Did she sell recently or are you talking about the transaction in March? I had flagged her transaction in this very thread back on 31st March. You can check my post.
Nevertheless I dont think the promoter, i.e. Arun Jain has sold any shares.
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Stock went from 750 to 900 and many insiders had sold before that too right ? we look for negative reasons only when the stock falls. These things are immaterial. a few thousand shares here and there. Why did no question them when they sold and stock went up…stock made highs of 892 bucks end july. Did no insider sell before that day and if they did, what conclusion do you draw ?
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Any firm which is based on the strength of its talent has to incentivize the employees to retain them. ESOP selling is also sometimes to subscribe to the new options which are alloted to them.
Till date, Arun jain has not sold a single share of either polaris or intellect in the market nor does he even draw a salary. that should put all concerns of corp governance to rest.
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To be honest, I think this is positive news . It shows the company acted promptly even for a relatively minor mistake and was quite transaparent about it .
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What does logos mean ?
Different customers are referred as logos.
as example: We added 10 new logos means we added 10 new customers.
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My Problem with IDA is not just abt the Key Persons selling their holdings but rather how they are being allocated crores worth of shares for peanuts, all in the name of employee retention/motivation , this is by far the biggest scandal.
58d4eee7-f283-4d1a-b74a-3b062d92d9b9.pdf (bseindia.com)
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What is an ISOP?
Also, in comparison to what does this look like a scandal?
Usually software companies/especially product based need to retain top talent else they simply fail. Is your frame of reference wrt to other product companies?
How many s/w companies that are listed and dolling out ESOPS at face value or at book value??
Usually the s/w companies allot ESOPS or grants at a discount of 10% max as per market price and the company bears the difference of 10% as employee expenses (as in the case of Cognizant USA)
why is that I pay full price and someone pays book value or sometime even facevalue? why should my share gets diluted ?? how much ever miniscule it may be.
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Yeah, I missed the book value part altogether. That is some food for thought for me. Thanks for pointing it out.
Disc: Holding tracking position
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It is not rare for companies to offer ESOPS at very discounted price. Some startups choose the exercise price as nominal as 10 Rs, while others choose the exercise price based upon the last round valuation of the company. ESOPS dilution should be least of our worry, if its being given to tech employees.
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There is a difference between startup and a listed company. In start you can doll out what ever u want and for what every price, when it is listed you are responsible for all the shareholders.
Dilution is one aspect of the story the other one is abt business ethics.
If you are not honest and findings means to shortchange the shareholders one day the shares will be worthless and reputation will be in doldrums. as in the case of Aurbindo Pharma
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If you want to get top quality engineers , you have to pay for them.
One easy way to retain employee is offering stock options vesting over many years (typically 3-4 years) , so that employee wont leave thinking about the big money he’ll get in future years (especially when stock price appreciates).
I can give example from my present company .I work for a top semiconductor MNC & i get stock options(RSU) for free & gets vested over 3 years . Additionaly my company offers stock purchase plan at 15% below stock price on regular intervals (august & January) by cutting 10% of my base pay .
Its not uncommon for many tech companies to offer shares for free to employees . if you look at most product companies in USA , they have a stock dilution in the range of 2-3% of market cap ( some companies do buybacks to avoid dilution).
The dilution in IDA is only 0.5% of the market cap roughly . if the company can grow the revenue in mid teens & earnings by 25% CAGR , a 0.5% stock dilution annually is acceptable.
One of the reason why employees in IDA might be selling is to pay for tax (just a guess).
In my case whenever i get say 100 shares , company automatically sell 33 shares that same day to pay for my income tax , so i dont have to spend extra money for shares.
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“Multimillion” deal. Doesn’t appear to be a cloud deal. So license revenue should come through in 2Q results.
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Not a single employee, key personal nor relative of the promoter has bought a single piece of share from market from past few months other than the FREEBIES that they are getting from the company at throwaway prices
Intellect Design Arena Ltd Insider Trading 2015 |BSE (bseindia.com)
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Until 3Q21 management were confident of 30% EBITDA margin target. In 4Q21 margins declined sequentially but management said its all cool and margin expansion is on track. In 1Q22 margins contracted sequentially again and management admitted 30% profitability target wont be achieved.
