In my opinion, any decision of under or over value needs to be taken post investigations. The details published by print media are based on hard exchange data and should not be rubbished.The management statement has neither given any clarification nor any comfort.There are huge deals, which indicates large investors are off loading shares with 20% down circuit day after day.Keeping past frauds in an IT company in view, nothing is impossible .
Let us not try to catch a falling knife.Experienced boarders may pl. share their view/opinion.
From last many years I fail to understand profitability of this Vakrangee Business. They say per BC branch they make 10 lakh Revenue annually, out of which 3 lakh comes to Vakrangee. Even if I assume Rs 10 charge per transactions in these remote rural branch, they need 300 transactions per day to make 10 lakh. Now BLS just got its contract cancelled with Punjab govt, because there avg transaction across all branch was just 8 per day. Magically Vakrangee is able to 30-50 times more transactions!
Also Rs 10 charge per transaction is quite high. If the remote villagers hold a saving account with Rs 1000 avg balance. Banks pay 4% interest and keep 4% to themselves. At this rate Bank makes Rs 15 per month on these accounts. Even if the account holder does one transaction in a month business becomes uneconomical at Rs 10 per transaction.
Vakrangee’s performance defy all logic to me, but may be I am wrong and investors are right.
Tracking Vakrangee from 10 years now, never invested a penny in it and nor will!
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Hope you remember ONLY the wire has reported “Aadhar details are available for Rs.500”. Which raised eyebrows and ever since “the ever leaking Aadhar details” are taken little seriously. So, we can’t rubbish that Mumbai mirror was the only one to report (could be a rumor as well), but we can’t directly deny that without a conclusive report/clarification from Vakrangee. Apart from this, I have few doubts. Requesting boarders to pls help me understand.
- Is vakrangee is handling for Delhi ? If yes, then this is the second time they are in news, first to be Rs.500 aadhar detail saga.
- Any idea on what’s the % of Aadhar details collected/maintained by vakrangee. There are several other companies does that.
- Also, what are the regions which vakrangee manages the aadhar centers ? (I really hope they don’t have any aadhar kendras in Delhi)
I have reviewed this company few times over the past 10 years and every time there was some or the other thing that put me off. In most cases it was poor cashflow or growing debt or my inability to figure out exactly how does the company earns revenue or exact nature of its expenses. the only reason I kept on looking at this company every few years or so is because of its growing market cap. Never bought a single share of this company.
Here is the latest one. company claims that its Vakrangee Kendra (VK) are major source of revenues. These kendras are value-added cyber cafes cum ATM machines where customers are provided with hand holding services to use various banking, e-governance and other financial services. To me it sounds like these Kendras are small outlets that it set up to deliver its e-governance services prior to 2013 and later they added white label ATM machines and now using these centers as distribution channel for all kinds of financial products and other consumer services. The business model looks good but that’s where the story ends. When I tried to get details I got stumped. Since these Kendras are the main assets of the company, I looked at past 8 annual reports to get an annual count of these VKs but here is what I found
2013 - Company proposed to set up retail outlets
2014 - 3400 Vakrangee Marts (assuming these are called Kendra now) operational.
2015 - No mention of actual number of Kendra. If anyone as idea, please post a screenshot.
2016 - 21,000 Kendra
2017 - 35,000 Kendra
9M 2018 45000 Kendra
These numbers are approximate numbers that I can recall. AR reports are full of grand vision and mission statements as if company is trying to build a reputation based on what it is going to do instead of what it has done. There is no mention of operating matrices of a kendra (cost to set up, revenue share with franchisee, cost to operate etc). Even investor presentations are full of fluff and lacks specifics.
Company says they serve all PIN codes but they are present in only 17 states and they are not there in 4 southern states.
At peak market cap of 50,000 Cr just a few days ago, each of this kendra is worth 1 Cr each. That’s just too much. Anyone can set up this Kendra at fraction of this value. Moreover, staggering growth of these Kendra from 3400 in 2014 to 44,000 today is just unbelievable.
For any company, first thing I try to find out is the sources of revenue and risk to revenue. I could not get enough details on exactly how does this company earns revenue. Does the customers pay them a service fee? Probably not. Does the service provider pay them a commission? Most likely. What % of that commission does the franchisee keep? But there was not much details about who are biggest clients, how much revenue company is generating from them etc? They provide all kinds of services from banking, telecom, goverment programs etc. I was trying to get a break up who paid Vakrangee and how much.
