Friday 18 April 2014

Update on Shree Rama Multi-Tech Limited


The open offer of Shree Rama Multi-Tech Limited closed on February 04, 2014 and the money for accepted shares was credited on February 14, 2014. After a series of lower circuits , the stock price settled at 3.10 and I sold all my unaccepted shares on February 28, 2014.

You may access my earlier post on this case here.

The acceptance ratio for the offer turned out to be 36.35%. The ratio turned out to be poorer than both the ratios of 54% and 43% which I thought to be highly probable and worst case scenarios respectively. So, in effect a far larger number of shares were tendered in the offer than what I had expected. 

The probable reasons for the lower than expected acceptance ratio could be :
(1) my overoptimism about a higher acceptance ratio in the first place 
(2) lower number of "dead" or "brain dead" investors 

Conversely, I was able to sell the unaccepted shares at Rs 3.10 which was far higher than Re 1 which I had inbuilt in my workings. 

Overall, the trade resulted in a marginal profit of 2.33% after all costs; over an average holding period of 25 days.

Was this trade a disappointment ? Well, I don't think so. The returns may not have been in line with my expectations but it was a beautiful trade. A set of such opportunities over a lifetime should result in very satisfactory returns in aggregate.

3 comments:

manilife said...


Which brings me to the topic of my interest.

more than usual people participating in open offer, leaves more than usual dent on the price since everybody tries exit from the same old small gate.

Has this created an opportunity @Rs3.00 as u said, company is turning around, debt is reduced, we don't know shit about ownership (unknown).

Ain't these the situations our beloved Richard Zeckhauser scouts 4.

Ankur Jain said...


I did think about that idea. But I gave it a pass.

Company is indeed showing signs of turning around but the business quality is not good [it's a poor commodity business], there are still a lot of court cases which need to be sorted out and there are other better relative opportunities available.

I decided to sell instead of letting the story grow more legs.

manilife said...

Thanks 4 the reply mate! Appreciate it.