Dangerous stock to be invested in.
Surprisingly the stock has been a 15 bagger in 2 years irrespective of such a terrible balance sheet.
How can people get so inspired by the turn around story that it still is intact at an excessively overstretched PE=312.78
If investors keep pumping in money blindly like this definitely its debt will continue to reduce but is that doing to do any good?
Posts tagged Value Pickr
Morepen Labs – a believable turnaround story (22-12-2015)
My long term portfolio (22-12-2015)
Thanks @vijayM and @giridesh3 .
yes , the weight on pharma is quite high as i am quite bullish on small cap , well managed pharma companies due to the patent expiries in 2017 and more so on granules as it has least USFDA worries . i did not find time to look at the recent observations (3) on granules recently an shall do it this weekend.
the other sector i believe will grow in a country like india is HFCs and well managed companies shall have a great time for the next 3 years at least. that is why the weightage on these two sectors.
willing to add shilpa and repco on dips. suggestions invited ....
two shares tracking closely and shall add when fully convinced ;
oriental carbon and chemicals
kitex garments.
there is a thread on both the above shares which i have read , but inspite would like suggestions if any..
Thanks
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
Management quality is probably worth looking if you are looking at a structural growth story..this looks like one of those mispriced one and has to be treated accordingly..
PS - disclosure given above
Automated Stock Analyzer (22-12-2015)
Many thanks. Will take this up.
Automated Stock Analyzer (22-12-2015)
EVA Basics
http://www.investopedia.com/terms/e/eva.asp
EVA Example.xls (177.5 KB)
By Intrinsic value- i mean a section which clearly shows valuation/share by graham, dividend growth, PE, DCF in one place so that a range of valuations can be seen.....eg. airtel valuation range 250 to 350 per share against current price of 320.........something like this
Introduction & Portfolio (22-12-2015)
Best way is to know from your network. That is value of groups like ValuePickr. Also read 5 year ARs and see if they walk the talk and level of disclosers etc. E.g. except couple of companies many Pharma companies do not disclose adequately.
But best way is still from other knowledgeable people. Scuttlebutt approach works best.
In India the management quality is most important variable in my own experience. My attitude now is... there are more than 5000 companies listed. I can always find few high quality business with decent management and decent valuation. We are spoilt for a choice in Indian market. Never lower your standards. It is not needed
Is there any good on-line library to borrow books related to investing (22-12-2015)
I am not going to cover Ben Graham books. I am assuming you know all that because you are part of ValuePickr
- The most important thing by Howard Marks
- Margin of safety by Seth Klarman
- Peter lynch books
- Essays of warren Buffet
- Warren Buffet way by Hangstrom
- Private Capital by Guy Thomas (Strongly recommended for private investors)
- Both Books by Bruce Greenwald
- The Manual of Ideas
- The art of value investing
- Financial shenanigans
- Creative cashflow accounting
- Money masters of our time by john train
- Competitive advantage and competitive strategy by Michel porter
- Accounting for value by Stephen Penmen
- The devil takes hind side
- The 52 week Low formula
- Contrarian investment strategies by Dreman
- Common stock uncommon profits by Philip Fisher
- The five rules for successful stock investing by Pat Dorsey
- What works on wall street
......and so many more.....
Enjoy reading and learning some thing new every day.... till very end!
Emkay taps and tools (22-12-2015)
Fair point Anant. Its a healthy debate. I was just sharing the info I read on
MPS Ltd (22-12-2015)
Much depends on the profile of acquisitions, but let me make some things clear :
(1) Aggressive inorganic route is only preferred when organically a company is not able to grow comfortably or you have some serious gaps in your offerings vis-a-vis competition. Relative to inorganic route, organic route is always better as such high inorganic quantum, ~70-80 % of existing scale, always brings with itself integration and other issues which if not handled properly can backfire severely on you.
