I have a fundamental question about when a NBFC will get money when they do Direct assignments and securitization. My understanding, so far, is that NBFC will sell the pool to any other financial institutions and get the entire amount as bulletin payment and the buyer of the pool will get money as a monthly payment(as and when the customer pays). Am I getting this correct?

Agree with your views. I exited from this stock recently mainly because of Chinese opening up. I bought it in 2020 and enjoyed some decent returns on it but I think the past growth may not be sustainable in future.

The upcycle will take time ,on a recent interview nikhil kamath with cnbc told us that the entrepreneur he has been talking to all are saying that demand for goods has been falling and on top of that we are also seeing crude prices going up and this is going to lead to margin erosion for all dye companies also another headwind is china coming back again increasing supply and fighting for already low demand.

At current price i think everything is not priced in for me it would be somewhere around 110 to 120.Even at this price my major cause of concern would be how long chinese suppliers are going to be there for because the company enjoyed super normal profits for a long time due to china closing factories beacuse of pollution norms.

A few recent additions in the portfolio:

1. Andhra Papers – valuation looks pretty cheap to me. Though it’s a cyclical sector, I think next 2-3 years will be good for the growth for cheaper stocks like this. I have 2-3 years horizon for investment in this stock. Recent reduction in the prices for pulp will be beneficial for the sector. Few other characteristics which I normally assess in the stocks:
   • Positive and increasing FCFF and FCFE since last 3 years
   • Highest score under fragility scorecard
   • SSGR > sales growth
   • Last 3 years, CAGR under CROIC and FCF / Invested capital has been over 40%
   • FCFF yield higher than bond yield.
   • Most importantly, If we look from equity perspective, over 10 years, nearly 100% of reinvestment rate and company earning nearly 45% return on this incremental capital invested (ROIIC). This means value generation by company by these reinvestments are over 45% but CAGR in stock price is only 6% over 10 years. Furthermore, if we look from both debt and equity perspective, 52% of capital got reinvested and this reinvestment got the return of nearly 83%.
   • ROIC > WACC means company’s EVA (economic value added) is creating value for the company’s shareholders

2. Triveni Turbines – they are the market leader in turbines industry (nearly 60% market share in India) and has significant growth potential. Invested for long-term.
   • Nearly zero debt
   • No pledged holding
   • Positive FCFF and FCFE since last 6 years
   • Very high score under fragility scorecard
   • SSGR > sales growth
   • FCFF yield higher than bond yield.
   • From equity capital perspective, over 10 years, nearly 32% of reinvestment rate and company earning nearly 34% return on this incremental capital invested (ROIIC).
   • ROIC > WACC means company’s EVA (economic value added) is creating value for the company’s shareholders

3. GPIL – This is extremely attractive from valuation perspective even now with such a good bull run under this stock.
   • Nearly zero debt. Debt to equity ratio used to 2.1 in 2014 which is now 0.1 in 2023. This is highly appreciable.
   • No pledged holding
   • Positive FCFF and FCFE since last 6 years
   • Highest score under fragility scorecard
   • SSGR > sales growth
   • FCFF yield higher than bond yield.
   • From equity capital perspective, over 10 years, nearly 76% of reinvestment rate and company earning nearly 28% return on this incremental capital invested (ROIIC).
   • ROIC > WACC means company’s EVA (economic value added) is creating value for the company’s shareholders

4. Shivalik Bimetals (SBCL) – I think much has written on this on its separate thread so not adding anything.

5. HBL powers – same as SBCL.

Views are appreciated. This is not a post for recommending stocks. Please do your own analysis before investing.