Went through the annual report and got the feeling that these guys have not done justice to the non-promoter shareholders. The related party NCDs they deposited in, give yield of 2.5-4% p.a. which I feel is very less as compared to Bank FDs but they repeatedly state on call that they get more than market rates and they know these companies well.
The NXTDigital merger transaction also seems like a way for the promoters to sell their loss making business to a recently wealthy company. I see no synergies in their operations but they keep on insisting on it. I couldn’t get old financials of NXTDigital but as per the segment reporting note it seems it was a loss making business which got a swap ratio of 20:63. The promoters must have pocketed somewhere north of Rs 900 crores by tendering these new shares in the buyback.
Entered this stock a long time back and gained a lot from it. Recovered my cost and but it still consists a good part of my portfolio. Now will exit seeing the level of corporate governance. I was excited about the stock seeing the new buzz around AI but I believe these allocation and governance lapses will outrun the cash flow from the remaining businesses. Teklink seems like a good acquisition but can’t stay just for that.
| Subscribe To Our Free Newsletter |
