Skip to main content

whats happening in markets?

Another day and another volatile fluctuations.
Whats happening with the market?

The stock market crash is defying all conventional wisdom of valuations. Many bigwigs are trading below their market capitalisation. This essentially means that, hypothetically , if you buy the complete equity of these stocks and sell the assets in the market, the realisation would be significantly higher than the price paid to buy the shares.

If we exclude companies with marketcap of more than Rs 1,000 crore, which have slightly better pricebook value ratio, combined market-cap falls further to just 54% of their total net worth. So if you have cash worth Rs 110,000 crore, you can acquire companies with total book value of Rs 205,000 crore.

Well, i know it is a conjectural scenario, as such buy-outs would have to follow the norms of a takeover which requires an open offer based on recent historical prices. Further, only a part of the shares are actually traded and it is not possible to buy the complete holding from the market.

Among the sectors, construction and textiles are the worst hit. Out of 100 companies with more than Rs 20 crore market-cap in the construction sector, 54 are trading below their book value. Similarly, for textiles, 75 out of 96 companies are trading below their book value. Besides construction and textiles, metals had 94 such companies whereas non financial services sector account for about 150 companies trading below their book value.

Comments

Post a Comment

Popular posts from this blog

Insight from the new book "The story of work" by Jan Lucassen. Work that never ends

The more things change, its turn out to be the  same as it ever was.  A new book about the history of work reveals that today’s workers have much in common with all those who have come before them over the past 12,000 years.  People’s appetites drive them to produce more than they need, and they build political and economic institutions to help them do it. Then those institutions drive them to do more. NYT ( see the story in the link)  also talks about  Gluttons for punishment.  We work so much because we want so much. That was anthropologist James Suzman’s conclusion after studying hunter-gatherers in the Kalahari Desert who satisfied their survival needs with roughly 15 hours of weekly labor. But modern, urban societies cause us to develop unlimited desires, which lead us to endless labour https://www.nytimes.com/2021/06/29/podcasts/transcript-ezra-klein-interviews-james-suzman.html?cid=other-eml-onp-mip-mck&hlkid=38845d000b404e829c41b7395739f39a&...
Post a Comment
Read more

Hedge Funds: Shape up or ship out

With markets testing their mettle, the new mantra for hedge funds is ‘perform or pay back’! - a la shapeup or ship out. Hedge funds that enjoyed a one-sided bargain with their clients in reaping handsome fees now need to pull up their socks. For if they don’t, they will be losing some of their biggest clients. As per Wall Street Journal, the California Public Employees' Retirement System, popularly known as Calpers, that is one of the biggest investors in hedge funds, is demanding better terms from funds. This includes lower fees and claw-back of fees if performance weakens. For the uninitiated, the US$ 172 bn pension fund is a bellwether in the money-management business. A Calpers investment can in fact help money managers like hedge funds attract other clients. This move by Calpers therefore underscores the changing dynamics between hedge funds and their clients. Just a couple of years ago, investors clamored to get an entry into these funds, agreeing to pay fees that in some cas...
Post a Comment
Read more

Biyani looks at the bigger picture

It is important to look at the holistic picture and have an individual opinion rather than get swayed away by the public consensus. This is the view of the man who pioneered the retailing boom in India - Mr. Kishore Biyani, the founder of India’s largest retailing company - Pantaloon. In an article in the Wall street Journal, Mr. Biyani wrote, "Almost daily doses of bad news on television screens and newspapers have possibly done as much damage to the economy as the events on either side of the Atlantic." I completely agree with him. Mr. Biyani’s predicament is based on the fact that an overwhelming majority of Indian consumers are self-employed, who can neither get laid off nor can have pay cuts. Consider some statistics he has provided. The share of the national income represented by proprietor-run concerns and partnerships is 35%. The share of companies is around 15%, government around 25%, and agriculture around 25%. Combine agriculture and the self-employed in industry a...
1 comment
Read more