(2) Since you have asked me, if I was in the management, I will definitely be concerned of lack of organic growth and it has to start somewhere for my company to sustain in the long run (unless I want to build the company in medium term and then sell it off). Also, I would not be atall hesitant to admit in front of investors/analysts, who are much more knowledgeable today and have varied data points in their hands to track, that company is falling behind vis-a-vis competition (reasonable indian peers) and these are the problems and we are taking these steps to resolve the problems.
(3) I would not have raised 150 cr. funds for inorganic expansion without concrete proposals in hand unless I was worried of my own companies' shares valuations by thinking that when concrete proposals do materialise I might not get the same valuation I am getting today.
(4) Its not easy to find everytime a company like Macmillan at the valuation at which it was acquired. Remember, even before the acquisition by Mr. Arora, MPS (under Macmillan) was a great company operating at ~45-50 % margins ; it was loss-making acquisitions and serious overheads at senior level that led to the debacle. This is not to take away the credit from Mr. Arora for the way he quickly made the turnaround possible -- if it was some other guy than him this could have been a daunting task -- But, when we look for inorganic route, we need to be practical as in this dynamic world, time lost is opportunity lost.
(5) Although many here might not agree with me, but, I still feel that no rationale management will face another AGM by raising before one and a half years, 150 cr. for acquisitions and not making any use of that funds. If beforehand at the time of raising funds, proper timeline was given asto within two years we will acquire then it was ok but post raising funds everytime management has said "we want to seal the deal soon and negotiations are going on". I feel that we are very near to some sort of announcement on this front and sincerely hope that its not a token decision.
(6) With so much delay already made post raising of funds, I would prefer acquisition for expansion of platform business rather than in plain outsourcing space. However, management is on record stating that they will prefer the acquisitions that are blessed by their clients but such blessings might not be possible in platform space.
(7) In whichever space the acquisition is, it should not be heavy loss making acquisition (as Macmillan did), as it will be foolish to think that everytime a Macmillan like turnaround is possible even from the same guy. As I said before, Macmillan was a unique case where its inherent strength were exceptional ; such cases are rare and not many.
(8) In plain outsourcing play, low margin low debt acquisition will be best but that might not come cheap. As management I need to understand my company's strength and that is robust cash generation in the absence of aggressive macro (industry) growth. I will give this factor utmost priority while making any acquisition.
Sreekanth....let's keep our fingers crossed and hope for the best.
Rgds.
Discl. - Invested in MPS . No trading in last 30 days.
Nandan Denim Limited – No. 1 position in denim play (22-12-2015)
Hi Janarthanan,
Thanks for appreciation. My answers to your queries -
1). EPS valuation of 18.11 made by me was before I met the mgmt. Till then I just had a talk with IR over phone. Once i met the mgmt - Govind Sharda - he told that there was some delay in the expansion plans which will reduce the projected EPS of 18.11 to some extent. But, again he told that the backward integration is going to help in a big way to increase the EPS. (Backward integration was planned to get finished by end of financial year - which we completed early). He did not tell exact figure. But, we might think to have EPS between 15-18 (18 has a high probability).
2). Sales will be 25% YOY for next 5 years atleast. They have plans to set up processing unit - hiring fashion designers, adding value added products in the portfolio, which will give them entry into global markets. Think when the domestic denim industry is expected to grow at 15-18% CAGR, Nandan is expected to grow at 25% CAGR - basis expansion done, backward integration done, export market entry, etc.
3). Capacity is 99MMPA - but the capacity utilization is 80% - that means 80MMPA. So company has 30 MMPA open capacity left.
Ignore the EPS for this year - it can be 15 or 18 - because still 4 months to go and we do not know how fast or slow the expansion plans will take place. But, if we look into long term - sales are there to grow at 25% CAGR, backward integration is there to help raise EBITDA margins, processing facilities to bring value addition and increased realization per metre.
Mr. Govind Sharda - with surety told that the CFO this year will be 200 cr (133 cr last year).