I normally refrain from commenting on the madness called the stock market, especially since some people naively assume that working in a financial services company gives me some special insight into stock prices.
But, for once, I want to think aloud whether there is something that I am missing here... Any views from more informed people are welcome...
Swan Telecom sold 45% stake to Etisalat for USD 900 mn... i.e. Valuation of USD 2 billion for the company.
Number of subscribers: 0; Number of towers: 0; Assets: Only the license.
Unitech sold 60% stake to Telenor for Rs.6,120 crore... i.e. valuation of 10,200 crore for the company (equivalent to USD 2 billion approx. at Rs.50 per USD).
Number of subscribers: 0; Number of towers: 0; Assets: Only the license.
TTSL sold 26% stake to DoCoMo for USD 2.7 billion... i.e. approx 10 billion valuation for the entire company.
Number of subscribers: approx 29 mn; Towers and assets existing, need to find out the exact number.
Now, in the midst of all this, why would a company which has approx 30 million customers, more towers than all these guys, more assets than all these guys, be going for a market cap of approx Rs.12,000 crore (i.e. USD 2.4 billion)...
Have Telenor, Etisalat and DoCoMo over paid? Or is the stock market undervaluing this company for hiring Abhishek as their brand ambassador?
In other words, what an idea sirjee!
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Disclaimer: Stock market investments are subject to market risk! The author does not hold any position in the stock, and does not advise any one to buy/sell the same.
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are we saying the stock mkt is correctly valuing most stocks today?! at least i dont believe so. n most of the opinions i hv read/heard dont believe it either. i know u too would agree that the current sentiments are largely driven by developments (or absence of it)at global level n once these fears settle down, mkts would value stocks better. pbly with sensex arnd 13-15k. maybe 6-7 months or more from now.
ReplyDeleteso is this the time to buy? well, given the volatality - it only makes sense for traders. investors can wait for some more time as stocks would continue to bounce to current levels for a few months or more.
coming to ur qn on etisalat/docomo paying more - even when mkts values these stocks better - i guess thr is a huge premium attached with the late entry into the sector. nothing else, in my limited understanding, requires them to pay more than the valuation of reliance!
facts which u mite need - TTSL (23mio subs, 10k towers), TTML (5mio subs, 2.5k towers) & TTML mkt cap is arnd 3.9kcr
- Santa
@ Santa:
ReplyDelete"are we saying the stock mkt is correctly valuing most stocks today"
I agree that may be it is not.
"so is this the time to buy? well, given the volatality - it only makes sense for traders"
Whatever happenned to "be greedy when others are fearful" :)
"i guess thr is a huge premium attached with the late entry into the sector."
And companies would pay the premium only if they are extremely convinced about the growth prospects, right? Which means that incumbent players also have the chance to ride that growth.
Anyways, I will stay away from the markets for now... if not in life, at least on the blog :)
Dear SRK
ReplyDeleteNot at all original.. this was covered on the front page of TOI (not even a business paper)!
About valuations and all.. i'll also refrain...
Cheers!
-hem
@ Hem:
ReplyDeleteThat makes it even more puzzling. If every layman read about it being undervalued, then why are they not going out and purchasing it?