This is partly due to pledged equity, nearly 5% is still pledged. Institutional investors have this as one of the primary health checks.
Posts in category Value Pickr
Grauer and Weil Limited- 101 out of 100? (28-10-2023)
Grauer and weil(past growth and future growth triggers)
Grauer
1…PERFORMANCE
=Last 3 yrs
Sales growth@11% cagr
Operating growth@7%
Net profit@8%
=Last 1 yr(2022-2023)
Sales@33%
Profit@43%
=The business environment for the first half of the year was challenging with continued increase in the price of commodities including metals
2…FUTURE GROWTH
A-Growel tech centre
B-130 cr capex in next 3 yrs
C-Paints
=In the area of Paints, the increase in capacity of oil
and gas segments and infrastructure provides an opportunity for growth in subsequent years.
D-=3 areas of big potential – semiconductor, EV, reneweables – electroplating plays big role.
There is a big opportunity.
Disc…invested
Punjab Chemicals & Crop Protection Limited (PCCPL) A Clear Runway Ahead! (28-10-2023)
Company came out with flattish results, with sales declining by 13% and EPS being flat YOY. While results were subdued, if compared with peers (likes of Astec, Sharda, Rallis, NACL, etc.) they were quite good as the industry is going through a massive destocking cycle with Chinese driving down the technical prices. My concall notes below
FY24Q2
- Witnessed drop in volumes (due to inventory overstocking) and prices (due to entry of Chinese peers)
- Margins were higher due to focus on better product mix, better cost management, process efficiencies, R&D focus on new products leading to improved process efficiencies, and better customer support leading to better demand and pricing
- There was a one-time 2 cr. interest cost in this quarter (due to some Supreme Court judgement). This wont repeat
- Australia product has huge inventory in market
- 4 new product registrations: 2 secured + 2 under process. Full potential for approved products will be realized in 12-18 months
- Efforts on LATAM has yielded good results in last year, main problem with that market is that registrations require 3-6 years
- Receivables: generally 50-60 days. In this quarter, percentage of sales in domestic market was higher where credit period is higher
- Lalru: pharma + specialty chemicals products (no agchem products).
- Derabassi: Debottlenecking to improve capacity, will migrate towards higher realization products. Capacity will not be a challenge for growth
- The pharma intermediate products are still under approval, its generally longer cycle compared to agchem
Disclosure: Invested (position size here)
E2E Networks Ltd – Listed small Cloud computing player (28-10-2023)
Looks like a paid article. Towards the end, it mentions source as “PR Agency”!
E2E cannot compete with top 4 vendors on scale…they are massive and rightly are called hyper scalers…only area where E2E scores is based on their claim of a much lower pricing.
Just my opinion!
MCX and Financial Technologies (28-10-2023)
I do not see any credible reports in Media that highlight any major problem with new software. If there was any real problem, it would have also got reflected in share price immediately. Slow volume ramp-up could be a conscious choice…its more the norm then exception when new software is deployed.
If anyone has any credible report highlighting post go-live problems impacting volumes, request to please share. Would be beneficial to everyone
Praveen’s Information Attic (Obervations, Lessons, Thoughts) (28-10-2023)
I have been follower of markets since 2017-28 and serious learning started only in last 2 years i.e. after 2021. I’d like to share my observation with data wherever possible which may help in avoiding some mistakes for retail investors like me.
I’d like to kickstart this topic with how entry valuations and market/sector cycle has a major impact on returns. In last 2 years this has been observed in IT cos, Chemicals etc. I’m mentioning some examples for better understanding
| Scrip | Price on date | Valuation on date | Returns now |
|---|---|---|---|
| Wipro Ltd | 715 on 31 Dec 2021 | PE of 31.5 | CMP 380 (drawdown of 46% in 22 months) |
| Happiest Minds | 1500 in Jul 2021 | PE of 135 | CMP832 (DD of 45% in 27 months) |
| SRF Ltd | 2400 in Oct 2021 | PE of 46 | CMP ~2200 (no returns in 24 months) |
| Divis Labs | 5370 in Oct 2021 | PE of ~70 | CMP 3400 ( DD if 36% in 24 months) |
| Britannia | 3900 in Aug 2020 | PE of 55 | CMP 4500 (just 15% returns in 3 years) |
| TTK Prestige | 1400 in Nov 2021 | PE of 54 | CMP 792 ( DD of 44% in 1 Year) |
| Dmart | 5324 in Oct 2021 | PE of 314 | CMP 3665 (DD of 30% in 2 years) |
| Sona Comstar | 790 IN Dec 2021 | PE of 200 | CMP 550 (DD of 30% in 22 months) |
The above data indicates that if one is not concious of the valuation (specailly when margins are at peak) may result in drawdowns and years on no to negligible return. I tried to mention examples from different examples to consider the broader market.
