Dhiraj Khadilkar’s Post

Investing in fractional shares allows investors to own less than a full share of a stock, has become popular in many markets around the world. However, in India, the practice of buying, selling, or trading fractional shares is not permitted under the current regulatory framework. However, the Company Law Committee in its March 2022 report recommended enabling the issuance, possession, and transfer of fractional shares in dematerialized form for a prescribed class of companies. The Committee proposed amending the Companies Act, 2013, ("the Act") to allow fractional share investing, considering the increasing participation of retail shareholders in the market. The Indian financial market operates under strict government supervision, notably limiting DEMAT account operations, which are confined to the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL), with brokers serving merely as intermediaries. The Committee, in its report, also examined the concept of issuance and retention of fractional shares but noted the existing prohibition under Section 4(1)(e)(i) of the Act which mandates that subscribers to the memorandum of association must agree to subscribe to at least one share and paragraph four of Table F in Schedule I prohibiting the possession of fractional shares. Acknowledging the utility of fractional shares in mergers, bonus issues, or rights issues, the Committee proposed amendments to the 2013 Act to enable the issuance, retention, and transfer of fractional shares for specific company categories under prescribed regulations. But what are the benefits of Fractional Share Investments? - Dividend Reinvestment: Introduction of fractional shares enables brokerage firms to facilitate wealth compounding through dividend reinvestment options. - Accessibility: Fractional shares diminish financial barriers, allowing broader participation in the stock market, which enhances the potential for significant investment returns. - Investment Strategy Enhancement: The adoption of dollar-cost averaging, through regular investment irrespective of market conditions, mitigates risks associated with market volatility, optimizing investment across diverse market cycles. Despite the benefits, there are certain challenges associated as well: - Voting Rights: Empirical analysis indicates a potential dilution of shareholder influence in corporate governance, with brokers potentially commanding disproportionate voting power in decision-making processes. - Stock Availability: The availability of fractional shares may be limited to certain companies, potentially undermining investment diversification objectives. - Market Liquidity: Fractional shares may exhibit reduced liquidity relative to whole shares. Brokerage practices could intensify this issue by accumulating sufficient fractional units prior to order execution, which could affect the trading velocity and market dynamics of the shares. #companylaw

SEBI Raises Red Flags on Shares of These Firms; Here’s What Investors Need To Know

𝐒𝐄𝐁𝐈 𝐀𝐦𝐞𝐧𝐝𝐬 𝐃𝐞𝐥𝐢𝐬𝐭𝐢𝐧𝐠 𝐑𝐮𝐥𝐞𝐬: 𝐀 𝐆𝐚𝐦𝐞 𝐂𝐡𝐚𝐧𝐠𝐞𝐫 𝐟𝐨𝐫 𝐏𝐫𝐨𝐦𝐨𝐭𝐞𝐫𝐬 🔍 The Securities and Exchange Board of India (SEBI) has recently introduced significant amendments to its delisting regulations, enhancing the pathways for promoters to take their companies private. 𝐇𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬: o  SEBI has introduced a fixed price framework, allowing promoters to buy back shares from the public at a minimum of 15% above the “fair price.” o  New norms specifically facilitate the delisting of investment holding companies (holdcos), requiring at least 75% of their fair value to be invested in listed companies. o  The fixed price option is available only if the shares are frequently traded, ensuring fair market practices. o  The threshold for counter offers has been lowered from 90% to 75% of public shareholders, providing more flexibility in the reverse book building (RBB) process. o  SEBI has set clear metrics for calculating the floor price, which includes recent acquisition prices and adjusted book values. 𝐖𝐡𝐲 𝐈𝐭 𝐌𝐚𝐭𝐭𝐞𝐫𝐬: ·        By providing a straightforward delisting option, promoters can now navigate the process with greater confidence and efficiency. ·        A more accessible delisting framework can enhance trading activity and investor participation. ·        The introduction of clear valuation metrics ensures that all stakeholders have a better understanding of fair pricing. ·        The new UDiFF reporting system, reducing the reporting formats from over 200 to just 23, is set to save market participants approximately ₹200 crore over five years. This simplification promotes ease of doing business and lowers operational expenses. In summary, SEBI's latest amendments not only simplify the delisting process but also signal a commitment to fostering a more robust and transparent market environment. #SEBI #Delisting #InvestmentHoldingCompanies #MarketRegulation #Finance #CorporateLaw #InvestmentStrategy https://lnkd.in/dFcjvTJi Disclaimer: The Content in this post is for informational purposes only derived from references and does not constitute any professional advice. We do not claim ownership of any data or Information referenced.

