Story of Jignesh shah , its promoter.
This company is a player in transaction market. Its products are means to the end and not the end itself. That is no matter people gain or loose money while buying or selling equites, commodities or bullion, FTIL is going to have a commission amount from the transaction made. That is a toll bridge kind of revenue model which would also need less capital expenditure.
The price of Rs 515, dividend of rs 20 and earnings of rs 148 is okay but if the price falls around rs 250- 350 would be a bargain price for this company.
Indian public holding in FT is only 7 %. So there is no scope for
promoters to buy any of the stock. Promoters buying is a good indicator
but not the sole indicator.
The company has two streams of income : 1) license and transaction fee on
its products 2) periodic stake sale in subsidiaries that it has
incubated.
Incubating and stake sale in subsidiaries is a Venture Capital model and
earnings are lumpy. Just as GE Shipping considers profit on sale of ships
as regular income, stake sale in subsidiaries is also regular income for
FT.
When analysing "Other Income" we have to see whether it is regular income or
extraordinary.
FY 08 results included part stake sales in MCX. But, even discounting
that, the previous few years had CAGR of 90 %.
Q-2 FY09 has no stake sales. There is rapid growth in license and
transaction fee income. MCX has increased its market share.
The value of the stake in MCX and other unlisted subsidiaries is listed
at cost in the balance sheet. The market value is much higher.
FY07 EPS was Rs 20. Due to the high profits in FY08, the dividend payout
was Rs 20, equal to the entire EPS of the previous year. The company has
enough free cash to continue paying Rs 20 dividends.
The price of FT is volatile due to the small floating stock.
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