Monday, June 30, 2008

GMR : a Global Giant is born.

Infrastructure, Energy, Airports, Roads, Bridges, SEZs , Corporate jets, Cricket Teams .. it was a heady cocktail offering from the virginal Indian countryside was.. and that excited the excitable Fund "managers" and PE YoYos in that lovely, strange way.. the possibilities looked endless..and imaginations ran wild.

GM Rao the promoter of GMR group came from behind and upped the wunderBrothers of Indian business the Ambanis at their own game..Govt connected business strategy where "environment " management viz. Govt management is the simple and winning strategy.
Some say it was his flourishing mustache (that both the Ambanis admittedly, can never dream of growing) that quickly opened many a door for GMRao and soon as he dyed it a blacker than black shade he was the cats whiskers in Infra plays.

While lesser corporates and honesty hobbled MNCs battle it out to win over customers and marketshares.. our local business "promoters" know the big game is the political game and the fools that represent the people's choice (and of course the people's interest) are the fools to win over for a cut of the great Indian booty (before the textile wrapped FinanceMinisters /PrimeMinisters /NonMinisters hand it out all out to farmers in the hinterland).

And the results are evident.. while the P&G, HindLevers,Batas, ABBs etc. of the world battled it out gamely and honestly to sell some product and grow at a non-Indian (i.e. non exponential) rate ..our boys in blue just pole vaulted into the upper end of the global rich based on castle building expertise in non terrestrial contexts.. which to their glee sold like hotcakes amongst the global alpha hunting community of smallish "managers'' with largish visions of their abilities and worth who enhanced their self image in direct proportions to the value they dished out in their latest stake acquiring.
Things got so bad the promoters had to necessarily expand his vision and potential for his business to 1500x of whatever he had fondly decided last night to meet the excitement of the fund across his table today. "..yes, he agreed the potential was there.. if funds like you came aboard , definitely the world would soon be our oyster.." ..the show was on the road!!

So was the fate of the GMR group.. their propulsion into the corporate jetting, mustachioed promoteroscenti was in no small measure due to the Funding frenzy of the Funds that would make India into a economic behemoth..though disturbingly, Luddic Research has identified them as a bit early in the emerging of India. Consequently these fine Funds who had visions of being heralded as the far sighted cowboys who came into India, saw the coy opportunities, sowed a few(quite a few they imagined) wild oats and went back victorious to knighted lives in the cigar and brandy circles back home.. sigh, those were heady days.. and no "play" was too far fetched to let loose your fertile imagination.. landBanking,deCoupling, valueUnlocking, growthStorying, infraPlaying.. the future was owned.

It was only a matter of time G.Mallikarjun Rao expanded his vision from jute making to larger extrapolation friendly plays. Such was his ability to leap into the play du jour , that he managed to sell stakes in his company at Rs. 240 per share to 49 (forty nine) leading institutional investors ranging from Citigroup( we all know how sharp these guys are) to old fogies like Soros .. and quickly announced planned investments of Rs.60,000 cr( abt $15 B) in Power and other lucrative sectors in the finest tradition of the noveau Indian Promoter chutzpah.

Well strangely these fineYoung alpha maleish investors have had to face up to the ignominy of seeing the share price dip to Rs. 82 (as we write) and despite every single analyst and fund Manager looking to average down, talk up and holdItforLongTerm, the shares of this golden Goose continue getting cooked.
The bovine participants of the Indian stock markets have refused to see light and participate in this fantastic Infrastructure play that is destined for untold greatness.( In fact the incumbent Govt. is looking seriously into the widespread rumors that bovine participants of the non-bull variety have infiltrated the markets and playing mischief with the oneVisionBulls' sentiments (who are important for this country's future global aspirations) and asked SEBI to rustle up some somnolent, Govt discard employees to look sharp and strictly ban any cattle without balls from the markets.. bulls are still to be allowed.

Evidence of the bullish prospects surfaced again today as the GMR Infra went out and bought a Dutch Power company and announced that owing to the recalcitrant behaviour of the semi literate investors in India it would look at overseas and western markets to fulfill its expansion dreams.. It's management and business acumen obviously puts it firmly onto a fast track to glory and riches and we have been advising all our clients at Luddic to buy every dip(since Rs.239).
The reasons are easy to see-

"The group has already set up an office in London as a preliminary step and has plans to start regional offices across the globe as it buys power plants in the US, builds an airport in Istanbul, and mines coal in South Africa. The group, owned by the 55-year-old Grandhi Mallikarjuna Rao, plans to earn nearly 40% of its income from international business.
The company plans to invest $10 billion (Rs42,880 crore) in the next five years to acquire overseas assets, Bloomberg reported last week. "
And it was only a little while back they had announced they were actively studying Nuclear Energy as the next foray (going by their expertise in Energy sector).

OK Infrastructure, Energy, Airports, Roads, Bridges, SEZs , Corporate jets, Cricket Teams.. and now Nuclear Energy..

..I got 3 words for G.Mallikarjun Rao .. Save Your Hair first.


Bala said...


Not that i disagree with your ideas, but a small quibble. The CMP of GMR at 80 is that of a 2 Rs face value share. GMR did a 5:1 split sometime when it was hovering in the stratosphere. Thus the adjusted listing price is not ~249 but ~40. It is still double its issue price :-)

Ludus said...

As per Luddic Research analysts:

Split stock- Oct 2007
Sell to Chimps @Rs.240 - Dec 2007

edit note:but you know we hire analysts per strict industry stds:

1.quality of neck Tie knot.
2.quality of handShake.
3.ability to talk knowledgeably w/o substance.
4.photogenic looks.

..that's all that counts. no surprise if they missed the plot altogether.