Had some discussion with Investor Relations of Pokarna about questions that I had posted here earlier.
At this point of time they are sourcing all quartz raw material from Chettinad and the he wasnt sure if they had any written contract with the supplier. I asked what if there is any interruption in supply considering the background of Chettinad, he spoke very positively about Chettinad and sounded like they are working with them for a while and are very happy, he spoke as if like its their own mine, tried to assure it will never be an issue. I wasnt that convinced though. He also said they are trying their best to get the license for their quartz mine.
He wasnt sure if there is any other Quartz stone competitor from India that exports to US. He said they should be the only one.
The Capacity for Quartz is 6 lac Sqr meter. Surprisingly, he said Quartz stone capacity is running at 80% in last 2-3 months.
He couldn't tell me which dealer is sourcing more and more in recent quarters, he said its confidential and couldn't share.
Having found all this info, I continue to work on this, and gather more and more info from from their dealers. Early this week I spoke to one of the Slab store of Daltile in Anaheim California, the store manager said 90% of their Quartz slabs come from Quantra. And to be honest, his feedback was too overwhelming to believe. He spoke very high of Quanta's quality/ colors/size options. Then I asked him if they are buying more and more from them in last few quarters, he confirmed their sourcing is increased and sounded very confident, he also said their Quartz slab business is going to grow in upper 20%.
If we map all the data of spike in Quartz Slab imports from India to USA, the capacity running at 80% (Quartz) and the Daltile's confirmation, Pokarna's 2nd quarter has to be extremely good.
I needed some help from the guys in Dallas Texas area to speak to Daltile Corporate office and find out info matches with the data I gathered from their Store in California (since I am in eastern zone time, the corporate office is generally closed by the time I get home, they aren't open on week ends).
Posts in category Value Pickr
POKARNA LTD ( Stock opportunities ) (09-10-2015)
Orient Bell – turning around? (08-10-2015)
Orient Bell manufactures Ceramic tiles. It has the second largest in-house capacity of 24 msm. It bought Bell ceramics a couple of years ago. This acquisition increased the company's debt dramatically.
• Market cap = 160cr.
• Average operating cash flow (4 years) = 50cr
• Promoter holding = 74%
• Working capital number has reduced 95cr. to 77cr in 4 years
• Debt has reduced from 182cr. to 139cr. in 4 years
Positives
1. Moving up the value chain - The company is planning to open 'Orient Bell' stores and become a branded player.
2. The acquisition has dramatically increased its distribution network. As of now it has 4500 dealers, 120 specialized stores and 25 depots
3. Profits have been subdued as the company is investing heavily in re-branding, store opening and re paying its debt
4. OBL plans to selectively outsource manufacturing and increase its focus on advertising. This will be done for the high value digital and vitrified tiles
5. Company has applied for 4 patents
6. Trend from unorganized to organized (Moved from 60% unorganized to 50% unorganized in last 3 years)
7. Crisil has marginally improved its debt ratings to BBB+ stable. IN fact OBL plans to repay its majority long term debt in 2 years
8. In the last quarter sales volume has increased by 11%, which shows a fundamental demand
Negatives
1. Demand affected by construction activities
2. Competition from imports = But China consumes most of what it produces domestically. Also OBL is heavily investing in point of sale advertising, strong sales force and new designs
Disclosure: I hold
Neo Corp-Growth Machine in Technical Textiles(CAGR 35%)! (08-10-2015)
Hello All,
Neo Corp International is a Technical Textile Company and it’s the leader in this Industry in India, which worth looking for the below reasons. Company is ISO 9001:2008 , ISO 22000:2005 & BRC/IOP certified.
1) It has very high CAGR growth rate of 38% for last 3 years and 34% for last 5 years which is huge and this attracts attention for this single reason.
2) NP CAGR is also good, which is 22% for last 3 years and 27% for last 5 years.
3)Although the promoter holding is less (24.11%) but Promoters have bought the shares from open market and increased their stake from 19 to 24% in last few quarters and pledged shares % came down in last few quarters.
