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Old 21-02-2014, 02:00 PM
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There's an entire index on the Dividend theme

CNX DIVIDEND OPPT
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Old 21-02-2014, 02:49 PM
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TATAELXSI, BIOCON, UPL in June
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  #1643 (permalink)  
Old 21-02-2014, 06:04 PM
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Originally Posted by jazz View Post
Also add the fact that Sterling already has 19 resorts + additional land in 15 more destinations. So apparently it appears the land bank value is much much higher than the paid price. Second since the land is already with them, their Capex for growth will be much much lower. Effectively this is a business which generates tons and tons of Float. This float in hands of Prem Watsa is more valuable than that of Mahindra Resorts.

Though there is significant dilution almost 33%, I think we are getting fair amount of value from the merged one. Continue to be bullish, continue to add in recent fall.

Quote:
Some thoughts on the Thomas Cook-Sterling Holidays deal:
1. The target company (Sterling Holidays) owns 19 resorts. As of 30 Sept 2013, the target had Rs 419 cr of assets. Of these, assets amounting to only 24 cr were funded with interest bearing debt. Deferred revenue (float represented by money taken in advance from members) was Rs 255 cr. So, while the business model is asset heavy, it’s “equity light” without utilizing significant and onerous interest bearing debt.
2. The target company has been operating at a low utilization rate of less than 50%. This is a business with high operating leverage and additional revenue should largely translate into additional earnings. Thomas Cook can divert business away from hotels (to whom it will have to pay a part of the total package holiday price charged from its customers) to resorts. While I don’t know how big this number would be, I believe it could be significant.
3. As of 31 March 2013, the target had accumulated losses of Rs 331 cr. Upon merger with Thomas Cook, these losses will help Thomas Cook save taxes. If all of these losses are available for tax set off, Thomas Cook (the standalone entity) will not be paying any taxes for at least the next few years.
4. The deal structure is very creative. First, by doing market purchase of shares of the target and a preferential allotment of shares by the target followed by a tender offer, it has been assured that even of the deal fails at the merger stage (as happened in the case of Grindwell-Saint Gobain deal), Thomas Cook will still have control over the target. Very creative. Second, the acquirer is not Thomas Cook but it’s subsidiary. The tender offer has been made by the subsidiary and not Thomas Cook (although Thomas Cook is a person acting in concert). Why? That’s because once the acquisition is over, the merger process will begin and under the terms of the merger, the target will demerge its operating business into the acquirer (Thomas Cook subsidiary) but Thomas Cook will issue 116 shares to the target company’s shareholders for every 100 shares they own. Then, the remaining target company (which I presume will have nothing but tax losses) will be merged with Thomas Cook, for which it will issue 4 shares in itself for every 100 shares in the target. This will ensure two things. One, the tax losses will come to Thomas Cook where they are most needed as discussed above. Two, of the total shares Thomas Cook will issue in itself to the shareholders of the target, a large number of shares will be issued to it’s own subsidiary, which I presume will be cancelled (but I am not sure about that as the merger document is not available).
5. Thomas Cook will issue additional shares for this deal for two reasons: (1) to convert the fully convertible preference shares being allotted by it to Fairfax group; and (2) shares issued to outside shareholders pursuant to the merger. Of these, the number of shares issued under (2) is uncertain because one does not know the response to the open offer. However, every Target Company share that is tendered under the open offer to Thomas Cook subsidiary acquired by that subsidiary in open market purchases (it has been buying target company shares in the market), will be a share which will not be converted into 1.2 Thomas Cook shares. Seems like Thomas Cook wants to minimize dilution.
6. Why was the deal financed partly with cash and partly with shares? I think the reason has to do with aversion to debt. If the whole deal was to be done through a cash acquisition, then either the target company and/or Thomas Cook would have to resort to debt to finance it. Does that mean that financing with undervalued stock makes it a good idea? Not necessarily. However, we should keep in mind two facts. Fairfax bought into Thomas Cook at about Rs 53 and is now buying at 80. And the stock price is below 80. So, people who are worried about getting diluted can easily cancel that dilution by buying shares at below 80. Here is the key point: Without the preferential allotment of convertible preferred to Fairfax group by Thomas Cook, the merger would have diluted Fairfax stake in Thomas Cook. Fairfax cancelled that dilution by buying new shares at 80 and since the stock is below 80, any stockholder who is concerned about dilution can also do the same by buying in the market – on better terms than Fairfax. So, as long as the price is below 80, current stockholders should not grumble too much about dilution! But see point 7 below.
7. Is this a good deal? Time will tell. The answer will largely depend upon the realization of synergy that can potentially come from the deal and also how the target company can grow its float- a concept that someone like Mr. Prem Watsa understands quite well.
8. Oh, one more point. The real estate assets of the target company were last revalued in 1999 i.e. 14 years ago.