The Sun-Star Investment Group Requests HoSE to Reconsider Delisting SJF Shares https://ift.tt/lp3j2uq Sunrise Investment Joint Stock Company has responded to Document No. 1658/SGDHCM-NY regarding the mandatory delisting of SJF shares. The response was addressed to the State Securities Commission of Vietnam and the Ho Chi Minh City Stock Exchange (HoSE). In the response, Sunrise Investment stated that they are currently focused on gathering and providing the required documents for the audit firm to conduct an interim review of the financial statements for the period from January 1, 2024, to June 30, 2024, and the audit of the financial statements for the fiscal year ending December 31, 2024. Given the substantial volume of documentation, the auditors require additional time to review the files. Therefore, Sunrise Investment requested an extension for submitting the 2024 semi-annual reviewed financial statements until November 8, 2024. Illustrative Image Concurrently, Sunrise Investment appealed to HoSE to carefully consider their decision regarding the potential delisting of SJF shares, as it would directly impact the interests of over 6,600 shareholders and the company’s employees. Previously, on October 17, 2024, HoSE had announced its intention to consider the mandatory delisting of SJF shares. This decision by HoSE was based on the provisions of Point o, Clause 1, Article 120 of Decree 155/2020/ND-CP dated December 31, 2020, as well as the opinions of the State Securities Commission and the Vietnam Stock Exchange. HoSE asserted that since the trading suspension, Sunrise Investment has continued to violate information disclosure regulations, and these violations are likely to persist, seriously infringing on the information disclosure obligations and affecting shareholders’ rights. It is important to note that SJF shares of Sunrise Investment are currently under a trading suspension, as per Decision No. 726/QD-SGDHCM dated November 6, 2023, issued by the General Director of HoSE, due to repeated violations of information disclosure regulations on the stock market, even after being placed under trading restrictions. On April 16, 2024, SJF was further placed under control based on two decisions by the General Director of HoSE. These decisions were made due to the external audit firm’s qualified opinions on the audited financial statements for two consecutive years (2022 and 2023) and the negative after-tax profit of the parent company in the audited consolidated financial statements for 2022 and 2023. Also, on April 16, 2024, SJF shares were put on a warning status due to the negative after-tax profit recorded in the company’s 2023 audited consolidated financial statements. You may also like The Foreign Sell-Off: Unraveling the 24th October Session’s Nearly 300 Billion Dong Sell-off by Foreign Investors – Which Stock was the Epicenter? “Foreign...

Fully diluted shares represent the total number of shares that would exist if all convertible securities, such as CCPS (Compulsorily Convertible Preference Shares), were converted to equity. This calculation helps companies and investors understand the potential dilution of ownership over time. Consider this example: - Your cap table currently has 1,000,000 equity shares. - You’ve issued 100,000 CCPS, each convertible into 2 equity shares. Now, a new investor comes in and buys 150,000 shares for $1,500,000, calculating their ownership as 13.04% [(150,000/1,150,000)*100 of the company. However, on a fully diluted basis, accounting for the eventual conversion of CCPS, their actual ownership is only 11.11% [(150,000/1,350,000)*100]. Without visibility into these CCPS, the new investor could be surprised by a significant dilution of their stake when conversions happen in the future.

