Tulip Telecom Ltd hit another buyer freeze, as is expected. I have repeatedly asked all the investors to average the scrip on all declines. It is now official: Banks are likely to approve an 18-bln-rupee loan restructuring package for the company by March end. So, we can look forward a series of upper circuits in the coming days.
(i) No selling of the shares are taking place from the CAS Benefit Trust. So, selling in the shares is purely local and should not continue for too long.
(ii) The company is thinking of placing the treasury shares from CAS Benefit Trust (10279604) for private placement at around Rs.40-45; which is expected to give them a working capital of Rs.40-45 Cr. The Company has accumulated losses of Rs. 3071.93 lacs or Rs.30.71 Cr which would get completely covered if such placement can be done.
(iii) One of its largest shareholders, D. E. Shaw India Software Private is a large multinational which has brought the shares of the company at around Rs.120 per share. This augurs well considering the current price of the share at Rs.4.65.
(iv) Even some of the top employees of the company has purchased the shares at a much higher price, than the current market price.
(v) Though the company is struggling at present but still, the company's 9 months turnover of Rs.20.29 Cr,h is higher than the FY12 turnover of Rs.19.24 Cr. This shows the company is limping back to normalcy, through still it could not improve too much on its bottomline.
The current problem of the company is therefore, expected to get alleviated in the days to come, as the interest rate comes down and the cost of its capital comes down. However, only if you think of the long term, you should risk your further capital. [This note was sent to the Paid Group members, today in the afternoon]