Disqus - Latest Comments for Deepak Shenoy

Re: StockTwits.com Closes Angel Financing

Deepak Shenoy — Thu, 25 Sep 2008 14:22:42 -0000

Way to go...I'm sure you're at it but do think about adding a price when tweeted and current price just to see context. I'm not a big user - I live in India and focus on stocks here - but good site, hope you guys include Indian stocks too someday.

Re: Asshat Fight of The Week…Buy and Hold vs. Indexing vs. Cramer

Deepak Shenoy — Mon, 20 Apr 2009 01:20:19 -0000

The right way to invest is to make money. Everything else is a hobby, a gamble or a failure. Nothing succeeds like success.

Re: Radio Stations: Pervasive Entertainment Everywhere | Vijay Anand

Deepak Shenoy — Fri, 24 Aug 2007 02:36:55 -0000

I've thought about this a lot - starting from Radio City in Bangalore which was the only station for years, and many a friend became a radio jockey, to today where there are around 10 stations, most of which spew Kannada, Hindi and other language music.

First, the licence fees were extremely high (plus a 15% increase per year) so there wasn't much interest among broadcasters. So the channels that came about went down the elite route - choosing English music, English speaking DJs etc. Ad rates were not too high as this was a loss leader model.

Soon that changed, and Hindi became a more attractive proposition. So it was: English/Hindi music and English speaking DJs.

Then the government went on a rampage, slashing annual fees to zero, charging a 5 crore entry fee (average, was a bidding process per city) and a 4% revenue share. Around 10 channels suddenly popped up in Bangalore.

In the process, STAR exited their Radio city ownership, and listed players entered the fray, like Mid-day, ENIL etc.

THe new channels decided that elite was not it. Therefore Kannada had to be tapped. That succeeded like crazy - cut to now, when nearly all channels have only Kannada speaking DJs (okay, smattering of English sometimes).

Only one channel - Radio Indigo - remains an English channel. Rather, a non-kannada-only channel.

I don't see the potential for a pure-English channel, unless the entry fee is also cut to zero and spectrum costs are sub-10 lakh. If you want to operate on the fringe, you could have a Telugu or Tamil channel in Bangalore, a Gujarati channel in Mumbai, a Punjabi one in Delhi etc. which might actually be more popular than the English one.

And with worldspace making all this available, plus the mass availability of Internet channels, the home or the office is no longer useful for an English (or fringe) FM channel.

What's left? The car. Now you compete with the Ipod FM transmitters, CDs and potentially worldspace car stereos.

Not worth the effort, in my opinion. This is the long tail of radio, except the fundas of the long tail do not apply - in that the cost is too high.

Re: Radio Stations: Pervasive Entertainment Everywhere | Vijay Anand

Deepak Shenoy — Tue, 28 Aug 2007 02:07:01 -0000

Vijay: Licence fees have only recently been reduced and the government/TRAI has been clear in most departments (Cable TV, mobile, ild etc.) that they will allow incumbents time to recover the licensing costs before they reduce fees.

In some cases, to limit participation or reduce rampant growth, the government has actually increased barriers to entry - look at airlines or cable tv history.

Now will they reduce entry fees further? Perhaps. It's not a license fee anymore - it's a "one time entry fee" plus 4% revenue share (or1/10th of entry fee, whichever is higher). ENIL paid about 20 cr. for bangalore. The smaller cities are lesser of course - order of 1 to 10 crores in the south. http://mib.nic.in/fm/CityWiselist.pdf

Now there still are channels open. There was a recent rebidding tender for FM (http://mib.nic.in/fm/NITVacantChannel.pdf) but the last date was July 23, 2007.

Currently the stakes are high. For a long tail the incremental cost of adding content (channels, music, DJs etc) should be low - in this case that is totally not so. (You will pay about Rs. 1400 per hour of broadcast music to the music industry, a cost that is significant compared to revenues)

If you want to go niche, the revenues must be much much higher than regular content. I don't know if you've analysed ad-rates for Radio, but in bangalore they are horrendously low for a niche set up.

What you can do - and this advice is only worth the money you paid for it - is to strike a deal with broadcasters to pod-cast or rebroadcast their content on the internet as internet radio, to listeners worldwide. Indian diaspora etc.

And there, you can do news as well, something local broadcasters are not allowed to do. You need the contacts and some money to get content; but the actual work needs very little hi-fi technology.

Re: Living On Instant Noodles. | Vijay Anand

Deepak Shenoy — Thu, 19 Jun 2008 03:21:26 -0000

When I started my first company, two folks from the "traditional" business lines were directors. They expressed a certain degree of shock when we presented them with a profit on the first year, with zero debt and only enough capital to buy four machines and a printer.

They said they always believed in the kosher-3-year law - that any business needs to be given three years to make a profit.