Notes:
- At bottom of the cycle a co may look optically expensive in P/E terms. But that may not necessarily be over valuation
- Even if the PE is expensive for some cos, still the return may be good. There are many examples in India including Asian Paints, Titan, etc.
- The data is selected to make a point, so the inferences from this may not hold true for all the stocks or in all kind of market cycles
My lessons and key take aways:
- Respect valuation, especially in a cycle top
- Not all stocks may face time or price correction. But better safe than sorry
- Derating is a Beyotch. Better stay away where there is chance for derating
- In a market with 1000s of listed cos, why stick with a co with chance of derating, when there could be other opportunities with profit growth and rerating
Disclaimer: All the info is for knowledge purpose and not 100% backed up concrete data/research. The reader is advised to do their one due diligence.
I may be a shareholder of some of these cos in past, present or in future
Please feel free to share any examples that support or negate the info/data shared
Sugar Cycles: 7-8 years of losses followed by 2-3 years of super gains! (28-10-2023)
(Below data is taken from few sources and may not be very accurate)
Global sugar sector scenario:
Global production expected for S.S 2023-24 is around 175 MT compared to 177 MT during the current season.
Global consumption is also expected to be around 177MT leading to a potential deficit of 2MT.
Brazil sugar production is expected at 41MT compared to 31 MT last year.
Thailand production is expected to be reduced to 8 MT compared to 10MT last season.
The European Union is expected to produce 17 MT compared to 15.5 MT last year.
DOMESTIC SUGAR SECTOR:
S.season 2022-23 production ~ 33MT and 4 MT was diverted for ethanol.( Total 37MT) and sugar export of about 6.4 MT.
Opening sugar stock expected ~ 6 MT at the end of S.season 22-23.
Expected sugar production in India for the sugar season 2023-24 : 29MT and 4MT is expected to be diverted for ethanol production.(total sugar equivalent of 33MT)
Available sugar for next season will be ~35MT (29MT+ opening stock of 6MT).
Total domestic consumption is expected at 28MT.
Sugar export quota will be dependent on Govt policy which is expected to be announced in January. Considering the tight situation it’s expected that the Govt will restrict the export of sugar compared to last year.
Overall sugar prices are expected to remain firm.
The reason for drop in sugar production is due to potential reduction from Karnataka and Maharashtra states.
Discl: Not invested , tracking sugar sector.
Dreamfolks services limited( DFS) (28-10-2023)
The business model looks like asset light.
What is dfs going to do with the profits it make ?considering the margins normalise and the business scales.
Is there any discussion how the profits will be distributed with minimal friction? Cause I don’t see management having bigger opportunities to invest profits with same or better return ratios.
Astec Lifesciences (28-10-2023)
Astec life -update(past performance and future growth triggers)
ASTEC
1…PERFORMANCE
-20-30% cagr growth upto 2022
-Negative de growth in 2023 and 2024
=Topline and profitability were severely impacted due to
-sluggish demand,
-lower realizations and
-high-cost inventories of enterprise products
=CDMO business grew 3.0x y-o-y led by new product development while profitability also improved
2…Future growth triggers
A…CDMO business
=Increasing Cdmo business
=Management guided huge expansion for CDMO business in 2025(Howeve
r it is still not finally decided)
B…Herbicide plant
=Completed in 2022-2023
=Diversification into herbicides and development of more triazole molecules in enterprise business.
C…RnD
=Completion of R and D centre
= R&D Center will catalyze Godrej Group’s ambition to be an application-agnostic partner of choice for innovator companies in the rapidly growing chemical industry in Cdmo business.
D…Enterprisisng business
=Recovery from enterprising business
Disc…invested
Carysil (earlier Acrysil) – Kitchen sinks (28-10-2023)
Disc: Invested…
One thing that i like – doubling down on India
One thing that i don’t like – they are spreading themselves too thin… added, turkey, australia, uae in last 12 months only… md said that opening a new geo doesn’t translate into too much effort for them as they go with a distributor… i would be happier if they go deeper in a few and maybe test a few markets… but they have opened up so many new markets – would be good to know what our some of the initial markers they look at before exiting/ going deeper