Donald
September 7, 2010, 6:09pm
8
I have been with this stock for almost 2 yrs and have made a decent 3 bagger and have learnt a lot all the way along. Will like to share it with everyone.
Bartronics mgmt was extremely active between 2007-08 in forecasting fast growth and talking about huge opportunities in smart cards, RFID that lied in front of them. Being only company of its kind in India and a first mover it had all the advantages with it. They have consistently underperformed against their own forecasts.
But I think, eventually they could not manage it well financially and operationally also. Debt kept on increasing because they never converted debtors into the cash as much as they added to the debtor positions, they’ve invested in Aap ke Dwar project and still need some more investment (that’s what I read somewhere). They could not materialize on UID project even though Sudhir Rao was bragging about Bartronics being first company to provide consultations to government on UID. I think they lost out on execution abilities on a high scale.
They have FCCBs US$6m@ Rs 140 and US$ 50 @ Rs 290 coming due in FY 12 & 13 which will act as a dampener to the so called promised revenue coming in from Aap ke Dwar in near term.
Interestingly Sudhir Rao is almost absconding now when compared to his regular media appearances back in 2007-08.
What scares me most is the two facts that 1) promoter holding that went on reducing all this period and the amount of pledging that kept on increasing (right now 65% of the meagre 31% promoter shareholding is pledged…leaving them with single digit unpledged shareholding in the company) and 2) frequent issues with auditors stating in their limited reviews that earnings have been overstated…promoters not being able to come up with audited results for March 2010 yet and having asked permission to delay holding the AGM till Dec 2010.
Although, I have made money on this stock, I have also learnt that it was more due to the right timing and not due to the business lying underneath or my craftmanship.
Thanks a lot Nilesh for sharing your experience. Another good example of why one needs to be wary of Promoters who love to talk up the stock!
Ofcourse this one had too many red flags, like you pointed out!
Recently it was suggested to me by a veteran of 25+years, well-respected name in the industry that Yes Bank is viewed in the same vein of Promoters loving to talk up the stock -not that its shares other red flags, that I am aware of.
Rgds,
Donald
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