@deepakshenoy's Threads
#Budget2019 Starts. (Thread)
When our hearts are filled with hope, trust and aspirations, we added $1 trillion in 5 years. GDP. Okay.
After a lot of fluff, we are now on.
Uber eats swiggy and Zomato are like ulips. You just can't estimate final bill until you add to cart apply coupons and then see. Just found that doing two orders from same restaurant on one of them was the best option.
The prices on the apps are totally weird. They bump up prices and add taxes and delivery charge and then give a discount....after which it's cheaper than going to the restaurant direct. But no coupon and you pay a lot more.
This means to me that the discounts exist to keep demand going...infact some restaurant owners tell me to.order on some app even when I go there to take a delivery.
Gonna thread it from now. The Berkshire AGM.
Is there any way that kids can develop the delayed gratification? Asks a child.
Charlies answers are too difficult to type but are hilarious.
Warren: buying govt bonds is of no use you won't get more if you delay grat. Dont delay what gives you enjoyment.
Charlies answers are too difficult to type but are hilarious.
Warren: buying govt bonds is of no use you won't get more if you delay grat. Dont delay what gives you enjoyment.
I personally believe in spending 2 or 3 cents of every dollar I earn (laughter) says Warren
Does Jet Airways deserve to die? It's an inefficient carrier (not speaking of the staff who may be quite hardworking, but just in terms of keeping costs low). It has too much debt, but has operating losses (before interest!) for the last 4 quarters, so it's not the debt.
Of course you can say the same of Uber, Swiggy, Ola, what not. None of them have, or will have, operating profits for the foreseeable future. So why do they deserve to live when Jet deserves to die? Answer: Some rich western funds.
Because rich funds, pensions and what not. have provided VCs with capital. They have provided such companies with capital. They won't buy into a Jet, so Jet has no capital and can't even borrow more now. Jet cannot find capital, so it deserves to die.
You know that argument that banks tell you that oh we can't cut rates because theirinput rates don't fall when RBI cuts repo? That's because 40% of all deposits are CASA (Current accounts, or Savings accounts). Across the banking system.
Of 120 lakh crore in deposits, about 50 lakh crore is CASA. THese are either at 0% interest rate (current account) or 4% or so (savings account). These are very low rates. They don't change when RBI cuts rates because RBI rates are at 6% now, even after the cut.
When CASA rates are unchanged because tehy are much lower than RBI rates, and CASA is 40% of the banking system input, then input rates will not fall much. even if banks cut deposit rates. BECAUSE BANKS GET 40% OF THEIR MONEY AT MUCH LOWER THAN RBI REPO RATES.
USDINR swap for three years at Rs. 7.76 = about 3.62% a year for three years.
This is good - the swap is on 28th March, which means banks get two days to borrow from abroad. My calculations are that they can offer 3.5% to 4% interest in USD terms abroad.
At a 3.5% USD deposit with an Indian bank in USD terms, if you can borrow at 2.5% and lever up 10x, you can make a yield of 12%+ a year (a structure banks are offering abroad but only at 6% yields - eating up more of that spread)
Jubilant Life and Food promoters attempt to charge the companies 0.25% of revenues as royalty. Andby the evening, withdraw this proposal. Well done there, because the Food stock tanked over 10% intraday - loss of market cap much higher.
For jubilant life, the Bhartias get around 30 cr. in salaries. They don't take salaries from Food - but that's becaues they don't run it. THe 0.25% would have been an additional 25 cr. from Life and about 8 cr. from Food.
a 10% fall in the stock means the promoters (who own about 45%) lose about 800 cr. - higher than the 54x P/E on the drop in earnings by 7.5 cr. It makes complete sense to reverse it.
My view on the cobrapost "expose": There's some fire in there, but way more smoke. 31,000 cr. is terribly misleading; the problem is a fraction of the 14,000 cr. loans made to entities linked to the promoter (and the market's been fretting about that earlier too)
What I find is bullshit - the donations to BJP (not a big deal) of 20 cr.
- the allegations of insider trading by using some random data - there is far more to this than the eye is being shown, but the 1000 cr. allegation is bull
- the allegations of insider trading by using some random data - there is far more to this than the eye is being shown, but the 1000 cr. allegation is bull
I'm also finding inconsistencies in the slum rehab thing. Cobrapost says a loan given to "Ghardwar real estate" of 430 cr. to a sham project, but indeed, the loan document is cosigned by "Darshan developers" who is the developer of the said Slum rehab proj sra.gov.in/page/innerpage…
The government and the RBI have always been at loggerheads. The RBI is super slow in some matters (like opening market access, allowing retail to buy bonds directly etc). ANd it's very good in others - interest rates, bank NPA recognition (though even that is only recent). etc.
The government though has issues with stupid things. Like why are you not letting banks lend. Or why should RBI okay our choice of bank chief. This is stupid because this is really what the RBI does for the private sector banks and it's done well there mostly.