Of course there are excesses in the other direction too. One such "traditional" businessman invested a couple crores setting up a 80 seater call center - complete with machines, call equipment, internet lines etc. - and got this "manager" to try and get him business. Because of the traditional thinking he didn't bother about the mounting losses, or with things like utilisation rates or any metrics - believing that it would take three years. He had to let it go at less than book value (luckily the property appreciated enough for him to recover a little bit)

A lot of people get complacent when you tell them building businesses take time. an interesting thought is to ask that all people take loans to build their businesses - even if it's a personal loan and you already have the money. The idea is: the loan must only be repaid by cash flow from the business. (any intermediate payments made by you are added to the company's loan) If in X years the cash flow has not paid off the loan, you need to get the heck out.

After running a startup for seven years and not really going places, I've seen a little bit of the other side - how inertia can take a toll on business.

Re: Stock Idea - Hindustan Construction Company

Deepak Shenoy — Mon, 29 Sep 2008 10:55:53 -0000

It's down some 8% today - all real estate stock have been battered. HCC is a tough buy - it has one of the highest P/Es in the space, and is very deeply affected by both the credit crisis (read: financing) and the consumer downturn. Where do you see EPS in, say, a year from now?

Re: Nifty PE near historical lows

Deepak Shenoy — Wed, 05 Nov 2008 13:45:36 -0000

Hi Gautam - Interesting post and good to see you in action! There's another way P/E can go up, with the "E" part going down. From an EPS of nearly 236 in the last quarter (trailing 4 months) the Nifty EPS is 228 today. If the earning goes down to Rs. 200, then today's level still give us a P/E of 15...I'm not saying it will happen, but it's likely.

GIven that US S&P 500 earnings estimates for $2009 aer down from $100 earlier this year to like $50 today I think we're quite capable of going down about 10% in earnings. What do you think?

Re: Nifty PE near historical lows

Deepak Shenoy — Tue, 11 Nov 2008 10:51:23 -0000

I'm not sure where you got the historical average from (the NSE data before 2004 is flawed, they used to take annual results instead of TTM, which upped the average). If you look at historical lows, I have data on the Sensex that has lows of 10 as well, and given that RPower has zero and RPL has very little earning power, the EPS has very little going for it. Average P/E is less than 15 on the Sensex, and will be similar if adjusted on the nifty (this is TTM earnings)

One thing though is that we don't have a very long history and not enough bull/bear cycles to compare. The developed world does and the average p/es there are dramatically low.

Re: Nifty PE near historical lows

Deepak Shenoy — Sat, 22 Nov 2008 12:34:57 -0000

The current P/E of sensex (from the BSE site) is 11.34 - as of Nov 21. 20th was even lower - 10.72. The Sensex is highly dependent on RIL, whose P/E is now around less than 10, because of an EPS of around 125 TTM. That's also skewed because it contains the one time RPL stake sale which was around 25 Rs. in the EPS. But the Sensex does not remove one-timers.

A developing economy will get hurt even more than a developed economy in a global recession - regardless of how good local economics is. That's because money flies to safety (i.e. developed economy debt) and exports suffer tremendously from lower demand. This time it's a lot worse, i.e. we have a real estate bust and a dramatically big recession worldwide.

PEs may eventually widen because of dropping earnings, for a while. Then when the recovery happens, risk doesn't get embraced - so pe's contract before picking up. These cycles can take years, and I think India will take at least three years before recovery begins, more like five. Meanwhile I wouldn't be surprised to see a further 40% drop on the Nifty, complete lack of retail interest in the markets, and very very low volumes.

Re: The Housing Surplus Question

Deepak Shenoy — Mon, 18 May 2009 23:53:39 -0000

I live in India (and love your blog!) and the situation here is weird. First, the market goes up yesterday, and that too, 17%, even though nothing much has changed. With a deficit at 6% there's not much room for a political economy prop-up.

Credit may get better - but housing is screwed anyhow. There's a glut at the upper end of the buying spectrum (>10x annual income) and rent to buy ratios are typically 35+. I've travelled the length of the country and seen overbuilding in every city - the place where I live, just this 5 km road, has over 5000 listings for real estate that isn't quite selling, and is full of half built structures whose builders are finding it difficult to even justify retaining cranes on site.

But since we don't bother to collect data, we will remain happily ignorant of inventory and delinquency levels. Hey the politicians can fix that, no?

Re: Fwd 2 Tweet

Deepak Shenoy — Fri, 03 Jul 2009 12:30:45 -0000

It's Shanghai, not Sanpada. http://news.bbc.co.uk/2/hi/asia-pacific/8123559...

Re: Naukri Owner Info Edge Records Revenues Of Rs 147 Crore In 2006-07

Deepak Shenoy — Fri, 04 May 2007 08:04:55 -0000

Some notes:
1) Company makes 27 cr. net profit, out of which "other income" is 7.6 crores. 28% of their profit comes from "other income"?

2) They got Rs. 170 cr. from their IPO, unused till now. This itself can be a cash yield of 9% post tax - meaning, 15.3 cr. of "other income" in the next year. Great for the bottomline, but bad return on equity.

