be too concerned about a bit high commission to CMD in an year when he has managed to nearly double the profit.

Further, the top management remuneration for microcaps and smallcaps as a proportion of profits is typically much higher than for midcaps and largecaps. Hence, this aspect would not worry me as most other microcaps and smallcaps that I own / follow have high top management remuneration relative to profits. In fact, for one well managed, high cash generating microcap that I own for the past 5 years, the top management remuneration is almost 15% of PBT !

2 Likes

Dear @Gorthi,

Thanks for raising this as a concern. I also had noted this figure as part of my earlier study of this stock, but I did not find anything negative about it, hence had not specifically mentioned on this forum in my earlier posts. My view on this is the following:

I feel that, Mr. Ashok Kumar is a top performing MD and there is nothing wrong for him to be excellently rewarded for the same. Also, it is important to note that, his portion of commission is dependent on the net profit of the company and the operating margin, and not on revenue.

In fact, company has nothing to hide about the compensation of the MD. As per the FY 2012 Annual Report, MD shall be paid commission on the net profit (subject to a maximum of 5% ) as may be determined by the Board or Committee thereof from time to time. However, I do not think that, the MD was really paid any commission till FY 2015 and it may be due to the relatively less operating margin (<15%) for the years 2012, 2013 and 2015. Subsequently, from FY 2015 onwards, the operating margin improved and MD got paid a commission of 2.9%, 1.9% and 5.8% of the PBT for FY 2015, 2016 and 2017 respectively (as against operating margins of 27%, 23% and 31%).

As per Annual Report of FY 2015 (page 3), the above limit got increased to 10% (from the earlier 5% set in FY2012) and the actual payment is 8.7% in FY 2017. However, as @AlokBhola has mentioned in his earlier post today, do we really have to worry on this, as the company has almost doubled its profit over the past one year and especially the percentage of payment is driven based on the operating margin of the company?

Hope this clarifies.

3 Likes

I have few concerns regarding Arihant capital:

  1. Check this video posted on arihant capital youtube channel and you can find mismatch of the lip sync by host in the beginning also go to play time 2:20 and 5:12 in the video you will understand what I am saying.( you tube link at the end).
  2. The other concern is that if they claim they have lakhs of demat accounts etc, then why only 1.2k views to learn there trading app which was posted almost a year ago ? It seems strange.
    ( on the other hand zerodha who has lakhs of demat accounts has 38k+ subscribers and all there tutorials have good viewrship as one would expect.
    This only my observation, any views or comments ?
    https://www.youtube.com/watch?v=GpDhK3d31xI&t=292s

Trading tutorial:

I am not sure how a lip sync mismatch in a 2-yr old video has any relevance to the business of Arihant Capital. They are in the business of capital markets, not in film making. In any case, that video was most likely provided by the relevant news channel (Bloomberg), and not produced by Arihant.

I am not sure why you are again and again making this irrelevant post. Earlier you posted this video claiming it to be a ‘fake’ video. That post was removed by the moderators.

The mobile trading apps are used by only a small fraction of the total stock market participants, and even fewer watch videos providing training about these apps. I have been investing / trading in the stock market for more than 10 years through multiple brokers, but have never used any mobile trading app for the purpose. None of my acquaintances seem to use mobile trading apps either. The regular trading site on a laptop is far more convenient.

1 Like

The moderators removed the post because I did not provided explanation about the video.

All I am saying is that, on their own channel why would they put such a video? what is the motive behind it?
2nd I do not agree that small number of traders use mobile app for transactions when it is the most convenient way to trade.

Disc: Not invested nor planning to.

How is this related to anything what company does?

Hi Mayank,

I have read the thread and according to that the company had 1.15 lac customers and 680 centers across 110 cities in 2015 itself.

Now by reading that it makes me question if this is true then obviously they must have a good following on different social platforms.
So I checked youtube where they have their own channel, but I don’t see subscriber base or views on videos posted.
Also the video where the channel claims that they had their representative talking on TV show and predicts the market moves correctly, even though the video itself is altered.

So all that convinces me not to invest, So I posted here so that if anyone could let me know if this is not of any concern and why ? Is it ok to try and do wrong publicity ?

Please feel free to remove the post if irrelevant.

I could be wrong that’s why I asked for any comments and opinions.

@arvind.calyx
your observations seems to be correct. Arihant definitely couldn’t have had 1.15 lac traders/investors trading on its platform in Jul-2015.
Below is the client base of leading brokers as on Nov-2016 and Nov-2015

Source:

@AlokBhola: do you happen to remember what was the source of this line “Arihant Capital now provides investing and trading services to over 1.15 lac customers” in the initiating thread.

@h_nazkani

The source was the “About Us” section on the company’s website (arihantcapital.com).

The article and the list mentioned in your post merely provides a sample list of brokers to prove the basic theme of the article that discount brokers are gaining share over full service brokers. It is by no means a comprehensive list of stock brokers in India and even big, well known brokers such as Kotak Securities, ShareKhan, etc are missing from the list and the aricle.

If you want a complete list of all the stock brokers in India, an easy google search is all that is required. You can start at Top Full Service Brokers in India that provides details of top 25 full service brokers in India (including, off course, Arihant Capital).

Second, the 1.15 lakh customers mentioned on Arihant website does not necessarily mean that all of them are equity broking clients. Apart from equity trading, the total customer base includes clients of their other businesses such as commodity trading, currency trading, investment services, etc.

1 Like

Of course, the list was not comprehensive. Purpose of putting the list was to compare Arihant Capital with other brokers broadly in terms of size/clients in 2015.

But as you rightly pointed out that, 1.15 lac customers are not all equity broking. For Arihant, active equity broking clients are just ~26,000 vs. Zerodha’s 2.7 lacs (did a google search).
Which kind of explains why @arvind.calyx happened to see huge difference between subscriber base and views of Zerodha vs Arihant Capital.

When I went through their site,I read that that they got some awrd for 2014,2015 & 2016 for most new accounts opened from nsdl.also saw a link for algo trading.

Disc:invested

1 Like

Dear @madhavikkutti ji,
Are you still invested in Arihant Capital? Would be grateful if you could share your expectations for the September quarter results expected to be declared soon?

Dear @shreys, It will not be appropriate for me to mention any price targets on this forum, but I feel that Q2 profit will be better than Q1. One supporting observation that I have is that, Mutual Funds have invested more money in equities in the first 2 months of Q2 itself, as compared to the whole Q1. This indicates that, more and more domestic money is coming into equity, which is good for Arihant.

Value Plus October 2017.pdf (2.8 MB)
Dear all, attached is Arihant Capital’s magazine for the month of October. It’s aesthetically pleasing and attention to detail is evident. I find it quite impressive. They’ve been rapidly expanding their research activity which is pleasing.
Would request views from seniors like
@madhavikkutti @AlokBhola