But the govt lets the RBI get away with total incompetence as well. For instance we were supposed to get retail access to g-secs five years back, it's still only tiny. Why? Because RBI loves its silly SGL and won't get rid of it easy.
RBI and SEBI say they're on the case. This is a good piece of news and I really don't want specifics. Here's why.
There's some fear of redemptions in mutual funds. Even MFs have to be able to sell to handle redemptions. They don;t have a lender of last resort who tehy can borrow from to tide over a temporary liquidity issue.
If the redemption pressure increases, RBI will open a line of credit - through banks - for mfs to borrow and use the bonds they have as collateral. HOwever they are expected to only take the highest rated paper initially - in a full blown crisis they will take more.
From Pattu about free direct plan fund websites and how they could have a hidden agenda: freefincal.com/free-direct-mu… I have a few things to say here.
I think this is as valid a complaint as Flipkart selling products cheaper than market prices (and losing money doing so). Flipkart got sold for some 20 billion or close despite not making profits. So, yeah, there's value in just getting a customer base now.
If a payTM or Kuvera or Zerodha offer this as a service for free, they arechoosing to lose money. If they go under, do your investments get lost? No. The MF ecosystem in India is watertight, and you automatically have access to your funds through the fund house.
Kesoram has issued a clarification saying oh no, we are not stiffing shareholders. bseindia.com/xml-data/corpf…
But one transaction stinks. They sold a division (HHC and Spun pipes) to Camden industries for 400 cr.. This seems to be a party connected to Kesoram promoters. And then, Camden couldn't run it. So Kesoram bought it back at a 22 cr. premium! 
The rest of their explanation is basically this: We did this, it's legal. We bought Century Textiles shares in the market, and then sold to a promoter connected entity at a loss. We are allowed to do this, so we did it.
There seems to be some confusion about Sanitary pads going exempt but lack of input tax credit will make them raise prices. That seems incorrect according to me. I'll try to explain.
Assume I sell Sanitary pads at Rs. 118. This is Rs. 100 + Rs. 18 GST.
I have input costs of Rs. 70+18% GST = 70+13 = 83.
I earn gross profit = 118-83=35.
I pay a net GST to govt of Rs. 5. My profit is Rs. 30.
Now government says my product is GST exempt. Now what?
I have input costs of Rs. 70+18% GST = 70+13 = 83.
I earn gross profit = 118-83=35.
I pay a net GST to govt of Rs. 5. My profit is Rs. 30.
Now government says my product is GST exempt. Now what?
Assume that I am not allowed any "refund" of input taxes.
I will spend Rs. 83 on inputs, this includes GST. I want to continue to make Rs. 30 profit.
So I'll price the pads at Rs. 83+30=113.
Earlier the price was 118. Now it's 113. That is a Rs. 5 drop.
I will spend Rs. 83 on inputs, this includes GST. I want to continue to make Rs. 30 profit.
So I'll price the pads at Rs. 83+30=113.
Earlier the price was 118. Now it's 113. That is a Rs. 5 drop.
Nice story by the Ken on Infibeam. the-ken.com/story/infibeam… by @Vegan_Shakes and Siddhartha Shukla. This stock sure "feels" shady, but I must say the points in the article aren't strong enough.
Like the infibeam sign on the building, the gift city being empty - these are positives, or irrelevantly tiny negatives. The trading volumes and delivery percentages are similar for a lot of stocks including IDEA and MRF.
There are things worth looking at, IMHO. First, the 28 cr. buying of shares by Infibeam's "Employee Welfare Trust" from the market. The company loaned its employee trust money to buy shares from the market. SEBI has banned such practices earlier, though it has weakened stance.
In researching quotes, I found some absolute gems from Terry Pratchett. It's an honour to just read them. Some of them in this thread.
“The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it.” - Terry Pratchett
“It is said that your life flashes before your eyes just before you die. That is true, it's called Life.” - Terry Pratchett.
People are telling you that oh, look, midcaps have fallen - this is why you should buy quality. But it's not apparent why quality means paying 50+ p/e ratios for FMCG companies growing at 11%.
If you're in the game for the next few days, sure, buy whatever people call as quality. But real quality lies is sustainable growth, and many of these "quality" names will fall by the wayside when it comes to that.
It is true, however, that midcaps and smallcaps have been overvalued. And in the process of a fall, even the good ones will take a beating. The idea of overpaying for growth will not always hold, but at the same time, there is the idea of underpaying because of fear.
There seems to be a cash crunch on. If so I have a few alternate theories other than the ones politically being discussed. (Thread)
There was a recent change in RBI guidelines on subcontractors doing cash management. They now need to have a net worth of 100 cr., have a fleet of at least 300 cash vans, and so on. rbi.org.in/Scripts/Notifi…
While subcontractors have a year to get their networth to 100 cr. any new contracts will need the 100 cr. worth right now. And there are number of new rules - like no cash transport in the night, restrictions on who can be employed etc.
