Lets get rich- prove ourselves

Thank you all for your comments. I must clarify that the information here is my opinion and presentation of facts collected . I am neither registered with SEBI nor am I recommending any stock. I am sharing my ideas. It is safe to assume that I maybe holding the stocks mentioned here and my positions can change at any point of time based on future events.

I will now present my next pick which I think is a buy and hold stock for the next decade, at least on current valuations and future outlook. The stock is Ramco Cements, formerly known as Madras Cements. Cement companies have been long term wealth creators. However the slowing demand has put their performance under cloud. Among the lot The Ramco Cements is definitely a company which has the potential to be true multibagger in the long run.

positives

1. lower valuations compared to ACC, Ultratech, Ambuja, and Shree.
2. Great brand recall and strong presence in South and East.
3. Stronger balance sheet and production profile than most regional players in the South.
4. Well positioned to cater to the expected boom in demand in AP, TN.
5. Great management and diversified ownership of the stock.
6. Consistently strong results even in weak macro economic conditions.

negatives

none that I can think of.

 

On ICICI Bank, juts to add ( to the point made earlier on low price ) that their Insurance Businesses are shaping well, both Life and General. Life with AUM of approx 1 Lac Cr, is presently valued in excess of 30,000 Cr . In all probability, once there is an Insurance IPO of any company that puts market valuation benchmarks in place for this Industry; it is likely to have a significant positive impact on ICICI's market valuation.

 

The next stock I would add to the list is Cyient or what was previously known as Infotech. This is a Hyderabad based IT company. Not often is its name heard but for all its worth Cyient is quality stock.

Cyient provides engineering services solution and has also made investments in data analytics and data sciences which are believed to high revenue streams for the future. Over the years the company has demonstrated strong and consistent profitability and made smart and strategic acquisitions in companies having expertise in engineering services and data analytics. The list of client profile is very impressive.
Since the company operates is very niche domain which has great potential currently and in future it can prove to a good choice. It current trades at around 10-12 times forward earnings which is very reasonable. The company has 1700 crores in cash and cash equivalents. With a market cap of less than 5000 crores Cyient definitely is a value stock.

 

My next stock is City Union Bank. It is of the smaller sized banks based out of Chennai. Though it is an old generation bank the transformation the bank has shown to new age technology is really remarkable. It has the best metrics on almost all parameters in the group of the small pvt. banks. The CAR is as high as 15% and GNPAs are at 2% with provision coverage of over 60% which is far better than most banks in the country. With P/BV of 1.5 the bank can definitely re-rate within a short time given the terrible performance of PSBs and shaky results of top private banks. Since it is a promoter less bank of high quality with a strong regional presence in TN, AP, it is also a great take over candidate. A definite buy in the banking sector.

 

Good analysis of stocks

 

My next stock pick is Tata Global Beverages. Ace investor Porinju has already recommended this stock as one of his top picks for the year. As a global company TGB has great potential to perform strongly in challenging circumstances when other companies are facing slowdown. Regardless of any crisis people will not stop drinking tea. Cyrus Mistry is really looking to strengthen the group's operations and remove inefficiency. The strong presence of the company in all major markets including India, China, US, UK, Russia, Canada etc. makes this a high potential stock which is available at very reasonable valuations.

 

My next pick is a PSU - Power Finance Corporation. Power Finance Corporation is NBFC which lends to power projects in India. What makes PFC an attractive bet is its asset quality and nature of business. PFC lends to State Electricity Boards, utilities, and power projects. The loans of PFC are often backed by state and central govts. Over the years power sector has generated the maximum NPAs for the banking and financial sector. However PFC has managed to keep its asset quality stable with NPAs as low at 1%. The govt. of India has recently launched the UDAY scheme to revive SEBs and rejuvenate power sector. Under the new scheme all loans of SEBs will be converted into bonds to be issued by state government and SEBs. States will aslo get incentives to join the scheme. Of course it all depends on implementation but there is unanimity of experts on the merit of the scheme. Hence it is expected that power sector's stress will reduce as whole and greatly benefit the lending institutions. PFC already has sound financials and is available at P/BV of around 0.5 which is actually less than several PSBs. Unlike PSBs it also does not have to deal with high operational costs. But on the flip side it cannot access low cost deposits. However interest rates are heading lower and PFC has market access to issue long term loans with moderate interest rates. I do not have figures for provision coverage but RBI has issued strict guidelines for NPA classification and provisions. The company as stated is already ahead of RBIs guidelines in implementing those guidelines.

 

@bholu you are doing awesome job !!!

 

good pick.definitely.

 

Good work mate..!!

 

It is better always keep away from PSU, better invest in private similar sector.Just personal view against PSUs nothing against said company

 

Thank you all for your comments. I hope the discussion is at least being informative.to the retail investors. It is always better to have a discussion where you share your views and information to help create knowledge and awareness and not try to prove somebody wrong and yourself right. I hope everybody will continue to contribute positively to this discussion.