The decline in share price is a perfectly rational reaction to this lack of visibility. Even at current price levels the stock is trading at 26x FY22 earnings. Not expensive but not a bargain either.
The share sale by employees was happening through most of the up move in the share price from lower levels. I think its more noise than signal.
Disc. IDA is c.25% of my portfolio. Avg buying price is c. Rs. 190.
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That makes sense and I think most of this stock price fall is due to the change in management stance on EBITDA margins. Earlier they were confident of sustaining 30% margins, but due to high attrition rates and retaining talents, employee cost has sharply gone up, which the management din’t see coming, may be due to covid. Margins have taken a hit due to this, but this is across the board, not just with Intellect.
I think Intellect will be affected more as unlike service IT companies, where the employees are more commoditized, Intellect needs certain expertise and skills in their employees due to the nature of the products they offer, so hiring and retaining the employees is going to be a big challenge and in short to medium term, we might see margins under pressure. Having said that, I strongly think 25% EBITDA margins should be sustainable until all this is ironed out.
Totally different sector, but I track Navin Fluorine as well, and the management over there also said that this quarter employee cost was higher due to retention bonuses, double hikes, increase in the number of employees, and other costs to retain the talent.
Disc: Invested, relatively smaller % of the PF, but would like to add more.
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The employee selling that everyone seems to be worried about are just in the thousands of shares.
Mr jaideep billa, ie the CEO of the wealth management side has sold the highest ie 25000 shares… But he still has 330372 shares left so it’s but a blip in the ocean for him and he still has more at stake in the company than any of us will ever have.
We tend to forget that these names are humans too… Many of them may need money for personal reasons, some of them may be planning on switching their jobs… Many of them are just employees who’s majority of networth is in the company and they’d have gone through the mental torture of seeing their holdings fall down to rs. 45 per share last year and want to cash some money out and diversify… Put yourself in their shoes and you’ll realise these price run ups of 10x jn a year makes millionaires in small companies and puts people in positions they never expected to be in(part of the reason people join smaller companies is to enjoy these risk vs huge reward systems and hence why many of them are given shares to draw them away from blue chip higher salaried jobs too). This kind of selling from employees is normal in companies that run up so much in a short time period… Akin to employees winning a lottery. Doesn’t mean the story of the company is reversing…
Basically the reasons could be endless. As long as the selling isn’t in huge quantities and Mr arun jain continues holding I don’t think there’s much reason to worry here. Technically ida had it’s run up from double digits to nearly 900 which was far ahead of most in the IT pack and it’s 200 dma is mid 500s (and it didnt break it even on the huge drawdown) so surely time correction/consolidation was on the cards .
Also, it’s in the asm list stage 1 and price strangulation does happen quite often when added to that list
The fundamentals haven’t changed since the last result and concall and if one is fine with the lower ebidta margins for the next few quarters nothing has changed long term. All we have to do is wait and not let the mental stress of time correction/huge dips throw us out of this story… Long periods of drawdowns tend to make us forget why we are invested in the first place.
Disc: invested since lower levels and Added more in recent drawdown. Will delete this post within 24 hours though please flag even before then if needed. Id strongly recommend listening to thr latest concall and keeping a tab of the story over the next few quarters (this isn’t a QoQ business ie a straight line business yet) … Everything else is pure speculation:
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Sharing news feed:
Intellect bags a large multiple-year digital transformation destiny deal from Resurs Bank.
Per the press release from the bank - “Resurs Bank is investing in a new, completely cloud-based banking platform that creates the conditions to provide customers and partners with services, interfaces and products at the forefront. The global fintech company Intellect Design Arena will deliver the new platform. Resource investment in this IT transformation amounts to approximately SEK 500 million, of which Intellect’s cloud-based solution forms part of. The development work to integrate the cloud-based banking platform is now beginning and is planned to be completed in the next three to four years. The goal is to gradually launch parts of the new banking platform in the business.”
Read the full text here.
SEK 500 Million roughly translate into about Rs. 400 Crore(note that this is the full project value and the portion won by IDA is not yet disclosed).
Interesting to note that a bank from Scandinavian region is betting on the core banking solution from IDA. If the implementation is successful, this could be a game changer for IDA, opening its doors into the lucrative developed western market.
AJ
Disclosure: Invested.
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