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Bulls and Bears of Geodesic
Posted by :
azmathGeodesic is perhaps one of the very few product oriented company in India. Mobile applications is a future technology with high growth potential. And the income statement of Geodesic is really good, with almost doubling sales each year! ans the profit margin is also around 60%!. And if you look at the valuation, it has got a P/E of just around 3-4. Enterprise Multiple Value is around 3 years. So. for a value investor like me, its a good bet. I would love to buy the company:)...
Bulls and Bears of Geodesic
Posted by :
comatose
Manju, your this post is of the same high standards as the previous " Giant in the making " post .
Thanks, looking forward to your next one.
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Bulls and Bears of Geodesic
Posted by : Rumple
So bm manju,
Are u a bull or a bear? Reading between the lines, seems you are a bull and prepared to wait for a marketprice of Rs 1500 plus.
This is so far the most optimistic price projection on the Geodesic board. Earlier comatose was only talking of Rs 1000 and some bears were mentioning Rs 20...
Bulls and Bears of Geodesic
Posted by :
bm_manju1961
It is curious to read messages of bulls and bears of Geodesic. The aspirations and betting on company`s future growth, possibility of share price increase is natural of bulls. However look at bears. If they are bearish on a particular stock, why should they bother about posting a message? The natural behaviour is to ignore the stock and look at any other interesting stock to invest. Even this stock cannot be shorted, as it is not in F&O. Ok, if somebody has got definite information which will affect the performance, even then it is not natural to share the same for a ordinary investor with others. He will simply sell and move on. Therefore, all bears, who are writing are simply trying to create panic and buy at lower levels, or frustrated lot who are expressing their anger.
Then bulls of geodesic wants this stock to be a multibagger and bring fortune to themselves. Their betting is based on the future possibility of explosive growth of profitability and sales. Nothing wrong in it. But whether every bull will completely participate in such upsite is a question mark and most unlikely. Majority of them cash in with the raise of 10 to 100%. Very few will wait patiently with their conviction and belief to capture the complete upsite whenever it happens, may be in six months, 2 years or 5 years.
Then the question is whether geodesic has got the potential to become a multibagger stock? Most likely yes with the developments that are happening. Chances of failure and not happening is also there, as the future is unknown. We all can make predictions and guesswork based on our understanding and ability. Chances are it may be right or terribly go wrong. Nothing is certain. It is a calculated risk based on certain assumptions. Now the point is whether geodesic will become 2000 crore turnover company in next three years, and profitability of 750-800 crores, then share price of between 1500-2000 at pe of 18-25. Possible , why not? If it happens, then will all present bulls are able to capture the entire upsite, a million dollar question and most unlikely. ...
WAIT FOR SOME GOOD NEWS
Posted by :
dks58
We have to take at least one quarter result in consideration before, we think where the company is?, daily taking a call , will not improve anything. it is the beers calling the shots and why not, when every wants to disown the stock? We ought to have patience and keep the fingures crossed.After all some DII,s have equal amount of faith. the stock could be a little long term, if the next quarter is ok. we are discussing so much because it did not give us the price appreceation, in comparison to other stocks.it can happen, afterall we are taking call on companies, not individuals.Every business has its cycle. what I as an individual missed to note that Rs120/- was one level which should have ben utilised to sell , when it was broken, Now its past, what has to happen has happened. I feel something good is in store, however we shouldnot forget the half yearly results dropped when compared to last year,but again it is a history, the price correction has been steep.
The only thing is if the price is static, with movement to market then it is dangerous....
FII`s reduce stake
Posted by : Rumple
Don`t know how many of you checked the FII holding as on Sept end. From above 50% at the end of June it is now down by about 3% to 47% at the end of September. Reliance Capital the lone MF holding Geodesic with 11 lakh shares at the end of June has also completely sold out during the quarter....
GEODESIC AN ENIGMA
Posted by : comatose
Madam, it is an honour for the Geod board that senior boarders like you come and post here. I hope this is the beginning of a longer association with the Geod board.
Regarding the issue you have raised, are you really surprised ? When such a large number of Fund managers, analysts, and merchant bankers are blatantly corrupt, why should bankers stay behind ? Incidentally, banks have the best possible radar for detecting corporate fraud. Once I was sitting with a credit appraisal manager of SBI, and was shocked to know that they have a comprehensive database of techniques relating to fraud by borrowers at their disposal. You want to get a balance sheet examined, take it to a banker, you will be surprised by the depth of his observations, his ability to generate information from cold figures.
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GEODESIC AN ENIGMA
Posted by : radhika_nandlalBut Bank of India lent to a dubious pharma company and ever since its balance sheet the last couple of quarters was irrepairable. So how do u judge under such circumstances? Whom they lend how do we know.. all this is client/customer confidentiality.... if a bank cannot get the creditworthiness of its customer right then who else can?...
GEODESIC AN ENIGMA
Posted by : comatose
Vivek, explaining methods of evaluating ethical working is tough. However I will try.
