Tuesday, December 4, 2007

Exit price of Igate at 410.

Today, company has announced the exit price to be at Rs.410/-
You can tender your shares even if you have not bidded before before 6 months.

The CMP is Rs.395/- and it is about 3% profit in less than a month. But there are many traders/investors out there who could make more money than this and getting out of this stock now.

Even if you have bidded above the exit price, wait for your shares to come back to your DP and then sell it to the company at exit price.

What will happen when you dont want to sell the shares?
You needn't have to sell it but it will get delisted from the exchanges. Then you are eligible to get the dividends that the company announces from time to time.


Tuesday, November 27, 2007

IGate - Delisting - Part III

Currently, the market price is going up as the delisting process is going on.The buyback will occur only at the price in which Igate can get 90% of the holdings. So, it will be quite high if some of them do not bid or put some high price. So, Putting a high price/Not bidding are almost the same. The CMP is at around Rs 392/- now.

When you are putting a high price, the exit price will be lower than your price and then you can tender your shares at the exit price at later point of time. But instead, if you prefer not to bid also, it is the same case, you can directly sell the shares to the company at the exit price. So, both of them are same...

But what happens when you are bidding at a lower price, you are actually getting down the exit price and it affects all of us. So, If you aren't sure how much it is worth it, you can see the current status of the buyback @ Buyback-Igate

So, stay out of bidding if you are in the view of bidding less. I can see some 25 shares (very meagre amount .0001%) tendered at Rs.288.90 (base price), I guess this one is from the employee of Igate to lower the exit price. So, Retail investors can just be out of the game of de-listing and you can anyway render your shares back at the exit price decided after Dec. 4.

If you haven't received your bid forms, you can ask the nearest Karvy office and the address is available in the internet at both BSE and NSE.

You should have to transfer your Igate shares to Karvy account before bidding and then you can bid directly going to the nearest Karvy centre. As said before, if you are going to bid less, don't bid at all. You will get more exit price because of that. But this is not going to change the exit price that much, if you are having very less shares. I am sure you will get more price than at least Rs.430/-.
There are some bids at Rs.600/- too :)).

Cheers!!! Enjoy minting profit in Igate.

Tuesday, November 20, 2007

Igate delisting - Is it worth the bet? - Part II

I said it is worth the bet in my previous post.

For delisting, the owner should atleast have 90% of the company's share. This is not the case with Igate which has only 80.1% currently.
But it can continue with delisting process as it is approved by the shareholders.

The floor price for the delisting process is set at Rs. 288.90/- , which is the 26 day average of high and low price. The current market price is Rs. 374/-.
As I said before, there is no ceiling price and one can bid at whatever price he likes!

The price will be decided after the Reverse book building process and it is decided by the price quoted by majority of the people much similar to IPO book building.

The management then decided to carry on or cancel the de-listing process at will after the exit price is known. If the exit price is approved, then that price will be the price at which the management buy back all the shares.

If the price you quoted is greater than exit price then yours will not be bought by the company. Any way, you can sell those shares at the exit price within 6 months to the company. If you miss that bus also, your share is less valued than a normal paper!!

If you quoted less price than the exit price, yours will also be taken at the exit price. The management can play around to get lower exit price (what you will do if you were in the management side). For this, they have exercised ESOPs, Employee shares and distributed to the employees at less than 250 according to the grades. They will be more than willing to sell at the management's disposal, say Rs. 300/-.

There will be people, who will bid way higher price as they dont want to sell igate shares and it will in turn increase the exit price. The best price is certainly above Rs. 400/- and I would expect the exit price to be greater than that mark.

You can see what is the current status during the book building process itself in NSE and then decide upon your final price as each and everyone's price matter here, but not that much.

If you have not bidded but have shares, you can also sell at exit price within 6 months.

Cheers!!! Get Ahead for Igate.

Igate Delisting - Is it worth the bet? - Part I

Igate solutions has come up with a delisting plan and the market reacted with a surge of 10% on the same day. Current market price is Rs.373/-

It is going to get de-listed by the 1st week of December. Is it worth the bet to buy now?

I will give you more insight on this deal. The company's profit is moving up every year starting from 2004 when it reported negative EPS. Because of the management change, it has come up to buy back all the shares from the Indian share market. It would continue to be traded on NYSE though.

As it is a IT company, the current rupee Vs dollar issue certainly affects the revenue. But still the chairperson of IGate has announced that the buy back price will certainly be higher and he is happy about it :)
If we keep P/E as 15, then the price at FY08 will certainly be around Rs. 435/- . If P/E is kept at the price would be around Rs.415/- . The buy back price is expected to above Rs.400/-.

Igate is going to buy back its shares by a process called Reverse Book Building process and it is expected to start on November 26th. It is going to end on November 29th. The preference is given to people having their shares in demat account.