When ROIC > WACC = 𝗩𝗮𝗹𝘂𝗲 𝗰𝗿𝗲𝗮𝘁𝗶𝗼𝗻 𝘀𝗶𝗴𝗻 ✅. The company is earning returns above what its investors expect [𝘉𝘢𝘴𝘦𝘥 𝘰𝘯 𝘵𝘩𝘦 𝘳𝘪𝘴𝘬 𝘢𝘴𝘴𝘰𝘤𝘪𝘢𝘵𝘦𝘥 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘤𝘰𝘮𝘱𝘢𝘯𝘺'𝘴 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘢𝘭𝘵𝘦𝘳𝘯𝘢𝘵𝘪𝘷𝘦]. The company is creating economic value for its shareholders. Here's what this means ⬇️ : 👉 𝗥𝗢𝗜𝗖: This measures the efficiency with which a company is utilizing its capital to generate profits. It's calculated by dividing the company's NOPAT [𝘯𝘦𝘵 𝘰𝘱𝘦𝘳𝘢𝘵𝘪𝘯𝘨 𝘱𝘳𝘰𝘧𝘪𝘵 𝘢𝘧𝘵𝘦𝘳 𝘵𝘢𝘹] by its invested capital [𝘸𝘩𝘪𝘤𝘩 𝘪𝘯𝘤𝘭𝘶𝘥𝘦𝘴 𝘣𝘰𝘵𝘩 𝘦𝘲𝘶𝘪𝘵𝘺 𝘢𝘯𝘥 𝘥𝘦𝘣𝘵, 𝘥𝘦𝘤𝘳𝘦𝘢𝘴𝘦𝘥 𝘧𝘰𝘳 𝘦𝘹𝘤𝘦𝘴𝘴 𝘤𝘢𝘴𝘩] 👉 𝗪𝗔𝗖𝗖:  Average rate of return a company is expected to pay to its investors [𝘣𝘰𝘵𝘩 𝘥𝘦𝘣𝘵 𝘢𝘯𝘥 𝘦𝘲𝘶𝘪𝘵𝘺 𝘩𝘰𝘭𝘥𝘦𝘳𝘴]. 𝗪𝗵𝗮𝘁 𝗶𝗳 𝗥𝗢𝗜𝗖 𝗲𝘅𝗰𝗲𝗲𝗱𝘀 𝗪𝗔𝗖𝗖: This is generally seen as a positive sign and suggests the company is creating value for its shareholders. It implies that the company's investments are • productive and • that it's effectively utilizing the funds

I just finished a Weighted Average Cost of Capital (WACC) analysis on Asian Paint Ltd. I hoped to obtain an in-depth insight of the company's basics. Let us first understand certain aspects regarding WACC: What is the WACC? The word WACC stands for weighted average cost of capital. It is the cost of financing a firm using various kinds of capital, such as debt, equity, and preferred stock. WACC is also used to assess the return that a corporation must generate on its investments in order to satisfy its shareholders. How is the WACC calculated? WACC is calculated by weighing the costs of each capital source based on their percentage in the company's capital structure. The importance of WACC: WACC is a useful a tool for financial decision-making. It is used to compute the hurdle rate for capital budgeting initiatives, assess mergers and acquisitions, and identify the best capital structure. How to Apply WACC in Practice: After estimating the expenses of each capital source, use the WACC formula to compute the company's WACC. You can then utilize WACC to make financial decisions like investing in a new project or issuing debt or stock. Disclaimer:- This is for Education purpose . don't make any decisions based on this model . Data source:- Screener, Yahoo Finance . #finance #investmentbanking #investing #valuation

WACC Cheat Sheet: What is the Weighted Average Cost of Capital (WACC)? WACC is the average after-tax expense of capital for a company from all of its various sources. This includes common stock, preferred stock, bonds, and other hybrid debt & equity instruments. WACC is the mean rate a company pays to fund its operations. ⚖️ FORMULA WACC = [(E/V) x Re] + [(D/V) x Rd x (1 - Tc)] E = Market value of the firm’s equity D = Market value of the firm’s debt V = E + D Re = Cost of equity Rd = Cost of debt Tc = Corporate tax rate WACC is computed by multiplying the cost of each capital source (debt and equity) by its respective weight and summing the products together. WACC serves as a benchmark for evaluating both projects & acquisitions for both companies and investors. WACC also functions as the discount rate for future cash flows when performing a discounted cash flow analysis. Projects or acquisitions should only proceed when the expected return is greater than WACC. Example: E = $750 MM D = $250 MM V = $1,000 MM Re = 12% Rd = 8% Tc = 25% WACC = [$750/$1,000) x 12%] + [($250/ $1,000) x 8% x (1 - 25%)] = 10.5% Do you use WACC analysis? Let me know below! #wacc #businessvaluation #decisionmaking

