Hello,
I was looking through Dr Agarwal eye Hospital and reading through article ,the following article claims the company raised 270 crore from temasek holdings in 2019 but the size of the balance sheet is still 141 crore (total assets) in 2020.Also how did they raise that amount.
Posts in category Value Pickr
Investing Basics – Feel free to ask the most basic questions (13-09-2022)
See the bright Sun: Aditya Vision (13-09-2022)
Hi Alok,
I am also from Patna and we were in the same business line and I can give my perspective from a business aspect. I also think there is a lot of misunderstanding among the investor community about the core business model itself. I will share my own experience while running a small retailing operation in Patna.
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Orders for a season are placed during off-season by paying certain % as advances and later getting a discount. The later one buys during a season, higher the price they pay to the OEMs. Please note that I am giving a retailer perspective, Aditya Vision will also be dealing directly with the OEMs. For e.g. we used to stock Symphony and Kenstar air coolers when we bought at average prices of around 3500-4000 during off-season (say Nov-Dec) by paying 15-20% upfront (depending on relationship with a distributor). As season progressed, list prices increase and during peak season one will struggle to buy even at Rs. 5000. From sales perspective, we started at ~5000 during off season and during peak season, prices crossed 7000 (thereby approaching the MRP). On a blended basis, during a good season we could make average realizations of around 5500-6000 giving us 35%+ margins over a full season. In our case, margins were higher (vs Aditya vision) because we didn’t stock lower margin products like mobile phones. All this data is for 2014-17 period.
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Now that we understand the basic business model (which is working capital finance), lets see how small retailers benefit from big brands. There are always upcoming brands who want to dislodge incumbents by giving better trade conditions and discounts vs more established brands. For e.g. Kenstar was growing aggressively in Bihar at that time and gave us very good deals whereas Symphony didn’t provide large cash discounts. Our strategy was to stock both Kenstar and Symphony, but try to nudge customers to buy Kenstar. At the shop floor, a customer knows the product they want to buy (with a vague idea of the brand they will prefer), salesman then nudges him/her towards another brand which has the same look and feel, better guarantee terms and is cheaper (and also higher margins for retailer). Those customers who are very choosy about a particular brand generally prefer purchasing from an online channel, but a large proportion of customers have no clue at all. At the end, all these white goods are commodity products with a perception attached to it. Trivia: We also used to make our own air coolers which was available at our shop for a bigger discount, these used to be marketed to customers with a lower budget but made very high margins for us. That’s how all three product ranges work (established brands, competitors, white label). At the end of the day, retailer owns the customer (and not the OEMs).
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The per capita calculations about Bihar vs Maharashtra will not improve our understanding of a retailer like Aditya Vision. We need to focus on the value proposition of a retailer like Aditya Vision. In my understanding, there is a lot of latent demand in smaller places which get unlocked by availability when an organized retailer opens shop. Take for e.g. my wife’s family, they run a retailing operation in Biharsharif and were expanding their shop and needed to install few ACs. The brands they wanted were not available in the local shops, so they went to Aditya Vision who provided the brand they wanted, and installed the ACs on the same day. Now, this is what I call latent demand, which already exists but is only unlocked due of availability of brands in a shop.
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Finally on the growth runway, while doing some work on Aditya vision I got the opportunity to talk with the jewellery shop owners in Biharsharif to understand size of market. Now, Biharsharif is a very small place vs Patna or Ranchi. Each diwali, 800-1000 cr. of gold is sold in Biharsharif along with ~200 cr. of consumer durable items. In Patna, I think the consumer durable sales will easily cross 1’000 cr. in a year, as Aditya Vision itself might be doing 200 cr+ sales (combined with a similar no from Chandni Chowk shops). Simply extrapolating that, implies the overall consumer durable market is atleast 4000 cr.+ in Bihar, and probably 2000 cr.+ in Jharkhand. And this is a growing market, I dont think we need to worry too much about growth for a few years. I will rather focus on execution of the company and its focus.
All this being said, we should also keep in mind other relevant details (like cash taxes being lower than accrual taxes, political affiliations, etc.). The point of my post was to (hopefully) give some insights about consumer durable retailing business. Also, we shouldn’t just disregard an idea because they are from Bihar.
