Posts tagged Value Pickr
Kitex Garments Limited (30-09-2015)
There have been some inevitable delays in opening back locked threads after cleanup - mostly unavoidable. Many folks have written in - some even angrily - attributing uncharitable motives even -to VP Core Team.
So here's a brief again on the reasons we had to resort to such measures (after repeated warnings had failed), for everyone's benefit - so we get everyone to comply to Team VP Culture/Ethos and Forum Guidelines. And why we think the thread can now be opened up again, as main purposes have been served.
All negatives/discordant points that did not add-up were freely allowed to be made. We don't think there was a single serious reader of this thread who wasn't aware of the (grave) issues/doubts being raised. Genuine points and counterpoints, doubts, missing gaps/clarification from Management were made. Some of the issues (unless clarified by Management) were indeed grave, and no wonder passions were running high
However, just a handful of folks carried this to the extreme a) ad-nauseam repetitions of the same allegations/opinions (these ceased to be issues) b) blatant allegations of outright fraud were being claimed without attempting the slightest diligence to ascertain facts c) name-calling and abrasive behaviour d) thread became completely cluttered by the allegations and rebuttal opinions e) it was clear such folks were intent on pushing their "Agenda" at any cost. Consequently Business Dissection - which is the hallmark and unique VP strength- completely took a back-seat.
As Administrators/Moderators we intervened repeatedly, politely without any avail. These handful of folks were very new to VP Ethos/Culture and a couple even adopted a couldn't care less attitude. We had to do something - as the core VP readership was getting turned off from reading the threads - and started complaining that any meaningful value-additive contribution was impossible in the face of the unrestrained/passionate ad-nauseam repetitions, agenda-pushing and its side effects. More threads started getting affected with the common malaise - Too much of NOISE - VP going the MC way? warning bells started getting sounded by genuine well-wishers and loyal readership of VP.
We could have taken the easy way out - suspended/terminated membership - and saved us all the trouble. The nuisance would have stopped/abated. However it is another unique Team VP trait - that we value all contributors and their contributions even as we may differ with their methods. We wanted these guys to be around - some of them had indeed ben making significant contributions too - just wanted to find a way to channelise their energies properly
, sensitise them to the side-effects, and nudge them back to value-additive discussions - not be hesitant to use both the stick and the carrot to make new VP Members (understand how much we value, and) adhere to VP Culture/Ethos, rather than lose potentially great Team VP members.
We found Locking the thread - a viable way forward in our attempts to a) COOL the passions/fights b) get rid of the CLUTTER by deleting endless repetitions c) allow time for corrective actions/CLARIFICATIONS from Management on (grave) issues raised d) bring the FOCUS back on business dissection
As we are aware - the main irritant - the CASH question is addressed to an extent - and everyone should be charitable enough to wait for the Sep Balance Sheet to reflect progress on the Management clarifications.
Let's bring the FOCUS back on value-additive discussions. Let's always be polite and tolerant of counter opinions (to ours, no matter how passionate and self-righteous we may feel about our individual positions). Let's always be conscious - think twice and thrice before posting, if need be - am I ADDING VALUE??
Let's all be VIGILANT a in not letting discussion quality deteriorate. Please be polite and firm, but do let offenders know why such actions are not valued by Team VP. Use FLAGS liberally, if you want VP Community to stay true to its objectives.
Control Print – Deservers attention? (30-09-2015)
I think CFO needs to be adjusted by removing interest portion before calculating CFO ratios.
It will give a much better picture. Also 4 years is a too small data point to see the true picture
I am still not sure why Indian accounting allows interest portion of debt being added first in CFO and then subtracted in CFF. Because of this rule, CFO for most debt ridden companies appears much higher than it actually is. I find US GAAP much better in this respect.
Hitesh portfolio (30-09-2015)
This sums up the secret to making money or rather not losing the money that one already made. Simple this may sound, this is very complex as exactly at this stage, i.e., when the markets are falling in love with a company and people drive the stock higher 'afraid' of losing any upside - now, you need to turn contrarian and look at things from above and act on it. Not many can do this and this needs a special effort to overcome the behavioural psychology/herd mentality. Time and again Hitesh was able to do it so eerily going by his past posts. If I were to envisage his position with his permission, after selling out from Kaveri and tuning into Canfin and then find Kaveri going up and up while Canfin sailing at its pace, am sure it's not easy unless the conviction is superb.
On a side note, I just want to know one thing in my money life, what date the bull market top will be made in this coming run? The next day you will find me in a beach with no internet connectivity, sipping coffee with a book in hand
and no stress.
Hitesh portfolio (30-09-2015)
amit,
The sell decision for Kaveri was triggered by a buy decision on Canfin. A business I thought had a lot of variables at that time viz kaveri was quoting at around 15 PE and something which I considered a very stable business was available at 0.7 times book value and that too with nil NPAs. viz canfin. After selling, kaveri did go up around 2.5 times whereas canfin's rise was more steady. Its only of late that it has gone ballistic.
