#PHIL FISHER 10 DON’T

1. Don’t buy into promotional companies
2. Don’t ignore a good stock just because it trades ” over the counter’
3. Don’t buy a stock just because you like the “tone ” of it’s annual report
4. Don’t assume that the high price at which a stock may be selling in relation to earning is necessary an indication that further growth in those earning has largely been already discounted at the price
   5)Don’t quibble over eight & nine quarter
5. Don’t overstress diversification
   7)Don’t be afraid to buy on war scare
   8)Don’t forget your Gilbert & Sullivan : Don’t be influenced by what doesn’t matter.
6. Don’t fail to consider time as well as price in buying a true growth stock
7. Don’t follow the crowd

Hi

1. I think the cost of capital here is high as the pedigree, loan book quality and brand comes into play. Plz correct me if that’s not the case.

2. Also India bulls lending profile is risky as it lends at quite higher rates ( since the coc is so high). So the asset quality should always be on a watch and I assume that here npa would always be elevated as compared to similar business.

3. Now this story can be broken in two parts. First will culminate with the change of name soon and second will start when reliable growth numbers with decent asset quality will start pouring in. Going back to BV will depend on the second part imo. Let’s wait and watch and also hope the sticky inflation doesn’t make cost of borrowing go higher and difficult for the nbfc group.

Best
Divyansh
Disc : invested
Made multiple entry/exits so cost of holding is lower

There are two major risks in too small a stock

1. Promoter (which extends to everything from fraud to access to big opportunities)
2. Liquidity (due to small equity base)

This under 400cr stock overcomes the first with LMW. A famous and old empire in Coimbatore which shares common management with LAKSELEC ( Lynch said the worse the ticker name, the better chances of people not discovering until it is already an obvious buy:)). LMW’s textile mills drives 80% of revenue for this company which supplies textile machinery.

Second risk is the inevitable risk we bear to invest in cos >1000cr. But also can be the reason why it is locked in circuit (upper or lower).

Why I’m studying this company?

1. Under 20 PE for a stock that has shown extraordinary growth with more promise in the future.

2. Company’s textile business is a consistent cash cow (set customers, textile businesses are on multi-year up-cycle). Company is foraying into exciting spaces like smart meters and EV chargers.

Will share research here soon. @Malhar_Manek invite you to start us off here.

My take as below:

1. Dont know impact on Book Value but I feel that conversion would be best for company as it will free up the capital for growth. Stock already at significant discount to BV so equity dilution would make base for higher levels with additional capital.

2. Debt raising is based on their AA rating and rates can only improve when their AUM increases with less NPA giving more stable future earnings. I feel Gagan and team has brought the company from difficult situation and things are only bound to improve from hereon. Change in perception by market is evident and if overall sentiment remains stable, IBH should cover its gap from BV.

Icici flexicap added close to 26 lakh redtape shares last month