Reverse Book Building process is similar to Book Building process that occurs during IPO. Essentially, all the people who have shares have the right to offer at what ever price they expect from the company. The floor price will alone be set unlike IPO book building where there will be ceiling price also. The process is visible to all people and one can see the current status before bidding.

With the current market price at 374 and with the expected buy back price at more than Rs. 400/-, it is certainly worth the risk. You are getting >10% returns in less than a month. Is it not a good deal?

Tuesday, July 3, 2007

Introduction to shares

Shares are given by companies as part of their ownership. The ownership will be divided into many parts and a part will be said as a share. For example, If you buy a share in a company which has given out 1 Lakh shares, you are the owner of 1/1 Lakh of that company.

If you are new to share market, you would have seen many giving recommendations in TV and also from your friends and many other websites. These are just recommendations. Just think this way, If they know the price before, they can easily make large amount of money in the market. Always believe in you and make decision for yourself or blame yourself. Don't ever try to simulate others. Try to do your own research before investing.

How can I get a share of a company?

You can get a share of the company, when it releases IPO (Initial Public Offering) or directly in the secondary market.

Thursday, June 21, 2007

Save money by doing Research

It is the *mobile* world and wherever you go you can see people speaking in their mobile, even while driving!! There are many service providers in India,
  • Hutch (I prefer this one, cos of its low cost)
  • Airtel (Better coverage all over India next to BSNL)
  • BSNL (Public)
  • Reliance and Tata Indicom (Using CDMA Technology)
You can get your monthly rental amount from net and according to your usage there are many plans available. For this you have to do a great research in finding the lowest rent. For example, Recently Hutch announced OneIndia plan (Re. 1 all over India) for Rs. 125/-, if you go to retailer every month. But When I asked for the same to be taken from my balance they are charging the double of it. What will you choose here? (If you are really in need of taking oneIndia plan)

I have also seen Hutch giving me Full Talktime for specific recharges with validity (Ex. Rs.875/- recharge, where I will get 6 months validity and 787/- as talktime.) They use two different words like Full Talktime for which they will take only the service charge of 12% and Complete Talktime for those which you will get the complete talktime without any service charge.

Go for Postpaid or Prepaid?

There are advantages in both the schemes. But do a high research. Dont lose your money by having unnecessary offers/plans which cost you high. Compare it with your usage and choose the best plan available with your service provider.
  • There is a refundable deposit in the case of postpaid, which you should have to pay even before getting a connection.
  • My friend has a postpaid connection and used to say they have charged for a missed call. I cant find any truth in that. But he showed the detailed billing where he was charged for some calls with call duration of 0.01 minutes.
  • In postpaid, the only advantage I can see is, you can pay your bills at the end of every month or once in a month, where you know your exact expense for your mobile phone per month.
  • The sim card charges apply for both prepaid and postpaid.
  • In prepaid you have to go and recharge everytime, anywhere (through Internet, ATM and also a dealer shop)
In Airtel, there will be some offers at the end of every validity which will be applicable for only those two days or so and only to you. It is like catch the offer soon!.

How I lost Rs. 70/- during recharge?

Two days before, I was talking to my sister at about 10 PM and my balance got over. Then I went to the nearest ATM and recharged my mobile for Rs. 550/-. There is a reason for this recharge. I had validity and I wanted only talktime and I had received many Complete Talktime offers from Hutch. I thought Rs. 550/- also is having complete talktime offer. Alas! , I got only Rs. 478/- . I enquired Hutch care to find that the offer of complete talktime is valid only for Rs.222/- , Rs. 333/- , Rs.555/- and Rs. 777/- and this is where my research failed.

If I had called Hutch care before (not possible,I was in the mood of continuing my talk with my sister that day), I would have got the information.

My advice is, either recharge it before your talktime ends after doing much research or go to the dealer whenever you recharge, so that you can recharge with what amount you need.

As always, Do a good research in finding which plan suits you and go with that plan. Keep you eye open in seeing any new offers to shift. Take my word. It is easy to shift if you are using GSM prepaid providers.

Friday, June 8, 2007

Term Insurance - Advantages

In my last post, I advised all to go to Term Insurance. This post is elaborate the same.

First of all, on the safer side, you would have chosen to take insurance. Thats right. But what insurance plan to take. There are many insurance plans available in the market. Which to take?.. Thinking.. Here is the solution.

You should remember that Insurance agent or Financial advisor has their own family and they also have to look for more money. so, they will also go with the company's plan that gives them more income.. Accept it? There are more companies offering insurance and some of them are,
LIC, Kotak, ICICI, etc.,. You can check out the premium for each plan from their website.

Dont take a decision to put your money into LIC or any other as someone told you to do so. Take your own decision after analying all the companies.

