SANGUINE MEDIA: Warrants case Study

I dont know exactly what made me to look into this stock SANGUINE MEDIA way back in januray and after a simple analysis of the company's balance sheet and stock price moving in narrow range i made a decision to buy some stock in it.It never moved out from that range for long time until some events made the stock pricet zoom Its current Mcap is 7.2 Cr with a low holding of Promoters

Suddenly in july the board announced  Increase the Authorized Share Capital of the Company to Rs. 120,00,00,000/- (Rupees One Hundred and Twenty Crores Only). from 15 Crores. I dont have a clue for making such a change.May be they were in expansion mode and might need additional capital?but see 6 fold increase in capital..  looks like they might be having aggressive plans going ahead

Now in August comes the surprise

Sanguine Media Ltd has informed BSE that the Board of Directors of the Company at its meeting held on September 03, 2010, approved the allotment of 10,00,00,000 Convertible Equity Warrants at an offer price of Rs. 10/- per warrant to various Allottees from whom 25% of the upfront money has been received in pursuance to the resolution passed in the Annual General Meeting held on August 18, 2010. link

Here are my observations:

• First why did they go for Warrants instead of selling the stock
• Its like head I win, tails you lose
• If they plan to sell the stock it has to be 10 or 15 % below CMP for it to be successful and there by the company will not get enough capital
• If they go for warrants then its like selling the stock with a premium here it comes around 100% premium meaning when they convert the warrants its like selling the stock to public at double the price..here company benifits not the investor who might be buying at more than 10 Rs in future..(lets see this in future)
• How ever if the warrants are never exercised then its clear profit to the company
• Allottees paid 25% amount mean they paid  25 crores to the company to buy the options
  
• Now they can improve the business with new capital which they got and hope they increase the EPS in coming quarters.
• Another doubt i had is who al got allocated with these warrants..BSE website doesn't contain any such information ...hope it will be cleared in coming days..
  
• My Feeling is that Stock Price will rise for some days till we get some clear status on exercise period and the allottes names.
  
• My Target Price is around 15 to 18 ( Time Frame based on exercise Period )Rs ///lets see if it can reach that price (My feeling is that operators might pull the stock to that price before any conversion).
  

Steel Index

 I found this in bloomberg website which tracks steel companies in europe.

Brief description of this index :

The Bloomberg Europe Steel Index is a capitalization-weighted index of all companies involved in the steel sector of the Bloomberg Europe 500 Index. The index was developed with a base value of 100 as of December 31, 1996. The parent index is BE500. 

http://www.bloomberg.com/apps/cbuilder?ticker1=TPIRON%3AIND


Now what we can do is if this can give any clue to metal companies which are trading in india , hope i  will track this index with the steel sector in india and will publish in another post

Todays Pick

Today i bought birla power solutions for long term hoping that it will go ahead with its fund raising plan and improves the business by investing in solar energy in coming years...Will be Tracking this closely in coming days and will post more about solar energy and its future in india and in particular Birla Power Solutions



Disclaimer:

These are my picks and that and you are solely responsible if u take any position based on the posts over here :)

Attention:

I know that i am making simple grammatical mistakes and am trying hard to eliminate them and incase if reader finds any please excuse me

Watch List

Posting these stocks over here so that i want to keep track of it .

Texmo Pipes & Products Ltd.	72
Indage Vintners Ltd.	37
Blue Bird (India) Lt	17
PVP Ventures Ltd.	17

• texmo came up with IPO and failed at box office..Need to see the business model  of this company which entered into industry which has high competition
  
• Indage is wine making company and the promoters instead of making wine and selling it to us themselves consumed it inturn there balance sheet went into red
• Fell from 600 levels to 40+ levels
  
• BlueBird india is into printing books and in the world of digitization they don't have a back up business plan and started getting less orders
• Fell from 60+ levels to 15+
  
• PVP Ventures is by a NRI business man who had a large properties in and around chennai, This guy has a uncanny ability of picking companies at low valuation and improving the business and sells at high value( example is Aircel..which is well used in South india)
• Fell from 70+ to 20+ levels
  

Go Edserv Go up.................

I guess this is worst desperate post from my side expecting Edserv to go higher.I am happy that its green right now.But the inevitable question is how far can it stay in green ?

Tasks to be Done :

I am looking for Historical Data related to FII Inflows ,Outflows and also Dollar index which is traded at ICE, if possible if i can get Dollar vs rupee historical Data also, then hope it would present some understanding . Hope that i will collect all these information and present it in coming days

hope i get some information from SEBI Database or RBI Database

Thanks
Pradeep Reddy Lekkala

Baltic Dry Index is sleeping

See the link below which shows that BALTIC DRY INDEX is not at all moving.

http://www.bloomberg.com/apps/cbuilder?ticker1=BDIY%3AIND

With knowledge i have BDI is calculated on the no ships in sea which are on business mean taking cargo from one place to place ..that implies export and import activity . July early BDI was at its peak due do heavy purchase of raw materials by china to increase its stock pile and also concerns of monsoon might restrict the number of ships engaged in business so i feel it increased at that time . Now if economic activity has to increase it has to start from imports /exports ,because for any business raw material is needed to start the activity . So ships have to be in business but here in this index am not seeing any relation of that kind ...am i missing anything..may be in next post i will include the price of booking a ship which might tell the actual demand of ships....guess that in turn should reflect the economic activity

Where is market heading ?

Off late am seeing many people posting questions to so called experts about the direction
in which market is heading , i believe am also one among them if given a chance. am not here to
undermine their abilities am just wondering where all did these experts go when market fared badly and what reco's they gave to investors about the direction
which made me believe that all are not correct .
Coming to the market here is the expert
(in making ..till will tell )I believe this is short term bull market which might end some where around 17500 to 18000
until unless fundamentals improve this will not get past that mark
Although speculators are going for a kill whenever they had the opportunity
but this trading range is not good for long term investors, also long term investors
should buy stocks when everyone is selling them and should sell when every one buys


will take u through EPS,P/E and historical values,Fundamentals in my analysis

...Will keep more of my analysis in later posts