Went through the results, aren’t impressive. Weak QoQ, EBITDA margins under pressure, YoY is good due to last to last quarters overperformance.

Let’s wait for management’s guidance.

Now, from here i expect two things can happen to this stock in the very near term.

1. Stock tanks to a more reasonable bv/cmp and market decides to cut the premium book value and pe. By how much? We shall soon find out.

Retailers who bought this cheaply might start to booking profits due to exuberance in numbers, and since the overall market is falling due to election uncertainty.

2. Stock goes sideways till the next cycle (or atleast a sign) of uptrend in core metrics start.

If anyone can do a side by side comparison with peers wrt the Q4 numbers that would be great help.

is there any possibility of merger not going through? I mean if i don’t want to hold icici bank, is there any hope in holding isec?

I have analysed the company with the available public information since 2010.

Following of my observations have led me not to consider investing in it:-

1. Size of the industry is small – Approx. 1500-1700 crore, which is not too big for a company to grow enough, and become a great wealth generator.

2. Frequent capital raise by the company – warrants to promoters in 2010, 2011, 2013, 2014, 2015. Till 2018, all the cash generated was getting stuck in WC, as such company needed constant capital from outside. The situation improved from 2019 onwards, although, but needs constant vigil.

3. Active investment in direct equity – It seems like equity investing is a core business of the company as a considerable portion of PAT is from capital gains from equity investing. Also, sometimes the equity investment is for very short period – it sold stakes in different companies within 01 year. In 2020, there was a net loss too from equity investing. As such, equity investment operation becomes a distraction.

4. Independent director does seem a related party – Mr. Vivek Himatsingka, Independent director seems like is brother of Chairman’s Son-in-law. I have tried all the public information available to come to this conclusion but correct me if I’m wrong. If my point is correct, it is very poor corporate governance and a big RED.

5. Promoters are very opportunistic – They wanted to diversify into Real Estate during 2008-12 boom, tried manufacturing Masks after COVID, investing company’s money in Venture capital funds.

6. Promoters almost every year went for the maximum remuneration possible under the law, but for many years, could not spend CSR amount as designated.

There are some favourable points for the company like expected growth in Packaging sector, it being only Indian company in the industry, formalisation of various sectors after GST etc., but the negative points outweigh the good ones for me.