Two things you should have to keep in mind.
With Term insurance,

1. you will not get anything back in your life time.
2. Only the nominees will be getting the money, if at all, something happens to you.

It is the perfect plan if you want only insurance, nothing else.

If you analyze all the other plans offered by insurance companies, it will be like, part of the money you invest (actually this is not investing, its spending) towards the plan, goes to insuring you and the other part will be going to get you the returns you want after the term of the plan.

Take this example,

Case 1:
If you invest, say 15000, in some endowment plan(one of the plan, which gives returns at the end of the tenure),
  • part of the money, say 5000, will be going to insure you.
  • The other part will be going to get the assured money back to you.
Case 2:
If you spend, say 5000, for the same sum assured in Term assurance and invest the other part in PPF (for secure returns) or ELSS(for high returns with risk), you will be getting more money in the end rather than this endowment plan.

As insurance companies gains are secure, we can compare it with PPF returns. Note here, you are spending only 15ooo in both cases and getting the returns only after 15 - 16 years and for the same sum assured. If you consider ULIP, consider it with returns from ELSS and term insurance at the mean time as it involves risk.

We will get the real time data into work here..

Case 1:
For 5Lakhs, endowment plan in LIC, just use this to calculate your premium
I just calculated and found the yearly premium to be Rs.33,096. (age in 20's, 5 Lakhs, 15 years)

The returns will be upto 5-6% in case of LIC. we will take the upper 6% to calculate the bonus at the end of 15 years.

Use this calculator to calculate the returns after 15 years. It is Rs. 8,16,562/-

Case 2:
For 5 Laksh, Term Insurance plan in LIC, use the same calculator to calculate your premium.
It will be Rs. 1208 (Isn't it very less ?) (For the same age, tenure etc.,)

Now we will assume the amount (33,096-1208) is kept inPPF every year. Let us see the difference in the returns after 15 years here.

Use the same calculator, to find 31,888 invested inPPF every year. It is Rs. 9,35,093/-

Saw the difference? It is planning that makes the difference. Even though you have the same money, where you put it matters. If the tenure is further increased, the difference will be massive. Also, we have taken the upper percentage from LIC, which will be less most of the times. So always the case 2 here wins.

The other advantages of Term Insurance
  • Very less premium for sum assured.
  • we can stop at any point of time, if we dont have money at that point and dont need insurance but in the other insurance plans you have given more money and you will be losing your money.
  • we can insure ourselves more as the premium is very less.
  • Thats it!..
Just do the research now and find which suits you best from all the available insurance companies.

Keep investing!!!

Friday, May 25, 2007

Going to save tax - Read this first

Most of them would have come across this phase of 'saving tax' during their first year of working (entering into a professional world). They need help on where to invest to get higher returns and how much to insure themselves. This is to help you in making a decision, so that you needn't have to invest in something/somewhere without proper knowledge and regret for it later. (I have seen many doing this)

How much can I save and where can I save/invest?
How much should I insure?
Have I insured enough?

These are the questions that comes to you and the answers depend upon the returns you want and the risk appetite you have.

The maximum one can save now(2007) as per law is 1Lakh. This also includes your PF. So, exclude that and calculate. You can additionally save a max. of 10,000 from tax, if you are going to buy Mediclaim for your relatives or for you. And also, there are many ways to exclude tax by spending!

Insuring is always a best practise. You can insure yourself for atleast your annual income!. But I am not saying you shouldn't insure more. Actually you should. For insurance, I will write a separate post. The only thing, I will ask you to do is,

"Always go for Plain Term Insurance Plan" -

You can checkout the premium online on all of the insurance company websites. Please do your own research to find out which company offers the lowest. The term insurance plan is with everyone and you needn't have to think to go for any other plan, even your advisor says you to do so. More on this, on the next post.

Let me come back to How much and where to save/invest?

I said this depends on your risk. If you do not want to take any risk,
Try these, (for saving tax)
1. PPF
- Most effective return of 8% compounded annually
- 15-16 years of lock-in period.
- you can take out the money as loan after the third year
- 500-70,000 premium range / annum (Its really wide range)
- The income coming from it is not taxable.
2. Insurance Premium - According to the period and plan you have chosen.

There are many more plans withour rish like (NSC certificate( less returns post tax), Many small savings plan(returns are less than PPF), FD - 5 years(Remember there will be tax to the returns according to your tax slab)

I will recommend only these two for those who do not want to take any risk.

For those who are willing to take risks, but want higher returns,
1. Insurance Premium
2. ELSS - Equity Linked Savings Scheme
- 3 years of Lock-in Period
- Mutual funds - market risk.
- Investing in Equity - Risk is more.