3) SOmeone tell me my mathematics is wrong. They made 27.08 cr. in profit. They have 27.295 cr. shares outstanding (capital of 272.95 cr. at 10 Rs. per share face value). IF I divide the profit by number of shares, I get an EPS of 9.92.

They report EPS of 11.31. What gives?

At today's share price of 750 they have a P/E of 75.

Re: Naukri Owner Info Edge Records Revenues Of Rs 147 Crore In 2006-07

Deepak Shenoy — Fri, 04 May 2007 11:41:13 -0000

(That should have been capital of Rs. 27.925 cr, and 2.7295 cr shares, sorry. My funda stays correct though - EPS reported 11.31, but if you do a plain division it's 9.92)

Re: Naukri Owner Info Edge Records Revenues Of Rs 147 Crore In 2006-07

Deepak Shenoy — Sat, 05 May 2007 08:24:06 -0000

Rakesh, could you tell me how it is calculated then? Every other company calculates it the way I did.

Re: Naukri Owner Info Edge Records Revenues Of Rs 147 Crore In 2006-07

Deepak Shenoy — Sat, 05 May 2007 10:28:14 -0000

Oh you mean they used the weighted average number of shares? They haven't announced the number of shares used in the calculation.

Weighted average EPS is simply wrong. Earnings for the last six months include a whopping amount of other income that's attributed to interest from IPO proceeds anyhow. But that's not the real problem.

Imagine this: They have to grow profits at 14% this year just to *maintain* their reported EPS. If they grow their bottomline by 25%, EPS growth is only 11%. That is plain wrong for investors looking forward. I'd always use an end of period number of outstanding shares to calculate the "real" EPS.

Guess what, they are also releasing ESOPs to employees. Further dilution is going to happen.

Look at Mindtree. They will grow 30% but because of this weighted EPS calculation and ESOP based dilution their EPS guidance is EXACTLY what it was for the last four Q. Grow profits 30%, but the real EPS grows 0%.

I'm looking at it from an investor point of view , of course. EPS growth has to be measured using the SAME number of shares forward and past.

Re: Karnataka HC Plays Moral Police, Issues Notices To ISPs, YouTube, Google

Deepak Shenoy — Thu, 31 May 2007 12:56:58 -0000

There is no call for this kind of policing. This is violation of freedom of speech, period. I don't deny anyone the right to speak, after all it is that very freedom I talk of protecting; but I would like to see more dialogue rather than such arbitrary bans based on supposed cultural violations.

I don't believe a culture that started the Kamasutra should have a problem with youtube videos. I don't think anyone can even define "Indian values" without tying themselves in knots eventually.

Do we need a culture brigade? No way. This is like that time when everything at blogspot was banned because some blogs had content against India. And when FTV and AXN were banned for some skin shows - less skin and gyrations than some bollywood films perhaps. This is back to Shiv Sena's Mumbai.

It's easy to say stop everything - heck we should be banning tobacco as it is actually more harmful than marijuana. In fact our culture demands marijuana, and it demands the caste system, and it demands sati. That culture is not ok, but somehow some other cultural aspect needs to be kept?

Banning porn is silly; and this ban will be as ineffective as it used to be pre-internet. And it is plain ludicrous for a culture that has no problem worshipping naked or semi dressed goddess idols to be upset about skin and sex. But heck, everyone's a hypocrite. If it's just the victors that rule the spoils....we'll have our day too.

Re: Karnataka HC Plays Moral Police, Issues Notices To ISPs, YouTube, Google

Deepak Shenoy — Fri, 01 Jun 2007 07:13:30 -0000

Oh so LTLRC, you are against gay marriages? And don't even want to TALK about goddess idols versus skin show or sex? The problem is in your mind. Have you read Babies and other hazards of sex by Dave Barry? You should.

There's a difference between security of buildings which is undoubtedly ours and defined, and a security of a culture which you like and which I don't. You choose to easily remove what you don't like - caste system, sati, marijuana - and keep what you think is good - no homosexuality, no skin shows, deference to elders even when they are ridiculously wrong. If hypocrisy is allowed, then why not my hypocrisy rather than yours?

Perhaps you are ambivalent on the concept of love marriages; but would you be happy if there was a ban against them stating loss of our culture? Since free flowing hair is an accepted carnal sign would you be happy to ban the display of hair publicly? Since a woman's body can attract a man, would you be happy to have women wear black loose clothes to hide them?

The whole Bhagavad Gita is based on a war one fights with contradictions. If you revere that, you would understand how you should understand other people's opinions rather than shoving yours into our face. Think about it during your lunch break.

I am definitely a "harmon driven person". With no "harmon" you are nothing, not even a guy that makes smelling pistakes.

I won't go into personal attacks like you did; but you seem to be distressed with the whole world. Go out, smell the roses. Life is much more beautiful when you accept the inevitable.

Everything "west" is not good. Everything "good" is good. You define your good, I define mine. As I said, the victors write the history books. 'Nuff said.