⚡️ #YESBANK RESULTS DECLARED!

FINANCIAL HIGHLIGHTS (Q1-FY21)

🟢 Interest Income: ₹1908 Cr

🟢 Total Income: ₹2529 Cr

🟢 Net Profit: ₹45 Cr

🟢 Interest Margin: 3%

🔴 Advances: ₹1,64,510 Cr

🟢 Deposits: ₹1,17,360

🔴 Balance Sheet: ₹2,55,485

🔴 CASA: 25.80%

⚡️ #YESBANK RESULTS DECLARED!

ASSET QUALITY (Q1-FY21)

🔴 Gross NPA (%): 17.30%

🟢 Net NPA (%): 4.96%

🟢 Provisions (%): 75.10%

🟢 CET-1: 13.40%

🟢 CAR: 20%

🔴 Book Value: ₹14.60

🟢 EPS: ₹0.04

🟢 ROE: 0.8%

⚡️ #YESBANK RESULTS DECLARED!

PRELIMINARY ANALYSIS (Q1-FY21)

🔸 The bank has reported fair result as a starting point post the management reshuffle and moratorium saga of last quarter.

🔸 Biggest issue of capital adequacy is now sorted. The bank is now well capitalized.

📕 A Quick Guide on SUPPORT LEVELS & DEMAND ZONES

🔸 Have you ever noticed how a stock quickly moves up after it drops to a certain price level?

🔸 People say "the stock has taken support" or "bounced back from support level"

Let's understand why the bounce happens;

{1/7}

🔸 The basic logic behind support level (also known as demand zone) is related to how big institutional investors buy shares.

🔸 When institutional investors take a position they have a huge qty of shares to buy & so they want the order to be filled at a particular price.

{2/7}

🔸 Let's say the stock of XYZ Ltd. is currently trading at ₹525.

🔸 But institutional investors want to buy 5 crore shares of XYZ Ltd. at ₹500.

🔸 So they put in a buy limit order of 5 crore shares at ₹500.

🔸 This order now remains pending in the order book.

{3/7}

📕 A Quick Guide on OPEN INTEREST (OI)

1⃣ What is OI?
OI is simply the number of outstanding contracts (open positions) for a given stock

For eg: A stock having OI of 1 lakh means there are 1 lakh open positions (long & short)

* OI data is available only for F&O segment

(1/7)

How is OI calculated?

2⃣ As the name suggests OI represents the "interest" of traders in a given stock

For eg: If trader A has 10 long positions and trader B has 7 short positions then the total OI will be 17

That means buying interest is more than selling interest

(2/7)

3⃣ What is Put Call Ratio (PCR)?

In F&O terminology;
🔸 Long positions = Calls
🔸 Short positions = Puts

PCR = Puts / Calls

4⃣ Calculating PCR in the above eg:
Calls = 10
Puts = 7

So PCR = 7/10 = 0.7

(3/7)

📕 THE SATYAM SCAM

🔸 On the morning of 7th January 2009, Ramalinga Raju, Chairman of Satyam Computers submitted a letter to the board of directors.

🔸 In the letter, he openly confessed of committing a fraud of ₹7,000 crore over a period of 5 yrs.

Here's the letter 👇

{1/4}

🔸 Satyam Computers was a company listed on Indian as well as US stock exchanges (ADRs).

🔸 When the news of the letter broke out, it sent out shock waves throughout the stock markets.

🔸 Satyam stock fell 80% that day from ₹185 to ₹35.

🔸 Next day, stock fell to ₹6.

{2/4}

🔸 As part of the scam, Raju generated fake invoices to show inflated revenues.

🔸 He showed bank balances of ₹5,000 crore that was non-existent.

🔸 He kept on rolling money in rounds and kept doing the scam for 5 years.

🔸 He was immediately arrested by the police.
{3/4}

📕 WHAT EXACTLY IS P/E RATIO

🔸 Let’s try to avoid textbook definitions and formulae and instead understand the core concept of P/E ratio in simple words.

🔸 Assume that you and your best friend decide to start a new business venture.

(1/n)

🔸 Each one of you contributes ₹50,000 towards the business as starting capital.

🔸 In return each of you get 5,000 shares of ₹10 each.

🔸 Now here’s the capital structure:
- Total capital: ₹1,00,000
- No. of shares: ₹10,000
- No. of shareholders: 2 (50% each)

(2/n)

🔸 After a successful year in business, you generate a profit (earnings) of ₹25,000.

🔸 That means as 50% owner of the business, you get to keep ₹12,500.