My next pick is Selan Exploration Technology - another favorite of Porinju Veliyath. The fact that Porinju has picked 5% stake in this company through his PMS. I must clarify that I do have issues with the disclosures of the company but it is the cheapest stock available in oil and gas exploration. It has a strong balance sheet and good resources at its disposal in terms of proven oil and gas reserves. And we know Porinju Anna has always spotted winners. In this case the he has literally put the money where the mouth is. Also oil is showing signs of rebound. The Saudi resolve to keep prices low by increasing production is seeing signs of breaking as Iran has entered the global market (well it was always in the market but not supplying to US, EU). And low oil prices which were intially seen as boon for oil deficit countries like India is now actually disconcern in the very countries. Investors, traders are all getting worried. It seems nobody likes consumers saving money. Hence a rebound in the second half when summer kicks seems very likely. Selan is trading at very low valuations and is only attractive stock available in the sector as OIL, ONGC are affected by subsidies and Cairn by corporate governance issues.

 

I am recapping my recommendations for my investor friends.

1. Exide - Low valuations, strong balance sheet, good brand recall, falling raw material prices and insurance division which holds promise.

2. ICICI Bank- Low valuations, investments in subsidiaries, large branch network, high deposit and loan accounts, and reasonable credit growth a major advantage. High NPAs, low provisioning, and operations quality a concern.

3. Ramco Cements- Great Brand, Extremely strong management, lower valuations than comparable peers, relatively strong balance sheet, lack of competition in key markets, demand boost in Tel,AP are key positives.

4. Cyient- Low valuations, continuous profitable growth, strength in niche areas, and high cash reserves are positives. Rising dollar, revival of US economy aided by US presidential elections are good triggers.

5. City Union bank - Better managed smaller pvt. bank with great metrics all round. Low valuations, strong base in key markets,and inexpensive valuations.

6. Power Finance Corporation- Largest NBFC by loan size in the country with good asset quality among PSEs. Free from increasing employee and HR costs which affect PSBs. The UDAY scheme is also likely to de-stress the power sector, and high percentage of its loans are guaranteed by state and central govts. Has access to markets to raise funds at cheaper rates.

7. Tata Global Beverages - One of the cheapest FMCGs available. Truly global company having strong presence in all major markets. Cyrus Mistry's continued focus on removing inefficiencies and pushing sales growth besides extending product profile is likely to yield good dividend.

8. Selan Exploration Technology - The only oil and gas exploration company available at low valuations. Good reserves at its disposal and has fewer overhangs than peers. Expected rise in crude prices will help the company.

I hope I have been of help to people interested in investing their hard earned money into stocks and hoping for good returns.

My next stock will be a pick of the Big Bull, Rakesh Jhunjhunwala. After all this forum is inspired by him so I thought I should recommend at least one stock held by him.

 

Dear Bholu,
thanks a lot for the list of these great stocks .

TGB --> Truly global beverage company -- amazing quote , you explained it in just one sentence.
Cyient - Definitely worth to add at watch list of every IT fan / investor .

Thanks & Regards,
Prashant

 

Friends I see that market has cracked and some of my recommendations have fallen further (e.g. Exide, ICICI). I just want to say that (with all usual disclaimers) that these stocks are quality stocks with good fundamentals. Also the entire market has fallen, therefore this is the time to buy good stocks.
Have you ever wondered why retail investors lose money in the market ? Because they buy high and sell low when it should be the other way around. I am amazed when I see experts tell retail investors to say out of the market. When the market was at all time high they were saying all positive things and encouraging retail investors to participate in the market.
You can make good money when you buy a stock at cheap valuations and sell it when the stock appreciates. You will never make money if you buy a stock which trading at high valuations and reflects all the positive outcomes. Unless you buy a company which always grows at stupendous rate. We all know that this is not possible. Of course this also does not mean that you buy any company blindly without analyzing the fundamentals.
So friends use the market fall to buy good stocks. My next recommendation will come soon.

 

Friends I have decided to defer the recommendation of RJ stock for some time. Instead I bring you another undervalued stock which is very well known. The stock is NMDC. NMDC owns some of the most lucrative and profitable iron ore mines in the country. It also owns the only diamond mine in the country at Panna, M.P. The crash in prices of iron ore has dented the profits of the company but at the same time the cash on books of the company is almost 30k crores equivalent to its current market cap.
NMDCs new initiatives are also very positive. The company will probably begin operations of its first steel plant by mid 2017 with a high capacity of 3 million mta per annum, and has also been granted rights to new mines in the state of Chattisgarh which have high proven reserves.
Also the stock is trading at extremely low valuations with a good dividend yield. And unlike PSBs NMDC does not to face issues of losses or cash requirements or provisioning. A safe stock with good dividend yield and high cash reserves, and profitable mines. And positive initiatives coming up in the future. A decent investment bet at these levels.