What I have realised is that one has to avoid falling in love with the company especially when markets are falling in love with it.
Torrent Pharma Ltd (30-09-2015)
Hi Gyan,
We should wait for the results to come out. It is also possible that they would have shipped most of the quantities during Q1FY16 including pre launch quantities.
Let's do some maths here:
Abilify pre genericization had US sales of USD 7.80 billion (source Otsuka and BMS results). Let's conservatively assume its USD 5 billion. Assuming 50% decline in the prices (much more than 20 - 25% currently), the total market size remains at USD 2.50 billion. Torrent has market share of 10% and should report around USD 225 million sales for FY16.
REPCO home finance – another Gruh in the making? (30-09-2015)
This should further help in reducing the borrowing costs. Looks like it's raining good news for Repco. Further good Q2 results should add more ammunition to the stock rise.
Disclosure: I own Repco.
Ruchira Papers – Low downside high upside (30-09-2015)
My note on Ruchira
Ruchira Papers
CMP: 43.xx
Market Cap.: ₹ 97 Cr.
Book Value: ₹ 49.59
Stock P/E: 6.4
Dividend Yield: 3%
Face Value: ₹ 10.00
ROCE 3yr avg: 17.61%
ROCE: 18.60%
Debt: ₹ 57 Cr.
Inventory turnover ratio: 8.35
Inventory turnover ratio 3Years back: 6.90
Profit growth: 24.02%
Profit growth 3Years: 57.81%
Promoter holding: 59.51%
D/E is 0.54
Dividend Payout Ratio: 17.60%
Return on equity: 16.97%
Pledged percentage: 0.00%
Interest Coverage Ratio: 3.76
Contingent liabilities: ₹ 6.08 Cr.
About Paper Industry (From the AR itself):
The paper industry in India could be classified into three categories according to the raw material consumed.
1. Wood based
2. Waste paper based
3. Agro based.
The Indian paper industry produces 10.11 million tons paper per annum, just 1.6% of the total world production of 394 million tons. The Scandinavian countries, USA, Russia, China, Indonesia and Japan are the major players in the field of pulp and paper. These countries have some of the best available raw material for paper production and state-of-the-art technology.
In accordance with the economic growth and it is estimated to touch 13.95 million tons by 2015-16. Paper in India is expected to see an average growth of 7 per cent during the next year according to prediction by the Indian Pulp and Paper Technical Association. The sector is expected to grow 7 per cent per annum.
Currently, the Indian industry is accounts to about 2.5 per cent of the global production of paper. The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat straw, etc.; approximately 35% are based on chemical pulp, 44% on recycled fibre and 21% on agro-residues. The per capita consumption of India stands at only 9.3 kg compared to China’s 42 kg, Indonesia’s 22 kg, Malaysia’s 25 kg and the US’ 312 kg. Studies have shown that the growth of paper consumption changes from linear to exponential trends once the GDP growth rate crosses the double digit mark. Analysts often draw comparisons between the growth seen in bottled drinking water and tissue paper industries.
There are about 750-800 paper mills (Organized & Unorganized sector) in the country out of which 12 large units accounts for production share of about 30% and balance units mostly comprising of medium and small paper mills with production share of 70%. Wood based industry accounts for 31% of production while waste paper and agri residue accounts for 47% and 22% respectively. Capacity wise industrial paper accounts for about 40%, Writing & Printing paper 35%, specialty paper 6% and Newsprint 19% of total production.
The major players of the industry are located in Andhra Pradesh, Tamil Nadu, Maharashtra, Punjab, Madhya Pradesh and Gujarat
The key challenges to be met is market conditions which are poor and technology obsolete, lacking ability in achieving economy scale and lack of skilled labour.
About Company:
Ruchira Papers Limited setup by 3 technocrat partners is into paper manufacturing with agriculture residue and waste paper as raw materials material rather than the traditional raw material wood pulp which is quite difficult to source. Came out with IPO in November 2006. The Company started operations in 1983 with manufacturing of Kraft Paper that is used for packaging, corrugation, core pipes, cones etc.
With setting up of 100 TPD Writing and Printing Paper plant in the year 2008, the Company has widened its product base in multi-purpose Writing & Printing segment of Paper.
At present, the installed capacity of the Kraft Paper unit is 52800 MT per annum and for Writing & Printing Paper unit it is 33000 MT per annum. Presently the Company is operating more than of its installed capacity. The increase in education expenditure will definitely require more Writing & Printing Paper and the management anticipates a faster growth rate of Writing and Printing Paper. Writing paper commands a higher realisation and higher margin when compared to Kraft Paper.
