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Posts in category Value Pickr
Shilchar Technologies – Power & Distribution Transformers – Sunrise Sector? (16-06-2024)
refer recent podcast of sadhan on YT.
Godawari Power – Any Trackers? (16-06-2024)
Since the announcement of Board meeting for buyback, this stock has ran up quite a bit, despite softening of pellet / iron ore prices. May be it was due to the fact that it was discounted cheaper compared to peer group shared. But after the announcement of details, there is no further trigger in the short term. Also only 1.6% of paid up shares will be bought back. So acceptance ratio for retail shareholders in a optimistic calculation can’t be more than 3 %. So in my opinion, if it opens gap up on Tuesday, one should sell. I am sure we will get lot of opportunities to buy it at lower level.
NB- This is my opinion and I may be wrong.
Tinna rubber – recycling a rubbery growth path (16-06-2024)
At this juncture, the stock is surely overvalued (at least to me) and I won’t have the courage to top up on it. In any case, I have a decent sized holding and I’m very comfortable holding on to it, even if the valuation goes higher.
Where the market participants take the valuation of the stock is anybody’s guess. Even when I entered the stock it wasn’t cheap per se. I entered ~4-5 months back when it was trading at a PE of 35-36. However, I figured the company is placed very nicely on the growth front with sales, margins, profits and return ratios set to grow/improve meaningfully. Add to it the EPR revenues that flow directly to the PBT without an additional rupee being spent in expenses by the company. Furthermore, the company is experiencing some amazing macro tailwinds (thanks to the aggressive road construction/infra development taking place in the country). And lastly the modern themes of ESG investing, eco friendly companies focused on recycling etc. warranting more attention made it a no-brainer for me.
On the valuation front, my math was simple. The company was poised to grow its topline by ~35% + CAGR over a 3-year period with margin expansion leading to faster profit growth and improving return ratios. With all the other pointers and tailwinds mentioned above my thought was it trades at a PEG ratio of ~0.70-0.85 and that to me was acceptable as I would double my money in under 3 years (assuming everything falls in place). That the market has re-rated the company to a higher multiple is just a pleasant surprise. Who knows it may be even more irrational and take it to higher multiples.
For the time being, I’ll continue to hold it and keep monitoring the company’s business performance and the stocks valuation to decide further course of action.
Disc: Invested as a tactical 3 year bet. 3rd largest holding in the pf.
Shilchar Technologies – Power & Distribution Transformers – Sunrise Sector? (16-06-2024)
What’s the reason for sudden increase in their operating profit margin?
Because prior they were hanging between 8-12 , now suddenly 29 , last year 19.
Anshul’s investing journey (16-06-2024)
very true!
In such cases, recency biases take over where we change our plan of action with respect to the current environment.
Very well said, important to not forget the core of our investing in such cases!
However, I am still very new and hence figuring out my core
Investing Basics – Feel free to ask the most basic questions (16-06-2024)
Implies that costs growth rates are lower than the revenues growth rate. It’s common in businesses where fixed costs are a large % of the overall costs. For instance, car manufacturing. With increase in production volumes from the same facility, every additional unit results in a lower fixed cost for each manufactured unit. Hence, operating margins expand and operating profit grows at a rate faster than that of the revenue.