4) Consolidated P/E is only 2.5, which is very much cheaper. A good holding company “VLS Finance Limited” (who has discovered gems like “Relaxo”) is silently accumulating the shares in this company and increased their holding from about 3% to 9-10% in last 1year. And it is still accumulating the shares from open market (please refer to the latest SAST updates in BSE)
3) OPM is about 11% and NPM is about 4 %( which would increase dramatically once debt is reduced).
4) ROCE is 20.58%, which is good considering the Textiles industry.
5) Company’s immediate future growth is very much visible with the company’s entrance to South America and overall demand outlook in world and India. The textiles business is going to be of big size in the world and going to have market share of 60% of overall textiles Industry.
Please refer to the well written Annual Report for further details on the business outlook and company’s operation (Company has installed SAP ERP for the better business operation maintenance which will show result in long term and also the innovative approach has started paying off with new and innovative products being made, company recognized as “Export house” by govt. of India for huge contribution in exports).
Risks/Negatives:
1) Promoter/management quality is not so good, not shareholder friendly, they declare dividend but never gets credited to the bank account (probably they send cheques but do not reach shareholders’ home)-any further details on promoter/management is welcome.
2) Historically IT dept raided them twice the most recent being in Feb 2015. Although the company mentioned that nothing incriminating docs/money found during raid but the IT raid itself a bad thing for shareholders. Most probably they will come clean and Tax pay % looks okay.
3) Recently Swiss govt. published name of Neo in the black money account holders’ list, however company clearly informed BSE that the account was opened for GDR but closed a long time ago. So this is not a problem but again these kinds of news hurt investors’ sentiment.
Future Outlook:
With good capacity, innovation power and growth initiative taken in South America and good demand of Technical textiles makes sure that company’s revenue is all set to grow at least CAGR 25% in next 2-3 years. If the reduce debt then NPM will also increase. So overall it looks like a growth machine.
Business operation wise it is all set to improve day by day , however company needs to improve financially and debt reduction should happen in near future.
As far as stock price movement is concerned, its fair value is around INR 70-80 , it is trading around INR 40 , so soon or later the stock price is going to increase to get its fair value and with big players like “VLS Finance” increasing their stake consistently , stock should get fair value sooner.
Immediate triggers:
1)Company is going to issue Convertible Warrants on preferential basis soon(actually it was approved by shareholder to issue them at INR 65 around Feb-March but for technical reason it got postponed and that should be done in this FY and is around the corner.
2) As the company’s revenue is growing at brisk pace, “Q2” result should be very good and that should help stock price moving higher.
3) Stock was trading on NSE via MPSE(Madhyapradesh Stock Exchange) but as per new rule of NSE, it is not allowed now. This has caused several companies to stop the trading on NSE. Our Neo has submitted the necessary documents to NSE and it should start trading on NSE as well which will increase the liquidity and bug players comfortable to enter this stock to unlock the value.
4) The stock got hammered recently to its name in the Swiss govt.’s list for black money , however the company has cleared the air and the account has been closed long time ago and also company has not file any case against Swiss govt. for disclosing the information so that Indian IT dept can access all information and Neo can come clean. This proves that nothing wrong in Neo with respect to black money and official announcement of this by IT dept should help stock getting strength.
5)Technicals: Although I do not have much knowledge on technical but high deliver % and high volume from this week suggests that any of the good news(may be Warrant issue) is around the corner and some big guys has taken informed decision and accumulating the shares of this company(could be "VLS Finance" again), so technically it should look good(technical experts here please give more input on technicals so that we can estimate immediate trend of this stock).
Company website: http://www.neocorp.co.in/
Neo Corp’s Official blog: https://neocorplimited.wordpress.com/
Chartered Accountant blog covering Neo Corp:
"http://www.charteredinvestor.blogspot.com/2015/04/neo-corp-international-ltd.html" (not allowing to post more than 2 links, so putting it within quote)
My sincere request to all the senior ValuePickrs(specially Hemant sir, Donald sir and others) to please check this company, study this company, understand their business and take this discussion go forward with healthy discussion so that we can understand the future potential of this company. Any healthy discussion/argument is welcome.