When ROIC > WACC = 𝗩𝗮𝗹𝘂𝗲 𝗰𝗿𝗲𝗮𝘁𝗶𝗼𝗻 𝘀𝗶𝗴𝗻 ✅. The company is earning returns above what its investors expect [𝘉𝘢𝘴𝘦𝘥 𝘰𝘯 𝘵𝘩𝘦 𝘳𝘪𝘴𝘬 𝘢𝘴𝘴𝘰𝘤𝘪𝘢𝘵𝘦𝘥 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘤𝘰𝘮𝘱𝘢𝘯𝘺'𝘴 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘢𝘭𝘵𝘦𝘳𝘯𝘢𝘵𝘪𝘷𝘦]. The company is creating economic value for its shareholders. Here's what this means ⬇️ : 👉 𝗥𝗢𝗜𝗖: This measures the efficiency with which a company is utilizing its capital to generate profits. It's calculated by dividing the company's NOPAT [𝘯𝘦𝘵 𝘰𝘱𝘦𝘳𝘢𝘵𝘪𝘯𝘨 𝘱𝘳𝘰𝘧𝘪𝘵 𝘢𝘧𝘵𝘦𝘳 𝘵𝘢𝘹] by its invested capital [𝘸𝘩𝘪𝘤𝘩 𝘪𝘯𝘤𝘭𝘶𝘥𝘦𝘴 𝘣𝘰𝘵𝘩 𝘦𝘲𝘶𝘪𝘵𝘺 𝘢𝘯𝘥 𝘥𝘦𝘣𝘵, 𝘥𝘦𝘤𝘳𝘦𝘢𝘴𝘦𝘥 𝘧𝘰𝘳 𝘦𝘹𝘤𝘦𝘴𝘴 𝘤𝘢𝘴𝘩] 👉 𝗪𝗔𝗖𝗖: Average rate of return a company is expected to pay to its investors [𝘣𝘰𝘵𝘩 𝘥𝘦𝘣𝘵 𝘢𝘯𝘥 𝘦𝘲𝘶𝘪𝘵𝘺 𝘩𝘰𝘭𝘥𝘦𝘳𝘴]. 𝗪𝗵𝗮𝘁 𝗶𝗳 𝗥𝗢𝗜𝗖 𝗲𝘅𝗰𝗲𝗲𝗱𝘀 𝗪𝗔𝗖𝗖: This is generally seen as a positive sign and suggests that the company is creating value for its shareholders. It implies that the company's investments are • productive and • that it's effectively utilizing the funds

When ROIC > WACC = 𝗩𝗮𝗹𝘂𝗲 𝗰𝗿𝗲𝗮𝘁𝗶𝗼𝗻 𝘀𝗶𝗴𝗻 ✅. The company is earning returns above what its investors expect [𝘉𝘢𝘴𝘦𝘥 𝘰𝘯 𝘵𝘩𝘦 𝘳𝘪𝘴𝘬 𝘢𝘴𝘴𝘰𝘤𝘪𝘢𝘵𝘦𝘥 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘤𝘰𝘮𝘱𝘢𝘯𝘺'𝘴 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵𝘴 𝘢𝘭𝘵𝘦𝘳𝘯𝘢𝘵𝘪𝘷𝘦]. The company is creating economic value for its shareholders. Here's what this means ⬇️ : 👉 𝗥𝗢𝗜𝗖: This measures the efficiency with which a company is utilizing its capital to generate profits. It's calculated by dividing the company's NOPAT [𝘯𝘦𝘵 𝘰𝘱𝘦𝘳𝘢𝘵𝘪𝘯𝘨 𝘱𝘳𝘰𝘧𝘪𝘵 𝘢𝘧𝘵𝘦𝘳 𝘵𝘢𝘹] by its invested capital [𝘸𝘩𝘪𝘤𝘩 𝘪𝘯𝘤𝘭𝘶𝘥𝘦𝘴 𝘣𝘰𝘵𝘩 𝘦𝘲𝘶𝘪𝘵𝘺 𝘢𝘯𝘥 𝘥𝘦𝘣𝘵, 𝘥𝘦𝘤𝘳𝘦𝘢𝘴𝘦𝘥 𝘧𝘰𝘳 𝘦𝘹𝘤𝘦𝘴𝘴 𝘤𝘢𝘴𝘩] 👉 𝗪𝗔𝗖𝗖:  Average rate of return a company is expected to pay to its investors [𝘣𝘰𝘵𝘩 𝘥𝘦𝘣𝘵 𝘢𝘯𝘥 𝘦𝘲𝘶𝘪𝘵𝘺 𝘩𝘰𝘭𝘥𝘦𝘳𝘴]. 𝗪𝗵𝗮𝘁 𝗶𝗳 𝗥𝗢𝗜𝗖 𝗲𝘅𝗰𝗲𝗲𝗱𝘀 𝗪𝗔𝗖𝗖: This is generally seen as a positive sign and suggests that the company is creating value for its shareholders. It implies that the company's investments are • productive and • that it's effectively utilizing the funds