-Prof Bakshi
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  #1644 (permalink)  
Old 04-03-2014, 01:33 PM
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Originally Posted by kkseal View Post
TATAELXSI, BIOCON, UPL in June

whats the news in this TATAELXSI stock ?
why so much upmove ?



thx
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Last edited by nTP; 04-03-2014 at 01:36 PM.
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Old 04-03-2014, 01:50 PM
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Originally Posted by kkseal View Post
If a company is able to grow it's revenue 5-fold in 4yrs & clocks (peak) mkt cap to sales of arnd 2, then is a 10-bagger feasible?

Originally Posted by kkseal View Post
Yeah had skipped it earlier due to margins But the mgmt guidance is fantastic (& it's a TATA grp company) Mkt has provided enough evidence too (Will be in the top decile of any momentum search).

You could not solve the puzzle
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  #1646 (permalink)  
Old 04-03-2014, 02:22 PM
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Originally Posted by kkseal View Post
You could not solve the puzzle

expected price to hit 1000 + or 2000 + for tata elxsi
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  #1647 (permalink)  
Old 06-03-2014, 10:10 AM
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Originally Posted by jazz View Post
One very interesting fact abt sanitation is tht currently demand is mostly from new buying while very less in trems of replacements.to be precise 90% is new buying n 10% is replacement market in india for sanitation.while in US replacement is 80%. So the demand for sanitation will be high atleast for a decade more. Cera already has 25% market share it is in similar situation asian paints was 5 yrs back. I can see similar returns like asian paints from cera. I will hold it for a decade atleast.


One should give a high marks on Corporate Governance to Cera. They chose to focus on Long term rather than Short term. As a result though Revenues are growing, bottom line "suffered" since last 2 qtrs.
Yet this company has moved from 500 to 850 today. They could have easily posted higher bottom line just by reducing the Ad Spent but that would have dented its Competitive advantage. So Thumbs Up to them from me and Mr Market !!
Continue to hold.
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Old 06-03-2014, 07:38 PM
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Why the margin squeeze at all? Raw mats have been pretty stable.
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  #1649 (permalink)  
Old 07-03-2014, 10:09 AM
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Faucets, Tiles revenues are increasing which are of lower margins than Sanitaryware. Though mgmt has confirmed margins of sanitaryware is constant.
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Old 07-03-2014, 02:58 PM
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This is getting interesting

http://www.lightreading.com/optical/.../a/d-id/708089

FB might actually move on to buy Tata Communications. Now if that were to happen then it will be a tug of a war between Voda and FB. Both cash rich hungry for growth.
Article points some interesting facts also sources of MOAT

Lowest Cost Carrier #MOAT
Largest Submarine cable footprint in world #MOAT
No.1 carrier of Voice in the world twice the size of its competitor (Network Effect= winner takes it all) #MOAT

Impressive and proven track record of mgmt as they acquired teleglobe and tyco global for pennies to a dollar.
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