October 13, 2010

Crushing Income Disparity in India – World's Most Expensive $2 Billion Home coexists with Largest Number of Hungry Children

42% of World's Hungry Children Live in India In contrast to the exponential growth of wealth of India's upper classes,the poor continue to eke out a miserable existence mired in hunger and constantly facing starvation.Globalization of Agriculture has further increased Food Price Inflation making their positive even more precarious.According to International Food Policy Research Institute (IFPRI),India slipped 2 places to be ranked in the 67th place amongst 88 nations in the Hunger Index.Despite a stellar economic performance over the last 20 years or so and sharp rise in per capita GDP,India remains one of the poorest nations on earth.It ranks below even Nepal,Pakistan,Sudan with 48% of India's children stunted due to lack of food.The report is a strong indictment of growth policies which has made its children mostly hungry and stunted.Other strongly growing economies like Brazil and China have performed much better than India.Time for India's government to radically change the structure of India's economic growth.Despite promotion of policies like NREGA and midday meals for poor,rank corruption and leakage has led to India being the hungriest nation on earth.
October 5, 2010

Oberoi Realty IPO Analysis and Review- Indian Real Estate Stock not really compelling without being bad

Real Estate Companies have been trying to raise money from the primary markets for a long time.The depressed markets and the negative sentiment about the real estate sector had prevented that from happening.Realty companies are known for their "creative accouting" shenanigans and their financial statements are not even trusted by Fund Managers.However the Current Bull Run has sparked renewed interest in all sectors even depressed ones like Realty.This has presented a golden oppurtunity for Real Estate Companies to do IPOs.While the last 2 Real Estates issues Jaypee Infratech and Nitesh Estates were disasters,this ones looks better than the last 2 lemons.Oberio Realty has good profits,cash flows and zero debt.This makes their issue much better,however the Realty Sector is a dangerous one to play because of the corruption that pervades the entire industry.So you make an investment here not really knowing what you are getting into.Not a Warren Buffet Investment by a long shot.The upside is limited with huge amount of downsides in the form of unknowns.Here are some of the features of Oberio Realty
September 15, 2010

Career Point (CPIL) IPO – Shady Management,Falling Margins,Regulatory Risk and Expensive Valuation

Shady Management - Income Tax Raids on the company and its promoters found $1.3 million in unaccounted cash and jewelery,cash and documents were impounded.The promoters have been accused of falsifying accounts,evading tax and Registrar of Companies (ROC) and Service Tax Department have also served notices. Expensive Valuation - The company will come out with a valuation of P/E of 30-32x which is more expensive than other listed education companies.At least Prakash Steelage with a corrupt management had the decency to come with a discount Summary The only thing to like about this company is the sector that it operates in.However Shady Management,Super High Valuation and Regulatory Risk makes this company a strictly no subscribe.However given the shenanigans being openly perpetrated in the Indian Stock Market don't be surprised to see a 100% Listing Gain.
September 15, 2010

India's Retail Investors Retreat from Foreign Money Fueled Soaring Stock Market

The Indian Stock Market is consistently making new highs as Foreign Money Surges into India it its hunger for yield.FIIs this year have invested almost $15 Billion into the Stock Markets as Indian Economy grows at a rapid 8%+ growth.Along with Thailand,Malaysia,Indonesia and other emerging markets,Indian Stock Markets are approaching Bubble Territory of the late 2007 and early 2008 days.Substantial Risks are being ignored by the Herd Mentality of Portfolio Managers who are lapping up India's Growth Story.Domestic Money on the other hand has been very circumspect during the last 1 year.Domestic Mutual Funds have become aggressive sellers in the last leg of this rally while Retail Investors are Bailing out Enmasse. Retail Investors have sold around $2.5 Billion of Stocks in the last 1 year when the Stock Market has catapulted by almost 25%.This is one of the strangest bull markets as Indian investors remain largely skeptical of this rally.
September 15, 2010

Government Confiscates Sicilian Mafia's Lucrative Green Energy Assets as Renewable Energy Booms in Italy

