Classic case of a listed company run by PE -

1. Discloses related party dealings in more detailed manner - analysts 👍

2. Promoter owned company doesn’t make any superficial gains from RPT. - Analyst call it professional and clean management
3. Listed company does margin management through dealing with this promoter owned company

4. Everything looks rosy - analysts 👍

5. No one cares to look at funding pattern and financial position of promoter owned company🤔

6. Promoter owned company is at verge of bankruptcy
7. Promoter wanted to rescue their company…else entire funding given by the listed arm will become NPA

8. The rescue may be via pledge of shares or financial shenanigans

Street - we missed everything 😢😢
Bottom line -

Don’t get excited just because it is company is backed by PEs.

Do not carried away by just looking at one side of the information

Do in-depth and holistic analysis

Don’t forget we are part of capitalist economy, every one is here to make gain incl PEs

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More from @nrmangal

19 Jun 20
Reading annual report of #Wirecard ...let’s see what is says🤔
#Wirecard annual report pointers:
1
It had €3.3 bn cash and bank balance as at 9MF19... average yield on cash and bank balance is 0.3% since F10.
2. Alongwith increase in cash and bank balance over the years, company debt levels have also increased to €1.85 bn.
3. Cash and bank balance has grown at the rate of 37.6% CAGR, while debt has grown by over 60% CAGR since F10.
4. Asset turnover ratio has remained flat over last 10 years, indicates fictitious assets in the balance sheet.
5. Effective rate of depreciation has kept on increasing
Read 4 tweets

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