Posts in category All News
Why there is no need for a cap on airfares (21-09-2015)
Index heavyweights under pressure (21-09-2015)
Granules India Ltd (21-09-2015)
Assuming an EPS growth of 30% over FY 15 EPS of 4.5 (as per Annual Report) we get an EPS of 5.85 for FY16E. I have not accounted an equity dilution of about 10% over the next 18 months due to promoter warrants. Let's assume EPS will even grow higher to negate the equity dilution.
At the current price of 130, it is trading at 22 times FY 16 EPS and 29 times current year EPS. For a company with no free cash flow, Capex intensive, relatively high D/E is it not expensive? The price is running ahead of its fundamentals?
Compared to this, Repco and PI are trading at similar valuations (a bit higher) and have better visibility and financial metrics, cash flows, better promoter (?). With this logic I'm not looking into Granules besides not being convinced about promoter somehow (I could be proven wrong just like many times before).
Disclosure: Not invested in Granules but invested in Repco and PI Ind - so holding bias could be masking my thinking!
Supreme Industries (21-09-2015)
Key highlights of AGM by Capital Mkt
Despite challenges and severe volatility, Supreme Industries recorded a volume growth stood at 10% to 275463 MT and value growth stood at 7% at Rs 3918 crore for full year ended June'15. Diverse revenue model with large product portfolio across 5 business verticals namely, Plastic piping, consumer products, packaging products, industrial products and composite products, also helped in sailing through the tough times.The company has total installed capacity of around 4.5 lakh MT with 2 green field capacities coming up by Oct'15, which will lead to a total of 5 lakh MT of installed capacity.
Domestic piping market is expected to be around Rs 22500 crore and about 70% is organized market. The organized share is growing faster and tapping more market share from unorganized players. The company has a 14% market share in the organized domestic plastic piping market in India.Consumer products business market is expected to be around Rs 2900 crore with Supreme's share of around 9.8%. The company is a one stop solution of entire range of furniture's made from polymers.The company has a 15% market share in industrial products segment which is about Rs 1600 crore market in India.
Poly vinyl chloride resin, polyethylene, and polypropylene are the major raw materials for the company, which are crude derivatives. These raw materials are volatile and thus the margins of the company fluctuate every quarter due to inventory positions. As per the management, sustainable margin on a 1ong term basis is around 14% for the company. In Supreme Petro, OPM of around 7% is a sustainable margin for the company going forward.Management expects the volatility of raw material prices to come down from Dec'15 quarter onwards, as in this volatile environment, neither the buyer nor the seller gets benefit. Going forward management expects things should remain range bound for some time, which will be good for the whole industry.The company is also the largest supplier to the soft drink industry.
Sale of value added products stood at 34.20% Vs 32.30% on YoY basis.Of the total saleable area of 2.8 lakh sq. feet of Andheri Commercial complex project, about 2.1 lakh sq. feet area is already sold and the balance area of about 0.7 lakh sq. feet is expected to be sold in next 12 months at price of around Rs 125 crore.The company also has proposed to change the financial year to March and thus next year will be a period of 9 months for the company ended March 2016.Overall, company expects to grow in double digit in volume terms for 9 months ended Mar'16, however it's difficult to gauge a picture on value wise. Long term target in next 4-5 years is to reach a turnover of around Rs 8500 crore by say 2020.
VOLTAS HOLD OR SELL (21-09-2015)
I DONT MIND HOLDING IT FOR A LONG TERM. ANY REASON FOR THE CURRENT DOWNFALL ?