 

Friends my next pick is GE Shipping. The company is the largest pvt. shipping company in the country and has a diversified ownership of vessels including both dry and wet bulk carriers, i.e. vessels that can carry dry goods as well as liquid products. Hence company is positioned well to cater to all types of shipping and transportation requirements.
The company has struggled in the past as lack of infrastructure and congestion at major ports was hurting the business prospects of the company. However the redevelopment of major ports, construction of new private ports has improved prospects of shipping industry. The fall in prices of crude has also boosted the prospects of the company. Now it saves on transportation costs and benefits from increasing refining activities due to low crude prices. In future India is likely to emerge as major export and import hub due to its strategic position and high population. The prospects of the company given its strength are bright.

The company also has a subsidiary which provides off shore services like logistics, drilling support, container services etc. The fall in crude prices has hurt the prospects of this division as exploration and drilling services have been badly affected. The company is burning cash in this division. However the long term prospects remain intact thanks to the investments in technology and requirement of oil and petroleum products in the country. The company is also cash rich and available at just 1 times price to BV. It has also ordered vessels for the future and is well positioned to meet increasing demand.
With a market cap of 5000 crore and expected sales of 3000 plus this company is available really cheap. Also it trades at PE of around 7 based on future earnings The latest earnings of the company continue to display improved operational performance. Given its expertise, moderation in crude prices, and increasing transportation of crude and other products GE Shipping can really provide good returns from here on with limited downside.

 

Dear Fellow Investors,

1. Exide - Low valuations, strong balance sheet, good brand recall, falling raw material prices and insurance division which holds promise. Results were decent. Maintain buy.

2. ICICI Bank- Low valuations, investments in subsidiaries, large branch network, high deposit and loan accounts, and reasonable credit growth a major advantage. High NPAs, low provisioning, and operations quality a concern. Results poor but better than most PSBs. Maintain Buy.

3. Ramco Cements- Great Brand, Extremely strong management, lower valuations than comparable peers, relatively strong balance sheet, lack of competition in key markets, demand boost in Tel,AP are key positives. Results were very good. One of the few companies which showed volume growth in this environment. Maintain buy and forget policy.

4. Cyient- Low valuations, continuous profitable growth, strength in niche areas, and high cash reserves are positives. Rising dollar, revival of US economy aided by US presidential elections are good triggers. Maintain buy.

5. City Union bank - Better managed smaller pvt. bank with great metrics all round. Low valuations, strong base in key markets,and inexpensive valuations. Maintain buy.

6. Power Finance Corporation- Largest NBFC by loan size in the country with good asset quality among PSEs. Free from increasing employee and HR costs which affect PSBs. The UDAY scheme is also likely to de-stress the power sector, and high percentage of its loans are guaranteed by state and central govts. Has access to markets to raise funds at cheaper rates. At a time when PSBs are registering steep decline in net profits or reporting losses PFC has shown marginal rise in net profit. Maintain buy.

7. Tata Global Beverages - One of the cheapest FMCGs available. Truly global company having strong presence in all major markets. Cyrus Mistry's continued focus on removing inefficiencies and pushing sales growth besides extending product profile is likely to yield good dividend. The results are disappointing in what should have been a strong quarter. I would now not recommend a fresh buy on the stock simply because there are other stocks which are far cheaper on simple PE valuations. But the central point behind the stock's selection remains unchanged.

8. Selan Exploration Technology - The only oil and gas exploration company available at low valuations. Good reserves at its disposal and has fewer overhangs than peers. Expected rise in crude prices will help the company. Results poor as expected but balance sheet is strong. Oil recovery seems more and more likely in the second half. Maintain buy.

9. NMDC - Cash on books is equivalent to market cap. Ownership of highly resourceful mines and diversification into steel production are positives. The stock is very lucrative at current levels. Maintain buy.

10. GE Shipping - Valuations are very reasonable. The company is well managed and moderation of oil prices will continue to enhance profitability as fuel costs will remain low and increased refining will help business prospects. Demand of raw materials in India will continue to be high. The fleet strength of the company is good. Maintain buy.

The usual disclaimers apply. I am not registered with SEBI and I am holding positions in these stocks which may change anytime based on future events.You must do your own analysis, decide on your risk profile and time horizon before investing.

However I would maintain that current market fall is a good opportunity to buy these quality stocks. You can see the irony. When markets were at all time high the experts were recommending buying stocks at elevated PE levels now they are recommending holding cash when valuations are so cheap. You are intelligent enough to understand the situation. Also if you are holding the stock which has fallen sharply look at balance sheet, PE multiples, and management quality. I suggest that you do not give up if you feel the stock holds good on all these parameters.

I will be presenting new stocks soon including the RJ stock which I had written about.

 

great picks . all are big established businesses for risk free returns. appreciate your work.

 

Dear Bholu,
this is typical behavior from so called analysts, because fact is that they can not predict market .
I follow one simple rule, when anaysts starts yelling further fall, after a considerable fall, its time to Buy .

When analysts starts yelling Buy after a considerable run up, its time to sell(Though I do not sell, but stay away from fresh investment) ..
Now more and more so called analyst started talking about 20k and suggesting NOT to buy .. so for me its time of action .

Regards,
Prashant