There is also one thing called ULIP - Unit Linked Insurance Plan. What they say is they will combine 1 and 2 with risk above. I wouldn't recommend this. The point is, they also have 3 years lock-in period. But the percentage that they take as the amount for managing the fund in the first year is very high - like 50% or atleast 30%, then some 6-8% for the next two years and it does differ according to plans, while Mutual Funds are managing it with just 2-2.5% according to the plans. There are many Tax saving schemes available and you can see their NAV - Net Asset Value everyday in the internet.

NAV is just he price you pay to get a part of mutual fund on that particular day. The similar NAV will be available for ULIP but not updated everyday and also not easily accessible. So, I would recommend ELSS for getting higher returns (with risk) and Insurance - Term Insurance.

Its quite a long post, I know. If you want anymore information, just give a comment.

Monday, May 21, 2007

Begin Investing

There are various ways to get money and equally more ways to spend it. The question, most of them ask, is "Where to put in my extra money to get higher returns?"

This involves many factors like,
1. How much time you are going to remain invested? - Time span.
2. How much risk you are willing to take? - Risk
3. How often and when do you need money? - Liquidity

The banks give interest for the money you have saved with them in SB account. Surely, I will not call this as investment. You may have wondered, how come they are able to give some more money as interest. This is the time factor that comes to play here.

The thing you buy today at Rs. 100/- will not be the same after, say, 10 years. For example, The price of Gold before 20 years would be very less compared to what it is today. This is due to inflation. Inflation rate is the rise of prices in every year. It is something between 4-8% in India. Now, it is almost 6%. So, What does this mean?

If you are saving in a bank, the return what you get will not even cross the inflation rate. The rate of return in a year by a bank for deposits in Savings Account is almost 3.5% and it is far lesser than the inflation rate. Actually, you are losing the money over the period here.

If you invest some 10,000 in bank for a year. You can buy some furnitures worth 10,000 with this money, at the same time (just for the sake). The return after a year would be Rs. 10000 + 350 (3.5% interest (Roughly)) and you can buy for 10350 after a year. Now, the same furniture will be costing you (10,000 + 600 (6% inflation rate). So, your money has actually has depreciated in value. Don't believe it still?

Also, there will be tax for the money you get as interests. It would be according to your tax slab.
So, it will still be reduced. There is very high liquidity with very less risk and the rate of return will also be less. So, you should not lock the money by keeping it in the locker or putting in the bank for the sake of saving. Invest it wisely.

According to the risk, time and liquidity, you can invest in many ways and there are many ways to attain the same. Also, you shouldn't invest all the money that you have and go into credit for living your life. Always, set aside some cash for emergency. Even though, this money is not growing and beating inflation, this is for your safety. No one can predict what happens the next day and it is always better to be 0n the safe side.

Always try to make money out of your extra money. According to the risk profile, the instrument to make more money differs!

Begin Investing sooner than later. Also do your own research before investing.

Sunday, May 20, 2007

Saving and Spending

One should always think on investing if he has more money left after spending for his needs. Actually, what does that mean? His 'cash flow' must be positive.

Cash flow is the net amount with you after you spend for your expenses from your earnings. Roughly, calculate it this way,

How much are you getting every month (if you are a salaried person, its your salary)? - A
How much you are spending every month (It includes everything like food, clothing and every other needs) - B

Strictly speaking, (A-B) is your cash flow. Simple, isn't it?

Apart from paying for your expenses, you should also have to save for the future expenses. Also, there is a high possiblity that you have some financial goals in your life, like,

1. Buying a car, house, etc.,
2. Do marraige for you sister or son or daughter.
3. Financially free over the years to come.
4. Plan to retire soon...
5. Anything that the money can get you, that you can think of!

For all the above said things, you will be eagerly waiting for increasing your 'cash flow'.

To increase the cash flow, you can either increase your monthly income or decrease your extra expense. Note here, its "extra expense". You can have numerous ways to increase your monthly income, doing more work for incentives and/or creating a new side business.

How to cut short your expenses? First of all, have a pocket diary or something of that sort, to have all your expenses accounted. Anyway, you need to have this for finding the value of B, that was said before in cash flow. Then find, which of them is extra expense. you will be able to find it easily. Of course, whenever need/necessity comes you should have to spend for it.

You will be thinking where to put the 'extra money' to get higher returns, so that, it will be helpful in fulfilling your financial goals/needs. This will be the next post.

Life is a Game

I have been waiting to write a blog for quite some time. Time has come now. I have started this blog.Trying with some philosophies.

You should have to live happily and that lies in your heart and mind. There are many things that money cannot buy and that should also be kept in mind.

Life is always a Game. you can win and lose and thats part of life. Always try to be happy and have a smile in your face, that will give a boost to you.

This post will contain information about my home country (India) - But the concepts hold good all around the world. Its the funda that makes you think in the end.I am also a new investor in shares and also new to making money. I will share my experiences here and will be grateful to see your comments.

Happy saving and investing!