While Solar Energy is a new kid on the block,Wind Energy has been growing very strongly in the past Decade.Italy was rethinking its Renewable Energy Certificate (REC) Scheme to remove price guarantees but at the last minute it changed its mind.Wind is being installed at a rate of 1 GW per year in the last few years.The Italian Mafia has latched onto this lucrative business muscling their way in.The Sicilian Mafia is said to own a large portion of the country Wind Farm Assets and the $1.9 Billion Seizure of assets from a high flying businessman is proof of this.43 Companies mainly operating in the Solar and Wind Segments were seized by the state in one of the biggest swoops against Organized Crime.Wind Turbines involve acquisition of land,local permits and subsidy grants which require a lot of organization and local clout.The Sicilian Mafia is uniquely place to control and organize the setting up of Wind Farms.With a government guaranteed return of Euro 18c/KwH,the Wind Subsidy in Italy is one of the highest in the world.Compare this to the Rest of the World where Wind Subsidies get around $0.10/KwH.Note Criminals have not only been involved in Italy,but there are also reports of nefarious activity in Renewable Energy in Bulgaria,Spain,Canary Islands etc.
September 13, 2010

Are 30% of Indians Totally Utterly Corrupt – Does not seem an Exaggeration given the Number of Corruption Scandals being Exposed

Supreme Court which is India's topmost Judial Authority has accepted a petition to look into the aspects of the 2G Scandal.Note past experience does not instill much confidence that justice will be served.The prosecuting agencies such as CBI and CVC are known to be puppets in the hands of the Ruling Politicians and you can't expect a person to prosecute himself.India's Manmohan Singh who has a very clean image strangely has defended A.Raja damaging his own credibility instead of taking a high moral stance and firing the Minister
September 10, 2010

India's Corruption Infested Realty Sector gets Raided by Tax Department in another Futile Exercise

The Developers as usual are being brazen about it denying any wrongdoing despite tons of cash and incriminating documents being found.These Raids never result in convictions or prison terms and in India are generally politically motivated.Most of the Government officials are a part of the gravy train and would not touch connected Real Estate Developers without a push from their political masters.Expect these Developers to start their business as usual in a couple of months as India's Political and Business Elite toys with the country's laws with impunity.
September 8, 2010

Brazen Indian Stock Market Shenanigans continue as Prakash Steelage Stock Starts Falling

It does not take a rocket scientist to figure out that stocks are being manipulated to the detriment of the small investors.Experienced people in SEBI would surely know of such manipulation but they are not doing anything.The Prakash Steelage has followed the "Pump and Dump" Script to the letter with the stock in the process of being dumped.The stock fell 13% for no apparent reason and I expect it to soon fall far below its issue price.Note the Promoters of this Stock have already been convicted of Tax Evasion.
September 1, 2010

Coal India Limited (CIL) IPO – In Depth Analysis of India's Largest IPO shows it to be a Safe Investment at Cheap Valuation

Coal India Limited (CIL) would be a safe stock to invest in if it priced in the indicated manner that is a $33 Billion Market Capitalization.This stock won't be a multi bagger but would offer decent price appreciation with almost no downside risks.At trailing P/E of 15x and 3 year average trailing P/E of 20x,the company is not expensive given its competitive strengths.Its dividend yield would be around 1.5% with growth of around ~10-12%.However if you exclude $8.5 Billion in Cash,then the stock seems cheap at around trailing P/E of 11x.It has a P/B of 6x and P/S of around 3x.With its ASP being at a 65% Discount to the International Price,the Company has a huge moat around its business model and I would recommend it as a Buy.
August 27, 2010

China raises Environmental and Labour Concerns in another African Country even as it pushes Green Investments

China is making massive investments into Africa exploiting the virgin natural resources of the Dark Continent for its voracious industries at home.Unlike the Developed Nations,the Chinese government has no qualms about the country's rulers or human rights violations.Not surprisingly as it has been accused by activists of violating labor and environment rights in areas where it has invested.Most of the African countries have despotic and corrupt regimes looking to sell the continents rich resources to anyone willing to pay them.They have found a compliant partner in China which gives them a red carpet treatment.Mozambique is the latest country to sign a MOU which would lead to Chinese largesse.
August 27, 2010

Greater Fool Games continue in the Indian Stock Market as another small cap IPO gets Pumped

There is no good way of shorting Prakash Steelage stock otherwise it seems a sure shot money making opportunity.What is funny is that mainstream media websites have described the stock glowingly as a multibagger.More reason than ever to strictly avoid mainstream financial media.These IPOs have become a fertile gambling ground with the dice loaded in favor of the promoters and connected market operators.Retail investors get sucked in not realizing its a "Greater Fool" Game with the whole purpose of making them the Greatest Fools.
August 23, 2010