🔸 Let’s calculate Earnings Per Share (EPS)

EPS = Earnings / No. of shares

= 25,000 / 10,000

= ₹2.5

(3/n)

⭐️ BISCUITS - MARKET SHARE

MANUFACTURERS:

🔸 Parle: 33%
🔸 Britannia: 28%
🔸 ITC: 8%
🔸 Others: 31%

BISCUIT CATEGORIES:

🔹 Glucose: 44%
🔹 Marie: 13%
🔹 Cream: 10%
🔹 Crackers: 13%
🔹 Milk: 12%
🔹 Others: 8%

Top 3 companies own 70% of the biscuits market in India.

{1/3}

🔸 OTHER PLAYERS:
Kwality, Priya, Surya Foods, Anmol, Nestle, Kellogg’s, Dukes, Cremica.

🔸 MARKET SIZE:
$7.25 billion (₹55,000 crore) by 2022 @ 12% CAGR.

🔸 States with highest biscuits consumption:
Maharashtra, West Bengal, Andhra Pradesh, Karnataka, and Uttar Pradesh

{2/3}

🔸 GLOBAL RANKING:
India is the world's 3rd largest biscuit producer after US and China.

🔸 SEGMENT SIZE:
Biscuits contribute to 72% of the sales in the bakery market segment.

🔸 CONSUMER FACTORS:
Changing lifestyles, health consciousness, disposable income.

{3/3}

🌟 OPPORTUNITY & DECISION

This is a real world story of a friend.

In 2003, the friend's father was looking out for a job and interviewed in Eicher Motors.

Friend was studying in 4th grade. A typical middle class family from Mumbai.

Father got selected for the job.

(1/10)

The job was for a senior position.

Eicher Motors offered him a salary of ₹21,000 per month with additional stock option bonus of 5000 stocks of Eicher Motors credited over next 3 years.

At the same time, the father had applied at HPCL.

He got selected there as well.

(2/10)

HPCL offered him a salary of ₹28,000 per month with no additional bonus as such.

He had 2 offers in hand.

He rejected Eicher Motors's offer letter and joined HPCL.

His rationale:
HPCL is a Govt backed job and offering more salary per month. He had a family to support

(3/10)

⚠️ VODAFONE IDEA

For the past few days we’ve been doing a lot of research on the telecom companies.

1️⃣ Reliance Jio

2️⃣ Bharti Airtel

3️⃣ Vodafone Idea

Lot’s of not so good points about Vodafone Idea.

Retail investors usually don’t like to hear critical views.

Share or not?

Alright, so it looks like a lot of us are willing to learn more about Idea.

So here’s what we’ll do;

Instead of just sharing the data one-way, we’ll make it an interactive session dedicated to #VodafoneIdea

This way we all can do our own research and collectively learn from it

Before we start, let's clear some things;

🔸 This is NOT a buy / sell recommendation.

🔸 This is NOT technical analysis / price action analysis.

🔸 This is NOT meant to spread any negative sentiment.

Feel free to analyze the data on your own and take your own decision.

#VEDANTA DE-LISTING:

SHAREHOLDING:

🔶 PROMOTERS: 50.14%

🔷 PUBLIC: 49.48%

- Mutual Funds: 11%

- Foreign Investors: 15%

- LIC: 6.5%

- Retail Investors: 7.5%

- Others: 10%

✅ 34% is held by institutional investors.

✅ Institutions will resist de-listing price.

(1/n) 👇

#VEDANTA DE-LISTING:

PROCESS:

🔶 Company makes a public announcement of proposal of de-listing (done).

🔶 Company seeks the following approvals:

- Approval from board of directors (via board meeting)

- Approval from shareholders (via special resolution)

(2/n) 👇

#VEDANTA DE-LISTING:

🔶 SPECIAL RESOLUTION:

For the de-listing to be approved, the voting results should be in the minimum ratio of 2:1 (for : against) of public shareholders.

🔶 Vedanta Public Shareholders: 49.48%
- Institutions: 34%
- Retail: 7.5%
- Others: 9%

(3/n) 👇

📕 HOW MARKET DEPTH WORKS:

🔸 A lot of traders (especially intraday) look at a stock’s market depth table to determine the upcoming moves and accordingly take their buy / sell decisions.

🔸 Here's how market depth data can sometimes be misleading and lead to losses.

(1/6) 👇

🔸Here's how most traders read the market depth:

✅ If there are higher number of buyers (bids) means the stock is in demand and will go up.

✅ If there are higher number of sellers (offers) means the stock is in supply and will go down.

But that is not how it works.

(2/6) 👇

🔸 Let’s say, for a given stock the market depth shows as below (1 qty):

- Total Buyers: 50000
- Total Sellers: 2000

🔸 Many will interpret this as a high demand stock & expect it to go up.

