Balaji Telefilms has given 175% gain since Porinju’s first recommendation
Porinju’s famous tweet of 29th August 2013 may go down in history as the most profitable tweet ever.
Balaji Telefilms@31, Orient Paper@5, Orient Cement@32, KRBL@23, Mirza Intl@20 – all looking penny stocks, but not penny business. BUY
— Porinju Veliyath (@porinju) August 29, 2013
As one can see, each one of the five stocks referred to in the tweet has put in a spectacular performance, with two stocks having given gains in excess of 1000% (10-baggers).
|Stock||Reco price (Rs)||CMP (Rs)||Gains (%)|
Few people can boast of having made so many successful recommendations and that too in one tweet. We have to compliment Porinju for his sense of timing and selection of stocks.
In August 2015, Porinju joked that Balaji Telefilms was the only stock reluctant to be a multibagger.
Balaji Tele was the only one reluctant to go multi-bagger, out of this tweet with a strong message for beginners: https://t.co/8D5I2nwqFg
— Porinju Veliyath (@porinju) August 5, 2015
|BALAJI TELEFILMS LTD – KEY FUNDAMENTALS|
|MARKET CAP||(Rs CR)||
|EPS – TTM||(Rs)||[*S]||
|LATEST DIVIDEND DATE||
29 MAR 2016
|BOOK VALUE / SHARE||(Rs)||[*S]||
[*C] Consolidated [*S] Standalone
|BALAJI TELEFILMS LTD – FINANCIAL RESULTS|
|PARTICULARS (Rs CR)||DEC 2016||DEC 2015||% CHG|
(Source: Business Standard)
Radhakishan Damani & Vallabh Bhanshali storm into Balaji Telefilms
When Rupert Murdoch, the Billionaire founder of Star Network, announced the intention to divest Star’s stake in Balaji Telefilms, Radhakishan Damani and Vallabh Bhanshali of ENAM were all ears. The duo landed up early in the morning at Rupert Murdoch’s door, their pockets bulging with cash.
Of course, Rupert Murdoch was no match for the negotiating skills of Radhakishan Damani and Vallabh Bhanshali. The duo ran circles around him and got Star Network to sell the shares at an average price of ₹63.6, a significant discount to the then market price of ₹79.40.
While Radhakishan Damani pumped in Rs 22.26 crore, the Bhanshalis pumped in Rs 24.17 crore. The duo each acquired over 5 per cent stake in Balaji Telefilms from Star.
The stock was bought by the duo in various names such as Gopikishan Damani, Derive Investments, Talma Chemical Industries, AADI Financial Advisors LLP, Multiplier Share, Risi Finstock, Talma Chemical, MK Shipping, Mahavir Inducto etc.
@nooreshtech 2x target to be achieved 😉
— Rahul Chhajed (@rahul6202) August 5, 2015
Bargain hunting skills
It is a tribute to the bargain hunting skills of the trio that despite their status as Billionaires, they went all the way to the Metropolitan Stock Exchange of India (MSEI) to save a few bucks on brokerage (apparently, the brokerage charged by the MSEI is 50% of that charged by the BSE and the NSE).
Sameer Nair, the CEO, buys stock aggressively
A dead giveaway that the stock of Balaji Telefilms is quoting at a rock-bottom valuation in comparison to its potential comes from the buying action of Sameer Nair, the CEO.
Sameer Nair is a whiz-kid in his own right in the field of television. He is credited with having turned around the fortunes of Star TV with the blockbuster show “Kaun Banega Crorepati”, which was anchored separately by Bollwood superstars Amitabh Bachchan and Shah Rukh Khan.
Sameer Nair not only rubbed shoulders with Radhakishan Damani and Vallabh Bhanshali in buying 416,000 shares from Rupert Murdoch, but he also separately holds a chunk of 35,000 shares.
Rahul Saraogi’s Atyant Capital also tucks into the stock
We are familiar with the profile of Rahul Saraogi of Atyant Capital.
We last saw him in the distinguished company of Ashish Kacholia in Navin Fluorine, pocketing mega multibagger gains.
Saraogi prides himself on being a “deep value investor”. He is also known for insisting that there should be “asymmetry” between risk and reward i.e. the risk should be low or non-existent while the reward should be bountiful.
One can guage the extent of Rahul Saraogi’s bullishness for Balaji Telefilms from the fact Atyant Capital India holds 5.37% of the equity capital. In addition, Vanderbilt University, which appears to be a fund managed by Atyant Capital, holds 3.48% of the equity capital.
Stock is in doldrums despite being debt-free and with huge cash. This means that the risk is low?
It is notable that despite the aggressive investment by luminaries like Radhakishan Damani, Vallabh Bhanshali and Rahul Saraogi’s Atyant Capital, Balaji Telefilms is presently in the doldrums.
On a YoY basis, the stock has lost 18% while over 24 months, it has gained only 22%.
This is severe under-performance of the stock in comparison to the Nifty.
Prima facie, this under-performance augers well from an investment perspective because, applying the famous theory of Howard Marks, the Billionaire investment-philosopher, it means that most expectations are drained out from the stock. This reduces the risk of disappointment and makes the stock safe and sound.
This is especially so because the company is debt-free and is sitting on cash and cash equivalents of about Rs. 200 crore or about Rs. 31 a share versus the current market price of Rs. 87.
Ambitious business plans are on the anvil
According to the investors’ presentation, ‘Alt Digital’ is likely to be a game changer. It is also stated that the “ecosystem in India is getting ready” for the digital interface.
Detailed reasons have been given in support including the fact that the smart phones and higher speed internet connections have become cheaper.
This reason rings true in the light of the savage price war triggered by Reliance Jio as per which users are being allowed to consume as much as 28GB of data per month (1 GB per day) for a paltry charge of Rs. 303 per months (Rs. 10 per day).
Sameer Nair has articulated on these plans in his interview to CNBC TV 18.
Balaji Telefilms is heading for re-rating: Porinju Veliyath
Porinju Veliyath has kept his investment rationale simple and bare-bones:
“Are there any mid- or smallcaps that investors can add to their portfolios at the current levels?
Yes, a large number of mid and small-caps will be re-rated. Management culture and ethics of many traditionally unprofessional companies are changing, especially with respect to shareholder wealth creation. Investors should keep their eyes and ears open to such turnaround stories and catch them early. I like two mid-cap media stocks currently, Zee Media at ~35 levels and Balaji Tele at ~85 levels. Investors could explore and try to understand the business model and their relevance for the future. We hold both the stocks in our portfolio (PMS).”
Porinju Veliyath had earlier lamented that Balaji Telefilms was the only stock which was reluctant to become a multibagger. Now, we have to see whether the stock makes good that deficiency and showers multibagger gains on its lucky shareholders!