view on Lycos Internet

Is Lycos internet a good investment at these levels? I checked in screener.in and many valuations parameters look attractive.
Market Cap.:₹ 1,643.06 Cr.
Current Price:₹ 34.50
Book Value:₹ 36.24
Stock P/E:4.42
Dividend Yield:0.00%
Face Value:₹ 2.00
52 Week High/Low: ₹ 56.10 / ₹ 19.10
PEG Ratio: 0.07
Industry PE: 0.00
Current ratio: 2.95
Interest Coverage: ₹ 36.22
PB X PE: 4.20
NPM last year: 17.49%
NPM latest quarter: 18.61%
Promoter stake has decreased.
Views Invited.

 

asharan bhai i dont understand why does this company trades at 3-4. everything about the company is good apart from dividend. this company also pays taxes at full rate. I'm totally perplexed by this.

 

I checked a little more.It seems the sales /profit/eps numbers shown on screener match with annual report on the company website. However I see websites like rediff/moneycontrol showing different numbers(P/E as high as 110). I don't understand whats going on here,how different sites can show different numbers?

 

Standalone vs Consolidated

 

Yes Consolidated looks great

 

Lycos formerly known as Ybrant was dealing in digital add and recently they have launched a new product line creating fitness bands. This product line is new for them.
I have closely observe this company which always reports 400 Cr of annual profit but why there is need of pledging of promoter share is still un-disclosed.
Management is not so good. When the stock falled from 54 to 27 without any reason clearly indicates 2 things.
1. It is operators pick.
2. management don't care for investors.

I feel management is not good and not directing the companies business in proper direction. They have acquired Lycos and other companies dealing in digital add business but it seems that they have just shown growth which is in-organic by acquiring companies and showing their profit in the balance sheet.

Their actual business is not expanding and revenue generation from their main business seems to be bigest worry for them.

One can look at kellton or saksoft or intellect design instead of ybrant for better and guaranteed profits.

 

has any one taken a look at the Cash Flow Statement. I couldnt find the tax paid in that. is the company only provisioning for taxes and not paying them? or they are following someother accounting method.

if anyone has a clue please shead some light on the issue. price is not that important whats important is the authenticity of the numbers reported by the management. if the numbers are authentic then price will come about sooner or later. but if the numbers that are reported are false then no point hanging around in a script doesnt matter what the price is

 

Hidden RISK in LYCOS.


Lycos owe $36 million(approximately 250 CR) to Daum on Lycos DEAL. If you see Lycos balance sheet it has negligible amount in cash and bank. Majority of the money had been mentioned in "Work under progress". If they have to pay 250 CR then either they have to dilute the stake or take DEBT. Total Risk liabilities will be : 1. A debt of 250 CR 2. Fund raisers for recent acquired of bright com and mysms etc are through private investor. These private investors are on an urge of exit and Reddy himself told in an interview recently to mentioned that they will facilitate their exit. But he didnt mention that who will replace those investors and invest money. If they don't find any other investors then more debt need to be raised(equivalent to acquisition amount) 3. After the 250 CR daum impact they will need to Raise money for working capital under debt Seeing the above factors I would suggest to stay away from this stock until the information on "how are they planning to pay DAUM" and "who will invest money after the exit of private investors" is made public by Lycos management. If the above reasons are true then the stock will be available between 2-3 RS "Sudar Industries Ltd" also walked in the same path of Lycos. Study it to get more clarity on what Lycos will become.

 

The issue with Lycos is solved and now I believe the share is ready to move up.

The stock price were beaten down because of a court case Ybrant digital(parent company) was fighting with the rival company DAUM.

What was the issue - Ybrant(parent company) bought Lycos from Daum with 20 million dollars down payment and rest of the payment would be some X times the revenue. So the pending payment came out to be 36 million dollars.

Lycos refused to pay this amount on the grounds of manipulation of revenues by DAUM appointed Lycos CEO and hence files a court case.

They lost the case and court ordered to pay 36 million dollars to DAUM. Ybrant files bankruptcy to get time to file a counter case on DAUM.

Later bankruptcy court asked Ybrant and Daum to settle the case outside the court and moved Ybrant out of bankruptcy.

Then the US court appointed a sheriff to get the transaction done.

But Lycos Contributed only 1.2% to the overall profit and 5.6% to the net asset of Ybrant. So paying 250 Cr (36 million dollars) was a bad deal for Ybrant as well as the investors.

Finally court ordered Ybrant to hand over the share of Lycos it owned(56%) to DAUM.

So now the company has been renamed as Brightcom, which is their signature brand.

This court case was the reason of fear to beat down the share prices to Rs 5-6 and now this issue is solved the share price has a good chance to reach its intrinsic value of 60 Rs – 70 Rs at 10 PE.


“Comments and other perspectives are welcome”

 

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