Aegis Logistics: Reviewing Issue of Bonus Shares

Recently, Aegis Logistics announced the issue of bonus shares to existing shareholders. It will issue two additional shares for every three existing shares. These so called bonus shares will be paid from reserves it has accumulated over a period of time. Before you read this post, I suggest you read my earlier post about what really is a Bonus Shares.

Aegis has accumulated a reserves of Rs 167 crore in last few years against equity capital of only Rs 18.77 crore. These reserves are nothing but accumulated profits. The company will issue additional 12.5 million shares and increase capitalization by additional Rs. 12.54 crore. The new capital base for Aegis is likely to be Rs 31.31 crore [18.77 + 12.54]. In this announcement, there is no indication or even a hint on why the company decided to issue bonus shares. It is up to financial media and investors to figure out. Continue reading rest of this article…

Value Investing Landscape

Do you know how to differentiate between value investing and growth investing, or for that matter value investing with any other form of investing? I will leave this for readers of TIPBlog to ponder over it. However, I would like to say one thing; I do not know how to differentiate. I invest with an objective to grow my capital. It does not matter where it comes from. Hold on, don’t pass a judgment yet.

Let us take an example. Late last year, Buffett bought a whole rail company, Burlington Northern Santa Fe. On per share basis, the price paid by Buffett was (1) 31.5% premium to prevailing market price at the time of announcement; and (2) Approximately, 15 PE ratio at the time of announcement.

At first glance, these two matrices will tell you, “that was not cheap!”. That’s because in today’s world of instant gratification, we have come to believe PE ratio and/or current premiums are only ratios that determines value. We have dropped the meaning of value to few parameters. Small time investors like you and me would jump to take 31% premium and declare victory. But 20 years down the road, Buffett is likely to be basking in glory. Continue reading rest of this article…

Can I buy Stocks at Current Market Price – at Premium?

The above question can be framed differently as “Do I wait for next Downturn for Cheaper Valuation?”

When you are building your portfolio towards a long term sustainable wealth creation, there are multiple aspects that you need to focus on. As individual investors, it is very easy for us to get carried away with the individual stock wins. But when we look holistically, including wins and losses, then we realize who is the real winner. That’s why I say, for DIY investors, sustainability is key in portfolio management. Over the years, all the retail investors I have interacting with, most of us focus too much on stock picking, or stock selection. This is similar to what an employee does of executing blindly now knowing how it is related to overall company strategy.

The first lesson you should learn in investing is “not stock picking”, but how you can maintain and sustain what you have (safety of capital). By this I do not mean going with bonds, FDs, or government certificates. What I mean is invest in a way, where you believe there is relatively less risk of losing your capital. Continue reading rest of this article…

Reader Questions related to Macroeconomics

Today, I am presenting a discussion I had with one the readers on macroeconomic issues. I am not an economist so I cannot explain in economist language. I attempted to present my understanding in a very layman language. I gave him a very simplistic view. So here you go.

I am trying to understand some macro economics concepts in addition to my continued focus on fundamental analysis.I was going through min paper yesterday and few doubts cropped up. In a column discussing the alternative to dollar,there was a discussion that pressure is mounting on china to make yuan freely convertible and let it appreciate more.   My questions are:

  1. Why is China not allowing its currency to appreciate by market forces like other countries(i understand that the currency is not entirely free,as central banks do interfere many times,but with China its very rigid).
  2. The column also says that rupee has not appreciated that much probably because india runs current a/c deficit.What does this mean and how it affects the currency.
  3. Finally ,the column says that most central banks are obliged to support their currencies.what does this mean.I mean what will happen if we let rupee appreciate to say 30rs..why cant be do that… Continue reading rest of this article…

Thank You from TIP Guy and TIPBlog Readers

TIPBlog is close to 18 months old. Over these months, I believe I have become a better investor. Not in the context of becoming rich overnight, but in the sense that I now follow a documented process. Now, I put everything on paper (pun intended) which includes analysis, progress, decision making process, etc. It allows me to go back and evaluate my decision making process.

It has made me more disciplined. When you actually read your earlier thoughts, it gives you a starting point to measure your progress against that. If there is no documentation, it is likely that you will slip easily or make a rash decision.

In addition, I have interacted with quite a few folks who keep me busy by asking inquisitive questions. I love those questions, because they critic my assumptions, it gives a different perspective which I may have not thought about. In my view, it is impossible to think from all possible scenarios. It is humanely not possible. Since different people read this blog, the questions keep varying. Such questions bring more clarity in my analysis. Continue reading rest of this article…

Clariant Chemical Ltd – Good Company for Long Term Portfolio

Clariant Chemicals (India) Limited is an subsidiary of German company. It is publicly traded on Indian equity markets. The company operates in two segments, viz., (1) Intermediates and Colors which contribution 43% of the revenue; and (2) Specialty chemicals which contributes 57% of the revenues. The purpose here is to understand how it is growing, how it is sustaining high dividends, and does it meet my objectives.

Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is from 2001 onwards. Continue reading rest of this article…

Making Quick Money in Stock Market is a Mirage

I am sharing a story sent to me via email by one of the readers of TIPBlog. Here, this reader is narrating this experience about multiple attempts to make quick bucks from stock markets. After the story I will present my views and thoughts about it.


Sometime in 2002, March/April, I was doing my engineering and started working for a call center in the night to take care of my extra spending. I never knew or thought about stock market or any kind of investment. I spent two years in call center and spend many hours in the night watching CNBC after coming back from work. I learned few things about banking, credit cards, insurance, investment, and so on. In two years, I watched markets go up. I always thought I should invest in IPO and make some money on listing. However, I could not do so because I didn’t have a Dmat account. Continue reading rest of this article…