Hi Hitesh, do you still track Dhanuka ? How do you see business model and growth prospects of Dhanuka as compared to PI ?
Posts in category Value Pickr
Kitex Garments Limited (30-10-2015)
Its not even over analysis but hyper analysis. Same points, same arguments and clearly this thread is on path of getting closed again!!
My points:
Cash Issue
Yes, timing the exchange rate is extremely difficult. It seems management is wasting time trying to find the right rate to transfer. However, those who think that they should just transfer are also guilty of the same crime which is wasting their own precious time. If if seems so obvious that any USD should be converted to INR because of interest differential, your obviousness contradicts a host of global fund managers head on. Everyone in the world today wants to just buy USD and sell all other currencies including high yielding emerging market once. Interest rate parity is what should be considered and not the interest rate differential. Based on interest rate parity, the rate differential should be compensated by currency movements in long run.Merger
I think this is the best move by the management to get KCL listed first. As they said, any valuations given to KCL would have been treated as cheating to minority shareholders unless it was free of cost. Best to let market discover it.Other way to think about this is trust should be mutual. Management would probably have given better then fair valuations to the minority shareholders, but because people have started questioning their every small move, they stopped trusting the market and have decided to list it focusing more on transparency ( intangible benefit) than giving a tangible benefit. To me, (with my presumption that management is brilliant), this has been a negative news today and the benefits would go to management as well as the KCL Ipo applicants.Growth
One thing which is not clear is whether the guidance is to double volumes or the value in next 3-4 years. I thought it was to double the production, which translates to higher sales growth and margin growth if branded business is successful. But today, they mentioned 525 crores getting doubled to 1050 which seems a tab bit lower growth for the company trading at slightly richer valuations.And yes, I too feel the valuations are bit richer.Corp Governance
With a history of growing sales by approx 5 times, profits by approx 20 times and dividends by 10 times in last 10 years without raising a Rupee from the market, I do not have reasons to doubt management integrity. Just that the management is not very polished, and gets carried away by the analysts who try to extract too much information. To me transparency is good, but it seems there would be lesser questions on corporate governance if they stopped disclosing or explaining things....Some Fun
Just to give something to discuss for the Kitex's critics. How about a conspiracy theory that they have cooked all the books for so many years and given the dividends etc. to make KCL ipo successful. There was no ENY advice, no three alternatives, the end goal was always KCL listing!!
Admin: Sorry for the taunt, could not resist myself after reading so many repetitive posts. No intention of being disrespectful to the points raised by anyone, but to the fact that same points are being discussed again and again.
Disclosure: Invested less then 5% of portfolio.
Kitex Garments Limited (30-10-2015)
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Vinati Organics (30-10-2015)
Thanks. Absolutely, by current pace of repayment, they should be debt free by FY2016 or latest by 1H 2017.
Also, given the track record of succefully completing capex, I believe they should be able to do this one in timebound and efficient manner.
Kitex Garments Limited (30-10-2015)
Hi Santosh,
I have always found the cash issue to be a relevant question. Especially in the light of Mgmt's response. I don't think any of us would mind them holding onto cash provided a logical justification for the same is given.
I would personally write to them to get an answer on the pledge issue as well. I was surprised to see that questions about the pledge were not raised along with the cash issue. 'Coz of this cash issue I would like to understand that for what purpose are the funds against the pledge going to be utilsed for. I don't want the pledge money to land up as the USD converted money in the accounts or to be utilised to shore up valuations of the pvt. entity (maybe thinking too much; but none the less I find cash issue to be valid and mgmt. justification given unsatisfactory).
Regards.
Gulf oil corporation – the safest way to play coal cycle (forget about coal cycle) (30-10-2015)
Here are some updates from the AGM which I attended this year
Bangalore property (rental) market is slow and the rental expected is around Rs 40 to 45 per sft vs Rs 50 expected earlier.
The management was categorical that they will go slow on property development incl Hyderabad till an uptick is seen in the property market. They do not want to be stuck with unsold/unleased property
I think the land in Hyderabad which is freehold is around 280 acres and the value should be around Rs 11 - 15 crores per acre at least. The rest around 600 acres belongs to a Sikh trust (99 years lease with the company) and case going on for many years in Supreme Court. I met one of the trustees in the AGM and he does not expect a resolution soon
The quality of earning of explosive/mine business is also not great ....op profit was negative last year....However they said that it has turned positive in the current year.
I agree this company can be a multi bagger if the company shows some dynamism and gets its act together
Torrent Pharma Ltd (30-10-2015)
Quick updates from the concall today:
Ambition: to have best EBITDA margins in India.
Changes in domestic business (one time correction): some hygiene initiatives (stopped bonus offers).
Abilify: 6% share in Sep data. Some customers do not report data.
On a contracted basis, estimate close to 15% share.
350-400 million tablets. Next 12 months high favourable.
H2: share could be a bit lower.
Nexium: more than 6 players in US market. Large attractive market.
Manufacturing intense. Target to have high single digit market share.
Shelcal: expect price rise 10% in November. 45% growth in volume terms.
Detrol: next 12 months - 3 more players to come in.
Long term loan 2200 cr. No plan to reduce LT debt in near future.
Brazil: impact due to currency devaluation. 10% growth in value terms.
Steps taken to mitigate:
1. Work on pricing (Improve)
2. Work on cost base (decrease)
3. Distributor margin (reduce)
Foreign exchange gain on net basis.
Receivables: Outstanding now 3 months and 9 days as compared to 4 months earlier
Inventory level is low.
