Hi Abhay,
Thanks a lot for the comment. I agree with you in your analyses of the commodity play. I had covered the cyclical aspect in an earlier post here:

Over there, I spoke about three major cyclical factors to consider for SKM:

• Mortality Rate: Higher temperatures result in a higher flock mortality rate. And El-Nino this year has not helped that fact. February of last year was the hottest February India has ever faced in over a 100 years.

• Production costs: As mentioned in an earlier post, maize prices have already caused a 20% spike in poultry feed price cost. And the added expenses are hurting SKM’s margins over the past year. SKM is currently sitting at its highest material cost (normalized) in the past 6 quarters.

• Extreme conditions: The Tamil Nadu floods that occurred towards the end of 2023 was an unforeseen event that could have affected SKM’s business for the quarter.

This is definitely a down cycle that SKM is observing and I feel SKM have been unlucky with the floods too. But coming back to cyclicality, all of this has been priced into the stock and it is trading at valuations that existed back in 2010. We are definitely closer to the bottom of the cycle than the top.

A small correction in your point about forward PE. If the company was to repeat last quarter’s performance for the next quarter, the PE becomes 6.8 with an EPS of around 33Rs.

Hello,

The impending block Deal happened yesterday. In this BAT sold 3.5% of its total stake amounting to 17500 crores around price of 400.25 per share. After this transaction BAT will hold around 25.5% stake. I feel BAT’s overall stake reduction is the good news considering their earlier stand on buybacks and business diversification plans.

And surprisingly around 30 parties bought the available shares. the biggest being ICICI Prudential Mutual Fund. As per data compiled from BSE, ICICI Prudential bought Rs 4,963.10 crore worth ITC shares in 16 block deals. It was followed by the Government of Singapore purchased shares worth Rs 3,664.11 crore in one block deal.

For more details you can refer the below articles.

Who are buyers of ITC shares in nearly Rs 17,500 crore block deals? – BusinessToday

itc block deal: BAT sells ITC stake for Rs 17,400 crore; over 30 institutional investors pick up shares – The Economic Times (indiatimes.com)

In my view we can see a good upswing in share price in a quarter or so nearing the book closure date for Hotel business demerger. And once the business is demerged financial ratios like ROE and ROCE of ITC going to improve further as Hotel business was more capital-intensive business. that will also increase more cashflow and in turn dividends to share holders, as 85% profit is being currently shared as dividend. Even there will be additional interest of buyers for hotel business.

I feel more good days are ahead for ITC and its investors.

Disclaimer: Invested so views can be biased.

Thanks,
Deb

They have recently raised capital from investor. They will use that money to fund this acquisition. So I do not see any immediate dilution again.

Hi below is the Portfolio Started Creating from 15th Jan 2024 After Booking All The Profit Last Year

No Investment without rationale ,each and every Company has (Deep Value investing + Growth in the Company )

There are Many Companies i have identified during Bull Run ,But Did not add Reason is simple study in Bull Run and Just Make Tracking Position during that period and Invest in Bear Market

Expecting Q2FY25 Onwards companies will start reporting good sets of number

You can Pin this post and look after 18 Months .

To Understand the Methods I follow you can watch 3.5 Hrs Equity Research Video
Link : https://www.youtube.com/watch?v=yHP8S0NId78

Dis : No Buy or Sell Rico* Consider this post as identification of stocks which you can further study before coming to Any Conclusion