Hi please can you add me to what’s app group. I am in Singapore.
Anil
Posts in category Value Pickr
CAMS – Indirect Bet on Financialization? (13-11-2023)
Market did not react that well to results initially. But today stock price has given breakout, with 14% gains since last 5 days.
Is there any news?
Zen technologies – A micro cap in the defense space! (13-11-2023)
Zen Technologies wins Rs 340 crore order from Armenia last week for Anti-drone System.
The Anti-Portfolio (13-11-2023)
Hi Vikas, Congrats!! Having 30% CAGR even during these tumultuous times is simply amazing!
Pls help me understand how do you manage risk? both protecting the upside and limiting the downside.
Are you completely a fundamental investor or also include TA in your buy/sell decisions?
Shivalik Bimetal Controls Ltd (SBCL) (13-11-2023)
I heard and read quite a few times on this forum that the Shivalik Bimetals has now been over-valued and it’s not a right time to invest. While on the technical side, this might not be the right time but in my view, fundamentals are still very strong and stock price is still undervalued.
To back it up, I performed Price Implied Expectations (PIE) suggested by Michael Mauboussin in his book called “Expectations Investing”. This method provides an overview about the future expectations which are built in the current price of the stock.
As MM (Michael Maubossin) refers to another MM (Modigliani and Miller) in his famous paper (What does PE multiple mean),
Value of Firm = Steady State value + Future State value.
Steady state value assumes that current level of NOPAT will be sustainable indefinitely and that incremental investments neither add or destroy value. It’s very much like terminal value calculation in DCF model.
Steady State Value = (NOPAT / Cost of Capital) + Cash – Debt
Based on March 2023 numbers, NOPAT is 78 Crs. I have assumed CoC of 12.8%. Cash is around 40.5 Crs and Debt is around 52.5 Crs.
Using above figs and using the formula above, Steady State Value will be 601 Cr.
Future State Value refers to how much company invests, the spread between ROIC and CoC and for how long the company can find investible value creating opportunities or the competitive advantage period which MM refers in his book.
Formula for Future State Value as given in his paper is as follows:
Future value creation =
Investment * (return on capital – cost of capital) * competitive advantage period / Cost of capital * (1 + cost of capital)
Here, the inputs are (based on March 23 figs):
- Invested amount – 246 Crs.
- ROIC = 29% (tax adjusted)
- Competitive advantage period – 25+ (I calculated this based on the online tutorial at his website – Online Tutorial #8 — Expectations Investing
In his book, MM explains that the market always takes a long-term view and its expectations are already built into the current price. This is the period where company is expected to maintain its competitive advantage period before decline to a phase where reinvestment earns no more than CoC.
Using above formula and inputs, future state value comes to around 6945 Cr.
Total value = 601 Cr + 6945 Cr = 7546 Cr.
Value per share = 7546 Cr / No. of outstanding shares i.e. 5.76 Cr = 1310
If I apply 50% margin of safety, value per share comes to around 655 which is higher than current price of 545.
Caveats:
- This is not a DCF calculation. I did that as well in much detail and that also indicates that current price is undervalued. I performed DCF based on both FCF and EVA.
- With the help of this exercise, I just wanted to figure out what does current price imply and what kind of expectations are inbuilt into its current price.
- A couple of quarters of shunted performance may not be an indicator of the long-term performance of the stock, at least in this case, market agrees with this view.
Shilpa Medicare -Racing away on the Oncology API highway! (13-11-2023)
We had received fifteen 483 observations at the closeout of FDA inspection on February 25, 2020. The Warning Letter received on 10 Oct 2020 had specifically mentioned two citations – (i) inadequate handling of OOS and (ii) inadequate handling of market complaints, including failure to file FAR within stipulated time.
Common reasons for a “for cause” audit include:
- Specific complaints to the FDA
- Concerns about Stakeholders involved in the research process
- Significant issues or termination identified during research activities
- Multiple deviations
- FDA identified events of special interest
“For-cause” inspections can be particularly stressful on all individuals involved, so it is best to take a proactive approach and ensure that you are always prepared for a visit by the FDA. There are several ways to ensure you are prepared for both announced and unannounced inspections, including conducting regular trainings on best practices for staff and staying up to date on the current regulations/guidelines/expectations. Teams should identify key roles and responsibilities for company personnel and establishing a contact tree if an inspector were to arrive at your facility unexpectedly.
Not only should all parties strive for compliance, but also for showing off quality implemented throughout the work. You can do this by maintaining up to date documentation, developing an effective and robust quality management system (QMS) and implementing a thorough inspection readiness program.
A gap analysis is an excellent way to identify gaps and weaknesses in procedures and documentation as well as highlight areas for training. The best way to ensure that your firm is inspection ready at all times is to be proactive in preventing “for-cause” inspections and make the reactive approach the “not to be”.
Brand concept – New Emerging Micro cap Retailer (13-11-2023)
I was reading this regarding Delsey looking to make in India.
I feel Brand Concepts can be a good contender to make for them after the success of Tommy Hilfiger suitcases.
Red Tape Ltd. – The next fashion giant? (13-11-2023)
Panic sell off today. At 450 this would be a must buy stock opportunity.
Sumitomo Chemicals ~ After Excel Crop Care Acquisition (13-11-2023)
Since you track Sumitomo very closely , what do you think of them going so wrong ?
Dhanuka , Dharmaj , Punajab did very well during these tough conditions. Being branded how come Sumitomo did so poor ?