ANDA filing: no filing this quarter.
Close to 20 products filed. Out of these expect 5-6 launches in next two years with limited competition.
Dahej facility: expect production/shipment to start before Xmas.
Expect increase in European tender business
European market:
Germany: main business in Europe. 16% growth in constant currency terms.
UK & Romania: short term slowdown.
Focus remains on Germany and UK.
Portfolio Derma close to 70 crore. Number 1 in face wash category.
Kitex Garments Limited (30-10-2015)
why do you think so Santosh. Please justify the cash issue. Please do share your views or any such experience witnessed by you in past. It will help us. Thanks.
Kitex Garments Limited (30-10-2015)
why do you think so Santosh. Please justify the cash issue. Please do share your views or any such experience witnessed by you in past. It will help us. Thanks.
Bajaj Finance Limited (30-10-2015)
Rajeev Jain - CEO of the company addressed the call:Highlights by Capital Mkt
Assets Under Management (AUM) surged 36% to Rs 37964 crore at end September 2015 from Rs 28004 crore at end September 2014. Deployments jumped 51% to Rs 9236 crore in Q2FY2016 from Rs 6115 crore in Q2FY2015.The company is targeting an AUM (loans) growth of 20-25% for FY2016, while expects the growth to be higher at 35%, if the festive loan demand turns out to be strong.New loans acquired galloped 42% to 13,93,309 in Q2FY2016 from 9,78,174 in Q2FY2015.Loan losses and provisions increased 71% to Rs 137 crore Q2FY2016 as against Rs 80 crore in Q2FY2015. The company made accelerated provisioning of Rs 31 crore in Q2FY16. Adjusted for this, loan losses and provisions growth is 33%.
Return on Assets and Return on Equity for Q2FY16 were 0.8% and 4.2% (not annualized) respectively. ROE is adjusted for capital raised by the company through QIP issue of Rs 1400 crore during Q1FY16.
Gross NPA and Net NPA as of 30 September 2015 stood at 1.67% and 0.46% respectively. The provisioning coverage ratio (PCR) stood at 73% as of 30 September 2015. Net NPA & provisioning coverage ratios have shown improvement from 0.48% and 67% respectively a year ago.Capital adequacy ratio (including Tier-II capital) stood at 20.49%. The tier I capital stood at 17.32%. The Company continues to be well capitalized to support its growth trajectory.
Two Wheeler financing business disbursed 139K accounts in the quarter (11% YoY). Three Wheeler financing business disbursed 8K accounts in the quarter (21% YoY). Consumer Durable business had a strong quarter disbursing 908 K accounts (36% YoY).Existing customer penetration continued to remain strong. The business launched its first co brand EMI Card proposition with Vijay Sales the second largest retailer in India.
Retailer finance business & extended warranty cross sell for consumer durable business remained strong, disbursing Rs 930 crore (83% YoY) and 45 crore. Extended warranty volume penetration crossed 16% in September 2015 from a low of 7.5% in the previous year.
Digital product finance business disbursed 126K accounts (102% YoY) during the quarter. Business crossed 50K accounts for the first time in the month of August 2015. Business is also exploring partnership opportunities with wireless carriers for financing packaged products.
Lifestyle finance business disbursed 38k accounts (92% YoY). The business continues to focus on identifying new categories like mattresses etc. New category additions should help the business accelerate growth in second half.
Salaried personal loans continued its strong run during the quarter and disbursed Rs 715 crore (88% YoY). The medium term strategy for the business is to grow direct business and deepen geographic penetration. Business added 15 new locations during the quarter to deepen its geographic footprint.Salaried home loans disbursed Rs 246 crore (119% YoY). The business launched Developer Finance product during the quarter. HFC license is expected further augment the delivery of its strategy.E-Commerce finance business launched in June 2015 with a ‘Seller Finance' offering for sellers of Flipkart and Snapdeal disbursed Rs 49 crore across more than 140 sellers in Q2.
Rural lending business continued to be the fastest growing business in Q2 as well, disbursing Rs 361 crore (284% YoY). The business added 18 new branches across states of Madhya Pradesh, Karnataka, Maharashtra and Gujarat during the quarter. The business is now present in 272 towns and villages in less than 3 years of its launch. The diversified business model pursued has delivered rich dividends.Retail construction equipment finance business now has receivables of less than Rs 90 crore. This business had 1,100 crore of receivables at its peak. Due to timely exit from the business, the company has managed to come out with no capital loss over the 5 years of this business. Incremental provisions are expected to be non-material and the business is expected to fully wind down in the next 9 months time.
Loan against Share business had a good quarter with a net assets addition of Rs 159 crore (80% YoY) catalyzed by growth in its retail segment.
Structured Finance, Financial Institutions (FIG) lending business & Light Engineering Vendor Financing business are beginning to grow well and disbursed Rs 310 crore in Q2 (Rs 195 crore in Structured Finance, Rs 105 crore in FIG & Rs 10 crore in Light Engineering).
Relationship management (RM) strategy launched this year has started to deliver on growth momentum. RM business disbursed Rs 376 crore in Q2 (61% YoY).
Fixed deposit business garnered Rs 413 crore of new fixed deposits during the quarter taking the total deposit book to Rs 1467 crore (233% YoY). The average deposit amount stood at 3.3 lakh with a weighted tenor of greater than 24 months.
Interest cost for the company continues to remain significantly lower amongst its NBFC peers. Borrowing mix at the quarter end stood at 47:48:05 between banks, money markets and retail deposits respectively.