🔸 But still sometimes the stock rapidly goes down despite more buyers.

(3/6) 👇

#PAYTM COMPANY ANALYSIS:

🔶 COMPANY:

- One97 Communications Ltd.
- Regd: 2000, New Delhi

🔶 INCOME STATEMENT:

- Revenue: ₹3,391 Crore
- Expenses: ₹7,255 Crore
- Net Loss: ₹3,960 Crore

🔶 CAPITAL STRUCTURE:

- Paid-up Capital: ₹6 Crore
- Auth Capital: ₹104 Crore

(1/n)

#PAYTM COMPANY ANALYSIS:

🔶 KEY PERSON:

- Name: Mr. Vijay Shekhar Sharma

- Designation: Founder, MD & Chairman)

- Remuneration: ₹ 3 Crore

- Other Benefits: 2 cars, drivers, home, meal, fuel, insurance, medical, utility bills, PF, gratuity, etc.

- Shareholding: 16%

(2/n)

🔶 BOARD OF DIRECTORS:

- Jing Xiandong
- Joesph Chung Tsai
- Mark Schwartz
- Ravi Adusumalli
- Todd Combs
- Munish Varma
- Mukul Arora
- Pallavi Shroff
- Chen Yan
- Ting Hong Kenny Ho

🔶 AUDITORS:

- Internal: KPMG
- External: Price Waterhouse
- CS: PI & Associates

(3/n)

📕 HOW ROTOMAC SCAM WAS DONE

🔸Company: Rotomac Global Pvt. Ltd. (RGPL)

🔸Promoters:
- Vikram Kothari
- Sadhana Kothari (wife)
- Rahul Kothari (son)

🔸Size of Scam: ₹3,695 crore

🔸Type of Scam: Bank Loans (unpaid)

🔸Period of Scam: 2008-2014

(1/2)

Before we understand the scam, we need to first understand an important concept that was used to execute the scam - Interest Rate Differential (IRD)

🔸What is IRD?
IRD is simply the difference between interest rates between two securities.
Eg: Loans, currencies, etc.

(2/n)

An example of how IRD works:

1⃣ Get a loan of $10000 (₹7 lakh) from a US bank at 2% interest rate.

2⃣ Transfer the money to India (the tricky part).

3⃣ Give the same money as loan in India at 8% interest rate.

4⃣ IRD will be 6% in this case.

(3/n)

⚠️WILLFUL BANK DEFAULTERS:

🔸Gitanjali Gems: ₹5492 Cr

🔸REI Agro: ₹4314 Cr

🔸Winsome Diamonds: ₹4076 Cr

🔸Rotomac: ₹2850 Cr

🔸Kudos Chemie: ₹2326 Cr

🔸Ruchi Soya: ₹2212 Cr

🔸Zoom Developers: ₹2102 Cr

(1/2)

🔸Forever Jewellery: ₹1962 Cr

🔸Kingfisher Airlines: ₹1943 Cr

🔸Gili India: ₹1447 Cr

🔸Nakshatra: ₹1109 Cr

QUICK FACTS:

A total of ₹68,000 crore worth of #loans of top 50 defaulters have been written off by #banks.

6 of the 50 #defaulters are from the #diamond market.

The Govt had refused to reply to the question about the total willful defaults written off by banks.

RBI finally disclosed the details after an RTI request was filed by @SaketGokhale

Known names: Mehul Choksi, Vijay Mallya, Kothari Group, Sandip Jhujhunwala, Jatin Mehta

📕 WHY MOST INVESTORS FAIL?

🔸Most retail investors are introduced to the stock markets via news channels, stock websites or by friends.

🔸They start investing their hard earned money without understanding how the #StockMarket works.

(1/7) 👇

🔸Analyzing a company is out of question. They don't even know how to read a company's financial statements like balance sheet, etc.

🔸What next? They start hunting for stock tips given by market experts.

🔸Finally, they make their first investment based on a tip.

(2/7) 👇

🔸This typical cycle of retail investors usually ends up in a huge loss of their invested money.

🔸They start blaming the experts for their losses!

🔸They feel cheated and so they either leave the markets or start the tip hunting cycle all over again.

(3/7) 👇

📕 HOW & WHY COMPANIES FAIL

The biggest challenge a company faces is developing its ability to adapt to changing business environments.

Any company, however big or stable, is not immune to a downfall if it fails to adapt quickly

Let’s consider JET AIRWAYS.

(1/9)

#StockMarket

Jet Airways started in 1993 and quickly became the top private airline in India.