Disclosure: Not invested (no transactions in last-30 days)
Tata Investment Corporation: Unusual discount to NAV (13-09-2022)
50% increase in last month makes it 3500-4000 cr increase.
NTPC – Thermal Power (13-09-2022)
I have exited recently for making room to tackle US & EU recession. the stock was great at 90-95 Rs but i am constantly looking for doublers in my pf and this one has 30% left on the table.
Bull therapy 101-thread for technical analysis with the fundamentals (13-09-2022)
@nirvana_laha I am just a trader - discretionary & systematic - mostly discretionary as I rely on what “feels” right - the feel is essentially a 1:5 risk:reward (lose 10% max or win 50%, downside of 20% for 2x and so on) within 3-6 months, based on charts, fundamentals and some perception gaps. This has worked exceptionally well in the last 3 odd years especially and most of those charts are in this thread. When I don’t see too many such 1:5 risk:reward trades, I simply sit out like I did mostly between Oct '21-Jun '22. This did exceptionally well and the gains were simply too much to waste on middling trades. I don’t consider myself skilled enough to find great trades when the odds of finding them are slim (Fish where the fish are).
Now most of the trades are in micro/small caps in the last 3 years because that’s where the perception gaps are and where these 1:5 trades often appear (mids/larges are well-covered), especially when liquidity is high and caution is thrown out as most of these that trade at 10x earnings get to 25-30x without the business doing anything special, or pretending to do something special.
I extensively use Kelly Criterion for position sizing (which means most bets can get to 15-20% allocation mark easily when the risk:reward is in favour) - again this is not math driven but intuition driven (you know in your gut when your position size is off), going by liquidity, along with the risk:reward as mentioned above.
With that background - in '20 and '21, there were lot of 1:10 trades that offered 2x or even more with just 10% downside. In '21 there were only 50% sort of upsides I could find but with almost 20% downside. In '22 barely any with the same risk:reward in small/micros. This system works OK and you can have a splendid CAGR, but your turnover is almost 4-6x your capital when you are aggressive and you end up paying a lot of tax as well (which is absolutely fine - good problems to have)
But at some point of time, your capital is bound to grow where the same strategy can’t work. You can’t find enough micro/smallcaps with the same sort of risk:reward in the same 3-6 month time period (again, I speak as a trader - a novice at that). Also there’s a watermark in most of our minds in terms of what’s a good capital base post which we want to take lesser risks. I think I have crossed that limit sometime in the last year and would want to extend time horizon for the same risk:reward of 1:5. This means I churn less, take lesser risks in a overheated market in illiquid scrips.
That’s where this strategy change came in - the only way I could convince myself to get back in the market was to see a bigger picture of where we are heading as a country, in terms of per capita incomes and consumption. Also, our market being a smallcap in the global scheme of things meant a flood of capital coming in due to narrowing of global markets (which I think is bound to happen) was going to go into most liquid midcaps/largecaps (which are global smallcaps). Also, it gives me the opportunity to allocate more of my capital per scrip - which means lesser ideas to hunt for in a dwindling ideas market - and lesser decisions to make, when your hit rate is bound to be poor due to market conditions.
So that’s what it is. I don’t know if its the right thing. I may change my mind as I am also trying to experiment and find out what works best for my temperament and capital. This is probably not the right way and I think everyone should find their own process and see what works.
Disc: I am a novice. Those consumption stocks were bought in early July and unless your horizon is long, now is perhaps not a good time to touch them.
CDSL – Stock for our children (13-09-2022)
(post deleted by author)
Rubfila International – Evolving story of rubber threads (13-09-2022)
Regarding Spandex threat, it will be worthwhile to read about European plan to go for mono fibre garments by 2030.
Environment cost of Spandex may be its undoing.
Rubfila International – Evolving story of rubber threads (13-09-2022)
Regarding Spandex threat, it will be worthwhile to read about European plan to go for mono fibre garments by 2030.
Environment cost of Spandex may be its undoing.
Glenmark Life Sciences (13-09-2022)
Delivery % is up because of upcoming 10.25 Rs dividend
Company does have valuation on its side, so that could be another factor.
Glenmark Life Sciences (13-09-2022)
Delivery % is up because of upcoming 10.25 Rs dividend
Company does have valuation on its side, so that could be another factor.