Start with studying balance sheets. This is a very tough job, and interestingly, calls for a detailed knowledge of accounting hanky panky that can be done. Normally, managements try to inflate profits in a bull period, and this is often done by manipulating stocks and receivables. So you have to look for such tell tale signs. So you have to be a Sherlock Holmes around the balance sheet. I am sorry to inform you that some of our biggest companies are caught out at this kind of checking up. You then know that they are to be avoided. Another big tell tale sign is consistency of profits. When a company shows Infosys style steady profit growth, quarter after quarter , you should be alerted. Real businesses ( Leaving aside rare companies such as Infy ), rarely manage an actual steady profit growth. This is often thanks to creative accounting. Real businesses generally, have lumpy profit growth, two quarters of growth and one quarter of no growth and next of negative growth, or very strong growth, anything happens. Be alerted, when it is very steady growth. There are n number of things that can be deciphered from a balance sheet. You have to look for them.
Position in their markets. This is a really uncanny way to assess things. I used to have a large position in a Gems and Jewelry co., whose brands alone are worth upward of Rs. 1000/- per share in my evaluation. In fact, I posted a message or two on MMB giving the valuation. The group is supposed to be one of the biggest diamond groups in India having almost limitless money. In one of my extensive inquiries about the co. from trade channels, I learnt that their payment position was very poor, with nobody wanting to deal with them, whereas, they had a strong balance sheet. Then came other stories of poor management, and I baled out of the company in a hurry. You also have to read between the lines. I became friends with a merchant banker, who dealt with accounts of a major corporate. It so happened, that this company was also in my view for taking a long term exposure. However, whenever I discussed good stock ideas with this guy, he would mention many others, but never his own. The message was clear.
Another thing to look for is stock options. Whenever a management gives out stock option to its employees, these guys ( normally the seniormost ones ) act as very effective watchdogs. I have a great deal of comfort there. Board composition is also important. If you have rubber stamp or ornamental types, you should get alerted. In some cases, those famous for manipulations sit on the board. You can`t invest there.
You have to do a personal due diligence on the company. It takes a long time and a lot of effort. But then you have to take pains if you want to safeguard your hard earned money.
I have covered only some points. But, I am sure you have got an idea of the broad theme I work around. Hope I have given something useful to chew on. Good luck with investing.
...
Change in Trend
Posted by : Rumple
For the whole week the shareprice was declining a rupee or two every day. Today the trend appears to have changed, it is up by over Rs 2. Hope this is an indication of a new trend next week. ...
GEODESIC AN ENIGMA
Posted by : sb010500
dear friends,
you people are discussing company itself is proof of doubt abt businss prospect..even though business is good , the way stock beaten dn by whoever, does not give confidence to be in geodesic..i bought 10 K @ 131, will exit on every rise.
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GEODESIC AN ENIGMA
Posted by : dks58
dear comatose,
i have always found you a very methodical way of working. its good to have a bench mark, and i should be thinking in similar lines. But i rate the future of the company visavis its product for the future as very important and then it is then consistency in achieving the targets the management gives. then other factors. Now i will pickup some of the criteria from what you have stated....
Geodesic Management Quality
Posted by : comatose
Dear Madhur
Its really great to have someone from the industry on the board. We all hope that you will give us your timely inputs. With regard to the FIIs in Geod, all you have to do is to take the list and look at their backgrounds. Most of them are very high pedigree blue blooded FIIs and manipulation and money laundering is unthinkable.
Round tripping of money gets done once in a while, Pentamedia, Satyam, and some more have done it, but otherwise, is more hype than substance. It is also often born out of desperation, so people take such major gambles.
As a famous American president ( Roosevelt ) once said : "we have nothing to fear but fear itself", most of this worry and doubt is only serving to produce mountains out of molehills and produce unnecessary tension. I feel we should not put too much of our time into this.
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GEODESIC AN ENIGMA
Posted by : makeadiff
Would be great if you can share your system for the one mentioned below.
If I could know this, then it is
very easy
1) Ethics. This is also a qualifying filter.If the integrity in promoters/management team is dubious, I don`t proceed further. Now, how to evaluate whether A is honest and B is not, I have my own system.
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Geodesic Management Quality
Posted by : Madhur Kotharay
While it is hard to judge how the new products of Geodesic would do, the company appears competent in managing its business.
Being a CEO of a software products company, I know that a company that can be in products in the International Arena vis-a-vis being a software service provider such as Infosys, Wipro (which are great companies in their own right), needs Geodesic to get a much higher P/E re-rating. Look at i-Flex, perhaps the only real big product company out of Indian IT stable.
The only thing I am not clear on is Management Integrity.
An analyst friend, who used to track IT companies said that the large FII holdings in Geodesic is some hawaala money brought in with the connivance of the top management. I have no way to check that but I will keep that possibility in mind. Of course, if that is true, the money will not be pulled out like other FII investments, if the international market tanks :-)
Prashant Mulekar, one of the promoters and director, is a childhood friend, classmate, and an engineer like me. I know he is a very genuine, soft-spoken and ethical person. Unfortunately, I am not in touch with him in the last 9 years. And even then, getting more details from him would be tantamount to Insider Information. So I have never bothered to touch base further.
I am holding my Geodesic. If it drops below Rs 80, I would add more. But I will not gorge on it till I see the next 2 quarters.
Madhur Kotharay...
