JSW has shown a QoQ dip in revenue and profits. Not sure about the reason.
Posts tagged Value Pickr
Caplin Point Laboratories (04-11-2023)
Seems something amiss here. Q1 24 was just 13 %. I don’t think Q2 is going to be any different looking at their Q1 Conference call. Some uptick expected in Q3 and Q4. But 40 % in FY 24 seems almost unpractical. They were reluctant to give any guidance during conference call.
I don’t think this guidance was there in investor presentation when published in August 23.
Any body knows more about it?. Likely to get cleared in Q2 con call.
SBI Cards & Payment Services Limited (04-11-2023)
I feel companies wont give up easily on cards business as there are many people in rural areas who are very disciplined in paying dues than urban customers. Things have changed now… Rural economy is slowly improving with penetration of both shopping malls and online delivery. India still has lot of people who dont have cards – Ofcourse it comes with certain % downside risk of defaulting payments.
Sandhar Technologies – An emerging market leader (04-11-2023)
Latest rating update from India rating and research
The most interesting set of information for me is –
-
Capex to Support Incremental Scale: STL is incurring a INR5,490-million capex over FY22-FY24 (FY23: INR2,566 million; FY22: INR2,970 million) towards increasing products to support overall increase in its revenue.
-
The company’s all projects put together have the potential to generate incremental revenue of INR20,000 million-25,000 million, thus increasing the scale of operations significantly; although the ramp-up would be gradual.
-
This implies 4X asset turnover for expansion
-
Ind-Ra expects STL’s revenue to remain INR32,000 million-35,000 million in FY24, To clock the 25% sales growth target that the management have mentioned – FY24 turnover should exceed the above rating agency’s estimate to clock about INR36,000 million revenue
Disc-Invested in small quantity. Transactions in past month
Valuepickr goes Europe (03-11-2023)
Hello everyone, please add me from Germany Stuttgart +491733767725
Krishca Ltd : A SME offering steel strapping Solution (03-11-2023)
I don’t think the result have anything to do with the correction. As stock corrected even before the result got published.
Book Summary – Joys of Compounding by Gautam Baid (03-11-2023)
Finished reading this book. It is full of mental models’ and thoughts about different mindsets. I love the compilation of thoughts and quotes from some of the best investors of all time
Companies with 20%+ growth guidance for next few years (03-11-2023)
MTAR Tech is guiding for 3000cr revenue in FY28 from 573cr in FY23. This is 5x growth in 5 years, i.e. 39% CAGR growth in revenues. Source is Q4FY23, Q1 FY24 concall.
They’ve discussed triggers for each business vertical in detail in Annual Report for FY23. Interested readers can check it out.
Disc: Holding and biased
Praveen’s Information Attic (Obervations, Lessons, Thoughts) (03-11-2023)
P/E re/derating is a double edged sword
I want to put down my thoughts on some point that I think will effect an investors returns a lot. That is P/E rerating and derating.
Let’s take a stock at 100rs and 20x P/E in Fy23 end with EPS of 5. Let’s assume we expect profit growth of 20% and the P/E to rerate downwards or upwards in FY24. The following scenario may occur
| Scenario | EPS | P/E at FY24 | Stock Price in FY24 | Return |
|---|---|---|---|---|
| same P/E | 60 | 20 | 1200 | 20% |
| P/E rerating | 60 | 25 | 1500 | 50% |
| P/E derating | 60 | 15 | 900 | -10% |
| Slight rerating | 60 | 22 | 1320 | 32% |
| Slight derating | 60 | 18 | 1080 | 8% |
What does this tell me:
- Try to be in a scenario of rerating as far as possible
- Even though there doesn’t seem to be much difference in 20 P/E and 25 P/E, the returns are huge if we have a short term view. So, try to take advantage of P/E rerating whenever possible
- One may achieve point 2 by following the trend (technicals) define the exit from a stock rather than exiting once it reaches the P/E you think is fair (there’s not much difference between 20 and 25 P/E as per me). So, hold it and take extra returns
Note:
One may note that the rerating or derating effect is bigger, as I considered a 1 year time frame. But, the difference may not be as big if we consider a view of 4-5 years. But market has lot of cycles, and the rerating and derating can happen in just a few weeks to few months
Example: I’d like to explain one of my current dilemma as an example for this. You may know that MCX is recently gowing through a low earning phase because of high software charges which would normalize from Q4 FY24 onwards. So, I made a calculation of how much return I can expect from MCX by FY25 end. Let’s look at the following scenarios
I consider P/E to be in the range of 35-45x, as this is peers CAMS, CDSL trade at 40,50x P/E and the growth rates are better for MCX
| Market cap in FY23 | Profit in FY25 | P/E | Market cap | CAGR return in next 1.5 years |
|---|---|---|---|---|
| 13000 | 425 | 35 | 14875 | 9.4% |
| 13000 | 425 | 40 | 17000 | 19.6% |
| 13000 | 425 | 45 | 19125 | 29.4% |
The data says the estimated returns can vary from 9.4% to 29.4% based on what P/E i think is fair. And 9% is very poor return and 29.4% is top notch and the the difference is just P/E change from 35x to 45x
KTA:
- Don’t exit a stock just because it’s reached a P/E that you estimated. After all there is not fair value but there’s a fair band
- Book partial profits or take help of technicals to make exit (for that matter even entry) decisions
- If you have few stocks in P/F you returns may vary highly because of P/E rerating/derating, but if you have 15-25 stock PF, the effect of P/E on the total PF returns may not be significant
Disc: May have postion in the cos discussed
Please feel free to share your experiences of how P/E rerating and derating effected your returns or missed out on high returns as you thought the P/E has reached a fair band
Godawari Power – Any Trackers? (03-11-2023)
(post deleted by author)