"Please suggest me a stock trading at below ₹10"
Vodafone Idea's retail investors grew from ~5L in 2018 to ~29L now🔼
People look at stocks trading below ₹10 / ₹50
As Vodafone Idea (VI) rose ~20% yesterday📈
A thread on why this analogy is not correct🧵👇
Vodafone Idea's retail investors grew from ~5L in 2018 to ~29L now🔼
People look at stocks trading below ₹10 / ₹50
As Vodafone Idea (VI) rose ~20% yesterday📈
A thread on why this analogy is not correct🧵👇
[1] Price of share is a factor of valuation & shares
Say, a Dominos Medium Pizza costs ₹600 & has 6 slices
Among 6 friends we'll pay ₹100 each [₹600/6]
What if I ask you for ₹200 for a slice? You won't buy it right?
How about ₹50 for a slice? You'll buy
Keep reading👇
Say, a Dominos Medium Pizza costs ₹600 & has 6 slices
Among 6 friends we'll pay ₹100 each [₹600/6]
What if I ask you for ₹200 for a slice? You won't buy it right?
How about ₹50 for a slice? You'll buy
Keep reading👇
![[1] Price of share is a factor of valuation & shares
Say, a Dominos Medium Pizza costs ₹600 &am...](https://pbs.twimg.com/media/FoWDYiUacAABYta.jpg)
What if I offer you a packet of Lays whose MRP is ₹10 at ₹15?
You won't buy it right?
But you think otherwise while buying shares
You think that something priced at ₹15 is cheaper vis-a-vis what is priced at ₹100
You won't buy it right?
But you think otherwise while buying shares
You think that something priced at ₹15 is cheaper vis-a-vis what is priced at ₹100
[2] How is share price calculated?
First market gives the company a 'Valuation'
Which maybe more or lesser than the 'FAIR VALUE'
A chips packet worth ₹10 might be available ₹15
And a Medium Pizza otherwise worth ₹600 might be available at ₹300 also
Contd...👇
First market gives the company a 'Valuation'
Which maybe more or lesser than the 'FAIR VALUE'
A chips packet worth ₹10 might be available ₹15
And a Medium Pizza otherwise worth ₹600 might be available at ₹300 also
Contd...👇
Then valuation is divided by the 'Number of Shares' to arrive at Share price
Share Price=Market Valuation of Co/No of Shares
The denominator is fixed
The numerator [market value] and the result [share price] can either be overvalued or undervalued
Irrespective of Share price
Share Price=Market Valuation of Co/No of Shares
The denominator is fixed
The numerator [market value] and the result [share price] can either be overvalued or undervalued
Irrespective of Share price
[3] What about Vodafone Idea?
Even though the government is converting shares at 35% premium to market price
You need to understand that they had outstanding debt of ₹1,91,072 Cr
And the losses have been increasing from ₹4,168 Cr in Mar'18 to ₹28,245 in Mar'22
Even though the government is converting shares at 35% premium to market price
You need to understand that they had outstanding debt of ₹1,91,072 Cr
And the losses have been increasing from ₹4,168 Cr in Mar'18 to ₹28,245 in Mar'22
The conversion of debt amount is worth just ₹16,000 Cr., i.e., <10% of their outstanding debt
Even VI's service providers think that it won't be able to pay them money
Indus Tower booked a provision for loss of ₹2,298 Cr in Dec'22 against money receivable from VI
Even VI's service providers think that it won't be able to pay them money
Indus Tower booked a provision for loss of ₹2,298 Cr in Dec'22 against money receivable from VI
[4] The Great Retail Confusion
The share price has fallen over 5 years with the fundamentals deteriorating
From ₹50 to ~₹7.5 today
Even then the INDIVIDUAL shareholders have increased from ~5L to ~29L today, within almost the same time frame
The share price has fallen over 5 years with the fundamentals deteriorating
From ₹50 to ~₹7.5 today
Even then the INDIVIDUAL shareholders have increased from ~5L to ~29L today, within almost the same time frame
[5] Way Forward?
Not saying that nothing has improved for VI but future looks tough
With so much debt to service despite losses, with losing customers every quarter
The future is definitely tough and thus, I won't enter
And never because it is price at below ₹10
Not saying that nothing has improved for VI but future looks tough
With so much debt to service despite losses, with losing customers every quarter
The future is definitely tough and thus, I won't enter
And never because it is price at below ₹10
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[1] Staying out a job and
[2] A lot of time commitment
Your love is all I need😊🙏
If you liked this summary, kindly retweet the first tweet👇
Follow me (@BahlKanan) for more on:
🔶 Personal Finance,
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🔶 Startups
Hit the bell-icon and always stay updated
🔶 Personal Finance,
🔶 Investing and
🔶 Startups
Hit the bell-icon and always stay updated
Disclaimer: Not investment advice. Please refer SEBI Registered investment advisor before taking any investment decision. This thread has been shared for the purpose of spreading awareness and contains my personal views. Info might have been curtailed for the sake of brevity
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