How Indian Real Estate Companies Inflate Revenues through Creative Accounting

India’s Real Estate Sector is one of the most unloved sectors in the Stock Market.Even Fund Managers shun this Sector because of the complete lack of […]
August 23, 2010

Food Insecurity and High Inflation in India finds its place in Mainstream Cinema;Movie Peepli Live Sensitively covers Farmer Suicides due to Debt Distress

Bollywood as India's massive Film Industry is commonly known as,has not been known to bring forth serious issues.While early movies used to dwell on Rural India,the 21st century Indian cinema has decoupled itself from the Indian masses.Most of the movies these days with inane story lines are shot in foreign locales depicting lives of an extreme minority on Indians.Peepli Live is a refreshing exception to this trend.With no famous stars and no "song and dance' routines around trees,the movie has humourously covered the issues of farmer problems in India.
August 20, 2010

China's Takeover of Gabon's Forestry Industry Raises Environmental Concerns

Chinese Firms are not exactly renowned for their Environmental Credentials and the weak regulations in African Countries does not give them an incentive to be so.Concerns were raised about the impact of a Chinese Ore Mine in the forests of Gabon.With lax oversight and easily corruptible administration,the Damage is already Done before it can be Stopped.Africa countries in general are ruled by Undemocratic, Corrupt rulers which are willing to go along with Environmental Degradation in return for Bribes.
August 18, 2010

India's Business and Political Elite continue to Mock Indian Laws;Raju gets Bail

India’s Business and Political Elite continue to mock the Indian Legal System through loopholes and expensive lawyers.I had written earlier in a post of how Satyam […]
August 17, 2010

India's Company Law Board (CLB) lashes IL&FS for trying to sell Maytas stake to BinLadin Group

The Board has lashed out at IL&FS for forgetting the strictures under which the company was given to the management of IL&FS.The government appointed directors had also been silent at the flouting of these norms.Note the company has already sold the preferential shares in the company without the approval of the CLB.Now IL&FS finds its reputation tarnished due to the jinxed Maytas.I am not superstitious by nature but it definitely seems that Maytas brings bad luck to its promoters.
August 17, 2010

Vedanta and Provincial Orissa Government accused of colluding to trample over Tribal and Environmental Laws by Govt Panel

.Now a Central Government Panel has indicted both the state government and Vedanta of environmental abuses in its earlier projects.The N.C. Saxena panel has found the state government officials guilty of violating Forest Rights Act in order to help Vedanta.While rejected Vedanta's Bauxite Mining Rights,the Panel has found the company guilty of mining on government land,violating environmental laws and tribal rights
August 12, 2010

India's Massive Supercritical Mega Coal Plant and China's Wind Farms get Rejected by stricter UN CDM panel for Carbon Credits Eligibility

UN's CDM panel which decides on the eligibility of projects under this scheme has come under criticism for being too lenient in approving projects.It has been said that these projects sometimes lead to more emissions defeating the very purpose of this scheme.The Panel has become more discerning and has rejected around 50 Wind Projects in China because they were thought to be profitable even without these credits.
August 5, 2010

Real Life Example of Stock Manipulation playing out in Indian Capital Markets – Aster Silicates

It is a microcap stock with only $12 million being sold to the public making it easily susceptible to manipulation because of its small float size.Its fundamentals could not in any way justify Rs 199 as even at Rs 118 it looked twice overvalued to me.But the stock kept climbing without any news probably sucking in naive investors out to gamble on the "greater fool" theory until the greatest fools were left holding out the can
August 3, 2010

Prakash Steelage IPO – Indian IPO market in sorry state as Management convicted for tax evasion files for offering

The Indian Market has seen a slew of junk Initial Public Offerings (IPOs) which have led to large losses for investors.The fundamentals of these companies are […]
July 19, 2010

India's State Owned Banks come under Scrutiny over Huge Loans to loss making Airlines

While their growth and margins are comparable to the private and foreign owned banks in India,the P/E multiple is much lower despite lower risks.The cause of this discount become apparent when you consider some of the loans these banks make.LIC had come under a cloud in nineties for making investments and loans to favored companies
July 13, 2010

Raju family swindled more than $500 million in the Satyam scandal however Ringleader continues to live in luxury

The Satyam scandal resulted in a loss  of around $3 billion besides doing irreparable harm to the reputation of India’s corporate sector.The ringleader behind the entire […]
April 25, 2010

Why do people invest in Indian Real Estate Companies

How do people invest in Indian real estate is beyond me. They are almost impossible to value, are mostly embroiled in cases,have short operating histories and […]