Their USP: Excellent in-flight service.

They enjoyed the loyalty of the rich class, bollywood celebs, corporates, commoners, etc.

They enjoyed peak market share for more than a decade.

(2/9)

In 2006, just when they were riding at their peak, a new player was born - #IndiGo

IndiGo was new and catering to the changing customer demands of price over quality.

They focused on being the best low cost carrier (LCC).

Unlike Jet, they did not focus much service.

(3/9)

🧠 TRADING PSYCHOLOGY:

1️⃣ When your trade goes wrong, you’ll find it extremely difficult to exit the trade and book a loss.

2️⃣ Your mind will trick you into thinking that the trade might work based on some random information.

3️⃣ This “waiting” will work 9/10 times.

(1/4)

4️⃣ Every time it works, your mind will reward you with a rush of dopamine (feel good sensation).

5️⃣ It will reinforce your thought process of “waiting till it works”.

6️⃣ Finally, the 10th time when it doesn’t work, you end up waiting till the trade blows your account.

(2/4)

7️⃣ The trick to avoid this cycle is to identify your state of mind.

8️⃣ The moment you identify that you’ve entered the “hope trading” mode, just quickly close the position.

9️⃣ Don’t allow yourself time to think about it. Just click the EXIT button like a machine.

(3/4)

📕 A Quick Story:
Ipca Labs and the rise of its stock price by +40% in the last 2 months.

🔸 For the last 5 years, US FDA had imposed a complete ban on import of any drugs from #IpcaLabs

🔸 The reason cited by #USFDA was manufacturing lapses at Ipca's factories

(1/5)

🔸 As the coronavirus pandemic broke across the world, a drug called #Hydrochloroquine (HCQ) was found to be effective against the virus.

🔸 India's pharma companies have always been producers of cheap generic drugs.

(2/5)

🔸 As the HCQ news was announced, India imposed a complete ban on export of HCQ drugs.

🔸 As many as 30 countries, including the US approached India to get a supply of #HCQ tablets.

🔸 US went as far as threatening with a "retaliation" if India does not supply them HCQ.

(3/5)

📕 A Quick Guide on OPEN INTEREST (OI)

1⃣ What is OI?
OI is simply the number of outstanding contracts (open positions) for a given stock

For eg: A stock having OI of 1 lakh means there are 1 lakh open positions (long & short)

* OI data is available only for F&O segment

(1/7)

2⃣ How is OI calculated?

As the name suggests OI represents the "interest" of traders in a given stock

For eg: If trader A has 10 long positions and trader B has 7 short positions then the total OI will be 17

That means buying interest is more than selling interest

(2/7)

3⃣ What is Put Call Ratio (PCR)?

In F&O terminology;
🔸Long positions = Calls
🔸Short positions = Puts

PCR = Puts / Calls

4⃣ Calculating PCR in the above eg:
Calls = 10
Puts = 7

So PCR = 7/10 = 0.7

(3/7)

How "Short-covering" rallies really work:

1) Let's say, a lot of investors have taken short positions in a stock expecting its price to fall in the future due to some bad news

2) As time passes, the stock price seems to hold steady & doesn't show any signs of falling

(1/2) 👇

3) As more time passes, these short sellers lose confidence in their initial idea of expecting the stock price to fall

4) They now decide to close their short (sell) positions. To close their positions, they have to buy the stock to square-off

(2/3) 👇

5) This buying pressure triggers a massive demand in the stock thereby increasing it's price rapidly

6) Looking at the price go up, more buyers (fresh positions) join in taking the prices even higher

All this results in a massive up move known as a "short-covering" rally

(3/3)

#YesBank

Retail individual investors should be exempted from the lock-in clause. Here' why;

As per the reconstruction scheme;

Total Equity Shares: 3000 Cr

🔸Existing Shareholders: 255 Cr (8.5%)

🔸SBI & co-banks: 1095 Cr (36.5%)

🔸Unissued Shares: 1650 Cr (55%)

(1/4)

#YesBank

Out of the 255 Cr shares held by existing shareholders;

🔸Promoters: 21 Cr (8.33%)

🔸Mutual Funds: 12 Cr (5%)

🔸Foreign Investors: 38 Cr (15%)

🔸LIC: 20 Cr (8%)

🔸Retail Investors: 122 Cr (48%)

🔸Other Investors: 42 (16%)

(2/4)

#YesBank

So out of the total revised equity of 3000 Cr shares, a paltry sum of 122 Cr shares (4%) is held by individual retail investors.

Even if retailers sell-off in panic;

1) It won't have much effect

2) New buyers will emerge at such lower prices

(4/4)