Indian Paper Manufacturers Association (IPMA) projects that India’s demand for paper is expected to double to 20 million tonnes by 2020.
Due to the ecological problems caused by usage of plastic materials, paper is becoming the most favoured option for packaging.
The growth of the manufacturing sector will also enhance the demand for Kraft paper.
In FY15, Ruchira clocked total revenue of Rs. 347 crores, net profits of Rs. 13 crores and cash profit of Rs. 23 crore.
Promoters have been able to achieve production higher than the installed capacity with help of debottlenecking. In FY15, the Kraft Paper production reached 102% while that of Writing paper reached to 131% of its capacity.
OPPORTUNITIES AND THREATS
The global paper industry is witnessing a fundamental change with the demand shifting to emerging economies particularly Asia. The paper industry in China and India has emerged to be among the top global players and are expected to improve their ranking significantly in the coming years. India in particular has good growth potential. The low current per capita consumption of paper in India, around 9.3 Kilograms as against the world average of 57 Kilograms, reflects the significant potential that the industry offers in the future. Increasing usage of high speed printing/copying machines with colour reproduction is propelling demand for high quality Writing and Printing papers. This trend will be beneficial for the Company.
Opportunities: The Company being located in Himachal Pradesh is presently entitled to 100 % excise duty exemption for 10 years with effect from 30.03.2008 for the Writing & Printing Paper unit and concessional rates of Central Sales tax at 1.5 % against 2 % in other states. The Company is having a Captive Power Cogeneration Plant, which helps to get the cheap and uninterrupted power supply. Consistently complying with Environmental norms regarding Chemical recovery and is having its own chemical recovery system in place. Further, the location of the factory at the outskirts of Himachal Pradesh helps to get raw material agro residues from the neighbouring agricultural rich states of Haryana and Punjab. Per ton production cost of paper from agricultural residue is lower than that from the imported wood pulp. E-commerce led demand of corrugated boxes which are made out of Kraft Paper to benefit Ruchira. Kraft paper production for Ruchira grew by 14% YOY.
Threats: As the Indian Paper market grows it is attracting major international players who have access to better technology to setup business in India. The Company recognizes this challenge and has made conscious efforts to build a strong competitive advantage through increased brand equity, wider network and use of contemporary technology. Further Import duty on paper & paper board for ASEAN countries has been reduced from 2.50% to 0% with effect from 01.01.2014 which had implications in terms of cheaper imports being 2.25 million tonnes in 2013-14 as against 2.03 million tonnes in 2012-13. The Company has been also increasing its reach in the rural markets by increased distribution and customized packs. Further steep increase in Raw Material prices and shortage of raw material is creating threats for the paper industries. Lower Growth in Paper Demand due to digitization.
PRODUCT ANALYSIS
The Company is engaged in manufacturing of Writing & Printing Paper and Kraft paper. Writing & Printing paper is manufactured from virgin pulp (agro based), which finds its usage in manufacturing note book and for printing and publishing, a special grade of paper is also manufactured for wedding & greeting cards, art sheets & coloured scrap books, drawing sheets & paper for multipurpose office use. The market for Writing and Printing paper is expected to grow by about 9% annually over the next 5-7 years. The industry will see acceleration in the trend that favours branded and value added products.
Apart from Writing and Printing Paper, product range of Company also includes Kraft Paper which finds its application in the manufacturing of corrugated boxes, corrugated rolls for industrial packaging. The Company also manufactures a special grade of Kraft Paper known as DTY/POY grade which is used in the manufacturing of textile tubes and in wrapping of different types of Yarn.
My Investing rationale:
• Increase in promoter stake by 5% in last 3 years.
• Cheap Valuations
• Ecom Boom
• Textile Boom
• Manufacturing sector getting a boost
• Dividend Yield acting as a cushion
• Free cash Flows
Discl: Invested. Please do your own due diligence before investing.
Inputs have been taken from screener, moneycontrol, AR of Ruchira Papers and prosperotree.com
Regards
Sri Krishna Bhutra
REPCO home finance – another Gruh in the making? (30-09-2015)
Repco Home Finance Ltd has informed BSE that M/s. Credit Analysis & Research Ltd (CARE) has upgraded the following ratings assigned to the Company:
Long-term Bank facilities: from "CARE AA-" to "CARE AA"
Non-Convertible Debentures Issue: from "CARE AA-" to "CARE AA"
http://www.bseindia.com/corporates/ann.aspx?scrip=535322&dur=A&expandable=0
Disc - invested
TV Today- Value Migration (30-09-2015)
From a long term point i agree with you! But sometimes these short term movements are indicators of long term trend in a stock. I looked at the Volkswagen chart for last 3 months it had a downward trend from past 3 months even though the scandal broke out couple of weeks back. Might just be a coincidence, but insider trading do happen and cannot be ignored.