Disclosure: Invested.
My richdreamz portfolio – visit my portfolio to learn together! (08-10-2015)
here you go...
In fact this was key in building up my position aggressively.
My richdreamz portfolio – visit my portfolio to learn together! (08-10-2015)
hi, can you let us know about the source of that info of PI Industries?
HCL Infosystems (08-10-2015)
Yesterday Radhakishan Damani bought HCL infosystems. His investment arm, Derive Investments, bought 28,56,747 shares on the NSE at Rs. 48.90 each and 11,63,680 shares on the BSE at Rs. 49.85 each. By the end of the day, Radhakishan Damani had pocketed 40,20,427 shares by shelling out about Rs. 19 crore.
Disc: Not invested.
Vidhi Dyestuff Management Meet (08-10-2015)
Hi Nikhil,
Thanks for pointing out on trading sales being chemicals and not the end products. I agree with you that the trading sales is not the final product but RM or intermediate one as mentioned in AR annexures. I had missed out that somehow.
Regarding natural colors capacity, my central point is that even if VDSL ventures into natural colors on small scale (as compared to synthetic colors) it can contribute handsomely to the top line. I do recognize that the processing facility may be different from the synthetic color, however if the company is able to develop products and market it, there exist a significant possibility of company setting up capacity and capitalize on this opportunity.
Shilpa Medicare -Racing away on the Oncology API highway! (08-10-2015)
As emphasised time & again, Management Q&As at VP should not be seen as Recommendations. These are reproductions of discussions with Management - where the accent is on understanding the business, the competitive intensity/advantages, longevity & sustainability of the business and the Managements preparedness/plans ofr the medium to longer term.
Newcomers to VP, please do not jump to any other conclusions. Valuations is an entirely different game and current Shilpa's valuation look rich - especially as the next couple of years may be flattish.
Members also please refrain from requesting Entry/Exit targets (directly or indirectly) from other Members posting. SEBI Analyst regulations pretty clearly restrict that in public forums.
You might have noticed, as per Team VP Code of Conduct all above involved in the preparation and posting of Shilpa Management Q&A have disclosed details of their positions, and confirm that there have been no transactions in last 30 days (before the publication) by them. This will be a standard requirement of all Top Contributors at VP whenever they participate in creation of Stock Story, Management Q&A, Field Reports, or make any detailed post at VP
Cafe Coffee Day – Will you Date? (08-10-2015)
Found this on a moneycontrol analysis:
In Financial Years 2012, 2013 and 2014 and the nine month period ended December 31, 2014, 36, 42, 44, and 175 cafés were closed down. These closures were owing to a variety of business related factors such as non-renewal of leases, low revenue generation from outlets and unfavourable location of outlets. CCD expects to continue to close anywhere between 25 to 40 outlets every year.
I am wondering if the 175 cafe closure at the end is important. In effect, they are opening 215 cafes with the IPO proceeds (after they closed 175 in a year :P).
Discl.: Based on what I am reading here and other sites, I will definitely not invest in a loss-making company when there are far better companies in India that will benefit when the economy turns around.
Shilpa Medicare -Racing away on the Oncology API highway! (08-10-2015)
Hi Guys,
Delighted to bring to you Shilpa Medicare 2015 AGM Management Q&A.
What is even more heartening for us is that the next rung of VP Contributors are now picking up the baton, and completing fantastic runs!
This detailed Q&A has been entirely planned and put together (queries compiled, strategised and painstakingly reproduced) by Ankit Gupta and Ananth Shenoy, supported by Ayush and other VP contributors.
We are sure this will help bring everyone on the same page on Shilpa quickly. Hoping to see folks joining in and focusing on "real" dissection of business.
Cheers