Tuesday, September 28, 2010

Obituary: Gurgaon Roads

This post is in loving memory of the Roads in Gurgaon that died prematurely (yet again), due to heavy shelling by the rain gods during the current monsoon season. The same rains have also taken a toll on roads across NCR and other parts of the country.

RIP Gurgaon Roads (2010-2010).

PS: All hail the builders and bureaucrats who would procreate again to give us new roads again next year.

Saturday, September 25, 2010

Google Funds Khanacademy

Google is giving Salman Khan, of khanacademy.org, 2 million dollars to further the cause of making education content available online for free.

That is 2 million dollars well spent.

Check it out here http://www.project10tothe100.com/index.html

Friday, September 24, 2010

common wealth games - the reality

delhi would be hosting the common wealth games from the first week of october. After a barrage of controversies and setbacks, hope is that delhi would pull through
What is sad about all this tamasha is that no one is really talking about sport and the human spirit, any such sporting event is meant to celebrate.
Feel outraged and disgusted with not just the politicians and administrators but also with the media, and perhaps more so with the more progressive media
That said, the comments of some of the phoren babas from respective sports commitees, reeked of gross racial bias. It is time we stopped taking s*** from these guys

Monday, September 13, 2010

SAIL in a fix as i-banks race to the bottom to manage its FPO - The Economic Times

Came across the following post on economic times

SAIL in a fix as i-banks race to the bottom to manage its FPO - The Economic Times

The real cost to Sail and eventually the people of India is not the fee that the investment banker would charge but at what price the deal happens.

Friday, September 10, 2010

Kale Accelya Deal Analysis

Kale Accelya Deal Analysis

Accelya is niche BPO player based in Europe. From Accelya's perspective the deal has the following positives.

1. It gives them entry into IT services with a player that knows the airlines space well, allowing them to further penetrate their clients through cross selling
2. They can now offer integrated BPO/IT Services and a stronger value proposition for new customers
3. Gives them scale- The combined entity would be the largest IT/ITES services provider for airline industry
4. Most importantly, it gives them local knowledge and strong base for offering offshore BPO services from India helping them lower their operating costs

While being listed gives them some additional credibility it is not a huge advantage. Although listing costs are not very high in India

Kale's promoters

1. Decent premium price over current price and a large premium over the undisturbed price
2. Continuing employment for Vipul Jain - the current CEO and co promoter(who got 2 cr salary last year and possibly a sweeter/upgraded deal going forward)
3. Promoters get to keep the logistics division and possibly an opportunity to build another logistics focused IT services company. (the slump sale just before the deal also allowed to plug the valuation gap for both parties; as per the company the logistics division had ~4 cr revenue and about ~6 cr loss;This is theory means higher profits for accelya, which wants to remain only in airline space and a positive option value for the promoters )

They could have possibly got higher valuation, but the softer benefits in this deal may have trumped other potential offers

Thursday, September 09, 2010

Kale Consultants - Accelya Deal

The promoters have sold their 36% stake in Kale Consultants to Accelya at a price of 172 per share. The deal also ensures that Vipul Jain (co-promoter and CEO) continues in his role. As discussed in my previous post they could have got a higher price, especially with the restructuring (slump sale of their loss making logistics business to promoters)

The deal will trigger a mandatory open offer to acquire at least 20% of the company. It will be interesting to see what the open offer price is as that would determine the total upside to minority investors.

Wednesday, September 08, 2010

Value Stock - Kale Consultants

Stock Pick - Value Stock

Kale Consultants

This stock is what you call a low downside, high upside stock. Kale consultants has been in the news recently with all the rumors of it being acquired soon (first by wipro, NTT and then by InterGlobe or another European company)

The rumors have since been denied by promoters (check bse company annoncements) but the recent slump sale of one of its loss making divisions could possibly be cleanup before the actual sale.

Kale had  net earnings of 26 crores (EPS of 18.1)  last year with 40 Cr EBITDA and a healthy growth year over year. It has about 40 Cr of cash and no debt. At current market cap of about 200 Cr it has a PE of 7.6 and EV/EBITDA of 4.2 (versus average PE & EV/EBITDA of about 10 and 5.5 respectively for the smaller listed IT companies) which gives it an upside of 30-40% even if there is no control premium or deal does not happen

The slump sale of its logistics division gives it about 6-7 Cr of profit and therefore about 60 cr additional equity value. for a total possible upside of  60-70%
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