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Posts in category Value Pickr

Deccan Cement : Dull company.Dull business.Big wealth creation opportunity (10-11-2015)

I also do not expect a good PE levels or PE expansion for cement companies going forward. Here are some other comparisons

Panyam is 157 crs (TTM, till Jun-15) sales with MCap of 158 crs.
Deccan is 562 crs (TTM) sales with MCap of 391 crs

Panyam has done 0.32 crs of profits (TTM, till Jun-15)
Deccan has done 48 crs of PAT (TTM, till Sep-15).

Panyam has D/E ratio of > 5 with -ve reserves (-1.76) on Equity of 16.02. Debts 3 yrs back was 65.28 crs (Mar-13) and currently it is 81.48 crs
Deccan has D/E ratio of 0.65 with reserves of ~160 crs on equity of 7 crs Debts 3 yrs back was 236 crs (Mar-13) and currently it is 160 crs

Panyam has started showing good numbers from last 1/2 qtrs where as deccan has done it for 6 straight quarters.

Rest of the comparison is done by hrfacebuk.

I for sure think that market will value Deccan more than Panyam which it is currently doing it and the gap may increase going forward if they both give same kind of performance going forward.

Disclosure: Had Panyam from 55 levels when one fund was selling but booked 75% profits and moved to Deccan Cements. This is not a long term hold is I believe due to cyclical nature. Will decide holding based on south cements conditions.

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Boom before Bust – when does the bubble burst? (10-11-2015)

Slight correction bro*:
Nifty p/e (for consolidated earnings) is abt 19. Read the post from krishnaraj -

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Boom before Bust – when does the bubble burst? (10-11-2015)

Hi,
Check this link. http://www.motilaloswalmf.com/plans/movi-pack-plan
This also gives us a rough guidance that mr.Market is heating up or cooling off. The value index looks to be quite useful.

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MPS Ltd (10-11-2015)

Sreekanth

Quite the contrary - growth is not what people chase always. Look at infy - they do acquisitions to get into a domain and scale that up using their SG & A capabilities. Happens all the time - you take someone with a good domain understanding and IP and allow for your sales force to sell it globally and it becomes a low risk, easy to integrate acquisition.

It all comes back to how well MPS can deliver steady growth of 10-15 % without sacrificing profitability.

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Deccan Cement : Dull company.Dull business.Big wealth creation opportunity (10-11-2015)

Cement stocks are normally not valued on a PE basis. And are valued on an EV/Ebitda basis + Ev/Tonne basis (which is compared with EV/Tonne to set up a new plant). Also good to apply a discount on both the above parameters for a small capacity company (discount on say for e.g. to EV/tonne to set up a new plant). Current EV/Ebitda and EV/tonne should be compared with the above discounted value to arrive at a conclusion if it is undervalued.

Add to that other things like amount of debt component in EV. So company with minimal debt in EV is a better choice. Also add better to have a player with good margins and a company that is reducing debt constantly etc.,. (Deccan has been reducing debt constantly). So say a company that is reducing debt constantly would have a falling EV which will make its valuation better and this would be compensated by a rise in market cap of the company.

Throw in the scope of ramping up capacity utilisation depending upon current capacity utilisation.

Other things like WC cycle etc.,. can be considered as well while comparing with other players. How does receivable picture, credit period given, cash flows etc.,. look on comparison?

What is the current capacity of Panyam vis-a-vis Deccan or NCL, etc.,.?

  • How does Panyam fare with Deccan, NCL or other small players on above
    parameters?

Stating the above on the basis of my limited understanding.

Regards.

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Deccan Cement : Dull company.Dull business.Big wealth creation opportunity (10-11-2015)

Check the performance of these small companies during the times of low demand. They were squashed. High debt, low margins and poor mgmt (main reason). It is not the company which has outperformed or has made a turnaround - its the industry in south which has improved. Let these companies flourish for sometime.

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Deccan Cement : Dull company.Dull business.Big wealth creation opportunity (10-11-2015)

Deccan Financials -

EPS FY 16 (E) - 90-95 / -
CMP - 560/-
P/E - 6-6.15/-

Panyam Cements -

EPS FY 16(E) - 20-22/-
CMP - 91/- (Today's Open).
P/E - 4.55 @ 20 EPS (E).

Clearly undervalued.

Further, answering to your concerns raised on rise of Deccan and other companies - are you expecting that the stock will command PE more than 6 or 7 ???
Its really a fancy story out there which is not sustainable. Its good to bet, earn and come out. Its not like ultra tech which commands PE of 38 !!

I hope I have answered to all your concerns raised above.

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Boom before Bust – when does the bubble burst? (10-11-2015)

As of today, the P/E, P/B and Div. Yield of Nifty are 21.41, 3.18 and 1.44 respectively.
Above average, but surely not extreme valuations. However, if we are in a bull phase then a bear phase would surely follow, if history rhymes. Let's use this thread to record the tell-tale signs of a bull market gaining momentum. May be we can look back after 7-10 years and come out wiser. Surely everyone would want to learn how to keep dancing as long as possible before the music stops? Would request you to share over here the tips your panwaala gives you (when he does) :smile:, without adding your own tips.

I'll start by the following e-mail from ShareKhan:

Hi ,
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Deccan Cement : Dull company.Dull business.Big wealth creation opportunity (10-11-2015)

Futuristic thinking without any material/rationale provided. Can you demystify both the statements?

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Suven Life Sciences – Embedded triggers (10-11-2015)

Q2 FY15 results (comparision with Q2 FY14):

Revenue: 117 cr. v/s 140 cr.
PAT: 24.7 cr. v/s 24.8 cr.
EPS: 1.94 v/s 2.13

Results more or less on expected lines, don't understand why management compares with Q1FY15 to give good picture even though they had given such prediction.

Facility at Vishakhapatnam has commenced operations.

Discl.: Sold off few weeks back as I felt there was no MoS. Remain bullish as ever on the business.

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