Same with major expenses. Here is a major expense from the ir AR.
I have no idea what is this Project Delivery Cost and what goods and services they are purchasing? Is this payment made to franchisers? may be, but that’s just my guess. There were no details available in any of the annual reports.
Overall, I got more questions than answers and that’s usually when I let go a company no matter how interesting it appears to be.
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Another point at 5800 cr Revenue and 3 lakh per branch. They need to have 2 lakh branch or kendra already. They only had 35000 till last year, magic continues.
These Vakrangee kendras sound so much like the Sanwaria kiranas (and perhaps 8K Miles’s customers) from my research on the latter. I like how the possible cooking of books was speculated so beautifully in this post on VP.
4 Likes
can the share holders on this forum seek a con call from the management to post questions and seek some answers?
There is some more confusions from the numbers…
Segment assets… Why is most Rs 1539 cr unallocated?
Generally this number is very small. But when compared to total assets, it is 57.7% of the same.
Employee benefit cost of Rs 18 cr (quarterly) seems too low for the company of this size…
what happend to this stock? anyone having idea?
Jus a needed correction as it was not coming from last 2 years
42% correction of price in a week is not normal correction…something mr market knows which we dont
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no no i m asking about SEBI investigation???
In addition, if management had some definite clarifications with evidence, but there has just been a rebuttal without any detailed statement.while I am hoping this does not become another satyam saga, we need to be cautious
Disc:not invested but was feeling missed out & planning to seeing the growth.
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I never said it’s normal I said needed as price was going up one way in
last 2 years
Also if u see Prakash Ind it came in SEBI shell co list it dragged down so
much n see the price now
Correction was due due to very high valuation but reason of correction was not known !
Before purchase I did some field verification in my district area where such Kendra are in operation and was impressed by their services to customer without any premium. Multiple service roll-out at single point is the key for the operation leverage for this business. If Amazon want to penetrate in rural area, this was the best point. Because in rural area people are still fear to buy directly online but they need some shop who can buy for them without any additional cost.
Now onwards government priority is to focus on rural, chain of 45000 Kendra and expanding at very high rate (franchise based) Vakaragee is set to gain momentum to get commission from other business who want to roll out their services in rural area without much capital spending.
I recommend to go through last conf call which resolve many queries raised by group members.
Buffet - If you know business, volatility is the best friend. See’s was many times corrected 30-40% but adding more only proved right…yes but it need conviction to swim opposite to flow of river !
If you come to know that Dolly /other well-known tweeter followed investor buy Vakrangee, I think many will post good research data / favorable point in this forum !
Disc - invested …willing to add
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Which states these VKs work and do we have a state wide breakup ? I like to do a scuttlebutt in a Vakrangee Kendra if possible.
Disc: not invested. Looked at due to high reported growth rates of revenue and profit.
You take district head (Business coordinator’s) number from Vakrangee website and ask contact of VK in your area. Do sample of minimum 10 VKs and u will come to know reality. If VK owner is not willing to do business / not following ethical practice they are closing the VKs also. Their closure rate is 3% on yearly basis.
I request to go through last conf call …to know working of their business model.
Do they publish con call transcripts ?
From the Q2 Investor presentation
Then segment revenue
35206 was the VK count end of FY17. Now If I use a random mid figure 38K, I can see 3.78 Lakh as per VK revenue for Q2 2017. Per month this would mean 1.25 Lakh on an average revenue for company. Now if division is 70-30 ratio, then actual revenue should be 4.2 Lakhs (4.1 to 4.4 lakhs ) as these figures not in Inv presentation.
for Q3 2017, it is said 44286 are VKs and revenue is 16837. So for averaging if I use 43000 Vks to get per VK revenue per month, I would get close to 4.3 Lakhs (reg Q3 presentation - http://www.bseindia.com/xml-data/corpfiling/AttachHis/21e536d7-d200-46ac-a6fa-1359b3b2e768.pdf)
You can get call from researchbyte website
Apart from LIC, Edelweiss Mid and Small Cap Fund is also invested in this company. (increased shares into Vakrangee in dec quarter.) I am really confused after a veteran like Yogeshji posted his analysis and I cannot objectively decide if I like this management or not. I would rather wait till a clear picture emerges.