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Posts in category Value Pickr

Canfin homes ltd (03-10-2015)

This looks like a no brainer stock, with everything going right for the stock and company

  1. Q1 result was superb as 70 % inc in profit, all four quarters are expected to be like this good.
  2. RBI rate cutting will further increase the profitability with NCD/CP financing increasing qoq
  3. NIMs will further improve as year passes by, cost of funds decreasing
  4. Stock is still illiquid and under owned/undiscovered to some extent by institutions
  5. Any fund getting in will lead to further rerating
  6. A growth of 30/35 % in itself is a huge growth with NIL NPA
  7. RBI reducing risk wt for housing loans will further help. Avg ticket size of 18 lakh is another positive.

Disc : invested

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GRUH Finance – mini HDFC (03-10-2015)

Hitesh - can u pls have a look at the below chart of Gruh. Does it looks like a flag breakout pattern ? if yes what can be possible targets ?

Oct 3-GRUH FINANCE LTD.-800x600.png1120x545 87.5 KB

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Alembic & Alembic Pharma (03-10-2015)

@pikrohit ... In my mental model the EPS of 30 for FY16 is given (though we can't take anything for granted till it actually gets reported wink), what I will be looking on EPS front is that how far on north or south of 40 they will end up, the Q2 results should be able to give a good idea about this.

What is working in favor of both Alembic and Torrent now is that they were slow and probably late to make entry into US and historically their US business has been small and that has set up a small base. e.g. US revenue of torrent were 134 MUSD and Alembic had international generic (inc US) revenue of 80 M USD for FY15. Now revenue from single molecule (Abilify) in FY16 will most likely exceed their entire full year FY15 revenue from US generic and will give a big swing to both topline and even more bigger swing to bottomline as contribution to bottomline will be much higher due to lesser price erosion in Abilify because of limited competition compared to a normal generic. On top of abilify we will have Detrol and probably Nexium for Torrent and Celebrex for Alembic plus a robust base business from India and other molecules from international generics.
At a molecule level abilify is a one off opportunity but at the company level both Alembic and Torrent have good product pipeline which can provide similar upside giving decent overall CAGR even after considering abilify effect.
Another company in similar situation is Cipla where a single molecule (Nexium) in US has provided a huge upswing to both top line and bottomline (despite Cipla having a much bigger size) as is evident from Q1 results.

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Building of a Fresh Portfolio (03-10-2015)

Hi Prakash,
Thanks for the info. Let us see how it pans out to be. May be someday I may get it available cheap.

Hi Narinder,
Thanks for your views. Regarding Pharma, I have very limited / almost nil knowledge of the industry / products, etc. Though I look forward to it and shall try understanding them. Regarding finance sector, I am looking into a few banks. Shall update.
For investing in great companies, I shall never invest at such high valuations. Great Company + Great Price = Mediocre returns. This is what I follow. Look at HUL, since last 3-4 years. It has not appreciated that much, though it does have a solid business. There are other examples as well. Stock prices and markets are slaves of earnings in the longer term. You may argue about Page. However it is a different story, it has been in a very high growth trajectory in the past plus an efficient business model. However, it is valued at around 70 PE!! means the market is expecting 70% growth, which according to me is very difficult to achieve over a long period of time.
Anyways, you may have different views. This is why it is called Markets. Thanks again. smile

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GRUH Finance – mini HDFC (03-10-2015)

Income group Monthly expenditure on housing Est. no. of household Housing shortage Share of shortage
( Rs ) ( million ) ( million ) ( % )
Economically weak 0 - 3300 17.5 17.20 98.2
Lower income group 3301 -7300 27.5 1.50 5.4
Middle income group 7301 - 14500 9.9 0.04 0.2
Higher income group  14500 7 - -
Source : Report of technical group ( 12th 5 year plan ) on housing shortage

Above table shows the shortage of affortable housing and represents the enormous opportunity present and everybody has space to grow.

But instead of growth by new companies what would be important that which HFC's is able to maintain its asset quality.

Obtaining market share at the cost of assest quality is not advisable.

As well said by warren Buffet ' When the tide turn off then you come to know who is sailing naked '

For Gruh finance the LTV ( loan to value ) is 65% - 75% max. which shows the conservative mindset of the management and margin of safety in case of default, while incase of the HFC LTV is generally 85%.

For last 5 years for Gruh FY10-FY14 gross NPA's has come down from 1.11% to 0.27%.

While for Repco for June FY14 the gross NPA was 2.5%.

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The new Annual Information Memorandum (AIM) Document by SEBI (03-10-2015)

Hello Guys,

I was looking for an equivalent of "10K filings (US)" & found out that SEBI was planning to introduce a new document called The new Annual Information Memorandum (AIM) in 2014.

This document is supposed to give investors a more insight than a usual annual report does & should be quiet useful for us.

Source http://www.livemint.com/Money/ZNTbe0IShW3aDIAVgDY6dJ/Sebi-tells-listed-firms-told-to-provide-annual-information-m.html

However I couldn't find AIM document of any Indian companies. Also I was looking for SEC 10Q filing (more company details on quarterly levels) equivalents in India but no luck with that as well.

Some one has seen it for any Indian companies ?

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Smruthi Organics (02-10-2015)

Rite now there is no strike...In Q1 strike was there for 1-2 days..
IN Q1 they were just able to breakeven (15 lac loss)

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My richdreamz portfolio – visit my portfolio to learn together! (02-10-2015)

Yes, HF exposure is high and I'm working to bring this down. Recent adjustments made as indicated earlier in this thread are my increased exposure to PI Industries and MPS and since I do not have any extra money, I have moved some money off HFCs into PI and MPS. I will update the PF once I'm done with the adjustments. But Repco will have highest allocation in my PF at least for next 2 years.

No Pharma as I do not understand the products (for example, Torrent has this Abilify recently, but not sure what raw materials go into making it, what is the demand, how to find the next product company will make etc.) though broadly I very well understand what the Indian businesses do (APIs/Formulations/CRAMS etc). But Pharma is a very big opportunity unfortunately I will have to give it a pass. As Buffett says, I do not have to make money off every opportunity, I'm fine with what I understand. But if I can gain enough conviction on a pharma company, I will surely buy into it.

Exactly for the reason you have mentioned, I have invested into MPS for that ALPHA. My PF is a bit large, so safety is prime importance and then comes Alpha, though recently I'm trying to be a bit brave for Alpha.

Thanks and please do visit my PF once in a while for your suggestions.

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Alembic & Alembic Pharma (02-10-2015)

Zolmitriptan (gZomig) is used in the acute treatment of migraine attacks. The patent expired in 2012 and has lot of competitors like Sun, Glenmark, Mylan and Teva already present in the market. Seems to be a 'me too' kind of product. It had US sales of USD 163 million pre generic.

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My richdreamz portfolio – visit my portfolio to learn together! (02-10-2015)

i see you have 60% exposure to hf . all your 4 major bets are in high quality business.I see no threat of capital erosion rather only risk is of alpha.You have no pharma exposure i see was this a conscious decision.

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