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Raj
Posts in category Value Pickr
Ratio manipulation by Companies (16-03-2024)
Ratio manipulation by Companies (16-03-2024)
Sir, clarification requested regarding point
1.then that becomes ROCE?
- How they can show outstanding shares less, doesn’t that accounted?
Please clarify, thank you.
Is Buy and Forget a Myth? (16-03-2024)
Here is luck factor which is always true and u can’t give yourself full credit. Money lost from 2018 to 2020 was in below stocks, Rpower, R Infra, RCap, PC Jewel and final nail in coffin by Yes Bank, lost close to 17 lk in yes bank and sold stock at 10 rupees in Jan 20. Remaining capital dropped steeply to 10 lk in Mar 20. So lost 60 lks in 2 years out of 70 lk.
March 20, i took a call on 5000 Tata motors, put in Voda Idea at 3.3 rate, capital 3.6 lk. Never knew it will rise to 12 in two months, that was turning point.
Learnings: no hot stock play now, avoid stocks with unmanageable debts, no Infra company, no Banks, careful investing in cyclical businesses.
All grace and love of God:pray:
Net liabilities have dropped to mere 10 lk and assests have crossed over 10 Cr now, still real state is making 60% here.
If you want to make big than only u can do it on your own conviction. My strategy is bottom approach, i am looking for a fairly large sustainable business trading low due to some foolish decision by management and turnaround is seen in future. Major alpha is created here as stock is hated hence valuation is cheapest. Take large bet, inspired by Mohnish Pabrai. If dont bet big you dont make big. 
Is Buy and Forget a Myth? (16-03-2024)
What about 3 Lakh to 3 cr in 8 years? This is what I have achieved and process is on going. Started with 3 lk capital in 2013, grown it to 1.1 Cr till Nov 2017, cashed out 40 lks to pay off home loan, two International trips. Invested capital dropped from 60 lks to mere 10 lks in March 20. From March 20 till now grown portfolio to 3.4 cr in Jan 24. cashed out 40 lakhs in between two years. closed 12 lk invested property loan, 7 lks for my new Honda Elevate, sold equities to pay off advance tax. 6 dometic family travel trips. Money invested from Salary and bonuses, Loaned capital, lumpsum investment, over period of 8 years close to 65 lk, encashed amount 80 lks. Net investment negative as of now. PF value 3 Cr.
Most important part of this is efficient use of leverage. You can’t make big in stock market without efficient use of leverage. Some key stakeholders for this journey
Tata Motors, Force Motors, AGI Green, Apollo Tyre, Phillip carbon black, shoppers stop, AB Cap, HSIL, kalyan Jeweller. 
Shilchar Technologies – Power & Distribution Transformers – Sunrise Sector? (16-03-2024)
Hi. Even I thought so. But then read the below post from Jaspreet. These are his notes from an Investor Meet that the company organised (maybe it was the interaction during AGM).
So my assumption is that only standalone renewable power plants would require power transformers of 66KV or less. I have gone into more detail in my above post. Sharing a snippet below. Let me know if you have a counter opinion.
Ratio manipulation by Companies (16-03-2024)
ROE is ratio of (Profits earned)/(Equity). So manipulating profitability or equity component is how you change ROE.
- Using more debt instead of putting in equity by promoters. Debt financing is cheaper than equity and also faster. So by this you decrease denominator thus improving ROE ratio.
- This reduces the number of shares outstanding and thus reduces the denominator in the ROE formula, making ROE appear higher. While it can signal confidence in the company’s future, it doesn’t reflect actual operational improvements.
- Basically window-dressing! using different accounting practices. For ex, extending the depreciation period for assets reduces depreciation expense, inflating net income and ROE.
Avenue Supermart: a compounding machine? (16-03-2024)
- Land hold is just another capex, how they utilise this efficiently to get returns is what matters, not appreciation of land value. Hence importance of ROCE.
- Value of land is unlocked only when they are sold, that means they are shutting down those retail locations! or when company is being liquidated. So for this kind of industry valuation wont improve due to land holdings from investors perspective.
- For retail industry land helps due to the following
a. One time cost, variable cost go down, no rentals or rental escalations (was major reason for Big
Bazar to shut shop).
b. Benefit of depreciation
c. Protection against market downturn as they can liquidate assets and raise money - Land holding however improves valuation for real estate companies, only if they are able get returns regularly by developing and selling.
Avenue Supermart: a compounding machine? (16-03-2024)
- Land hold is just another capex, how they utilise this efficiently to get returns is what matters, not appreciation of land value. Hence importance of ROCE.
- Value of land is unlocked only when they are sold, that means they are shutting down those retail locations! or when company is being liquidated. So for this kind of industry valuation wont improve due to land holdings from investors perspective.
- For retail industry land helps due to the following
a. One time cost, variable cost go down, no rentals or rental escalations (was major reason for Big
Bazar to shut shop).
b. Benefit of depreciation
c. Protection against market downturn as they can liquidate assets and raise money - Land holding however improves valuation for real estate companies, only if they are able get returns regularly by developing and selling.
South Indian Bank (16-03-2024)
(post deleted by author)
South Indian Bank (16-03-2024)
(post deleted by author)