I am holding Aurobindo from very low level. Multi-Bagger now. I clearly say management is still a suspect due to political affiliations (if not fraud) and still need to watch out for. I am alert and ready to bolt at the slightest pretext. If management does not screw up then the business should do well for next 4-5 years. They have many ANDAs in pipeline and that should help. The stock should compound froom here on for some more time. But in the next 2 years we will have to take a call on sell when the stock is fully priced and factors in all good things.
Posts tagged Value Pickr
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
Hi ,
Few important question
1) Why is the sales growth subdued?
2) Which auto segment (Car,Two wheeler, LCV ,HCV) does steel strips caters to and what about competitors?
this will help in understanding the valuation gap?
3) What kind of RM price increase/Decreases are passed on to the customer?
Disc: Not invested
Kaveri seeds company limited — kscl (22-12-2015)
Multidisciplinary analysis on Kaveri seeds:-
lollapalooza effects:-
All Bad things happening at the same time.
1.Monsanto incident of paying 66 cr if only 2015 is considered and more than 100 cr if royalty is revised and paid from 2010.
2. Bad monsoon in 2016.(~40- 50%)
3. China crash caused further fall.(~17%)
Maths:-
What is the probability if all this incidence can happen in the same time again and built so much pessimism in the stock:-
Very low.
Q:-If we look the business prospects for next 5 years, will all this problems will be ironed out?
Yes.
Monsanto problem:- It has cash reserve of ~3 billion so it can solve the problem even in worst case.
Monsoon:- It was bad this year can be good next year not sure of this but with reversion of mean it is quite possible it can be good in coming years.
China crash:- Not possible again to happen with above incidences.
Control systems:-
What are the forces/ variables which are working together which can help the stock price to rise?
1. Cultural dominance:- GMO crops has been adopted rapidly in all advanced nations and it will be as well be adopted in India. The portfolio of corn/rice/maize etc of kaveri seeds can help it grow it further. The government has started to work on second green revolution and implement policies to do the same.There were certain news which were in that direction.
2.Surfer Wave Theory:- GMO crops under cultivation has increased by 100 times starting from 1996. kaveri seeds are riding the surf with good business economics and fundamentals.It is quite possible it can create wealth for investor who surf rides early on that.
3.There are many macroeconomics principles or force which help the company to use their product as we can see it in advanced nations like America where I believe if not wrong 96% crops under cultivation are GMO. They have definitely building their moat of crops along way with surf and maintain their earnings.Just as a side node value investor Kahn also invested in Monsanto in 2000 time frame some time.
4.Companies expansion to North India. New portfolio of crops like rice is making less dependence on cotton.
Moat in the company which is not destroyed currently :-
1.Economics of scale.
2.Habit with farmers.
3.On supply side is Portfolio of crops.
Big Risk:-
1.Promoters Focus shifting to other initiatives and if they destroy above mentioned moat.
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
W.r.t Management quality, considering Tatas, Sumitomo on board. Previously in 2012, when the share price trading @200, management allotted themselves @300rs. If you see the recent BSE disclosures, they are buying more from the open market even @370 levels. Similarly they are regular in informing the exchange about monthly sales etc..With the above points i am of the view that management is trustworthy.
W.r.t sales turnover SSWL stands 1.4 Vs Wheels India @1.8, but SSWL is having higher margins than others. I feel the current valuation gap with peers will be covered going forward.
Things are clearly changing for the company if you go by their recent order wins.
The Egypt order win is a new geological entry for them and as they claimed, it is going to be repetitive moving forward.With in a week they bagged one more order from Egypt, this gives me the trust that management are dependable. These order wins/ new entry to export markets should improve the Sales turnover giong forward.
Recently i am paying closer attention to the companies where promoter buying is happening from open market as a big positive move. To share specific details , Tera Software used to trade around 35rs, promoter purchased huge quantity from open market, After sometime they got 320cr order from Andhra Pradesh govt, thereafter the journey halted only @100 levels now ( My Tera Soft example should be taken in promoter open market purchase context only).
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
Thanks lot Vikas. Your logic might be correct. So its good to hear that the company has taken steps to enter into after market segment this year. Hope to see some improvements this quarter.
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
As per my understanding, SSWL is big in OEM sales and very less presence in after market, hence sales increase is less, almost in tandem with automobile sales. However, Enkei is big time into after market sales and hence higher sales. Also, scope of margin expansion will improve for SSWL if they establish themselves into alloys. It needs to be seen how they venture into alloys sales, through OE sales or focusing on after market.
Disc: Not invested.
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
Same concern here. Trying to get my head around order book. Is it binding, is there any break penalty in case client withdraws, so on so forth..
Steel Strips Wheels Limited – Attractive Valuations (22-12-2015)
ya true..agree with you
I made a comparison with the two peers –
SSWL reports good performance compared to both peers on EPS/ PE/ PEG/ OPM/ NPM fronts.
Sales are big concern for me. Sales for the peers have grown – for wheels at 4.59% and Enkei at 25% last year. What is the problem in SSWL? Topline growth has to be there for long term growth. ROE and ROCE are also somewhat a concern (almost similar to the peers).
The recent orders bagged by the company can really change the outlook – but am I correct on this?
Torrent Pharma Ltd (22-12-2015)
USDFA regulations hit prospects fo Sun and Dr Reddy’s
Interesting question here would be – what are the manufacturing practices/standards that are being questioned from USFDA? If so, why would the investors flock to the smaller companies? Why can they maintain better operational standards? Simply because of the size of the operations?
PS: This piece of news is generic to the Pharma Industry
Is there any good on-line library to borrow books related to investing (22-12-2015)
Great Collection and recommendation. Many thanks.
I will add few more to this exhaustive list
1. FIASCO by Frank Partony, its on gimmics of wall street (Recommended by Charlie munger)
2. Understanding Micheal Porter by Joan Magretta
3. The little book of behavioural Investing by James Montier
4. The little book that still beats the market by Joel Greenblatt
5. You can be a stock market genius by Joel Greenblatt
6. Deep Value by Tobias E. Carlisle
7. Buffett: The making of an American capitalist
and many more. Have fun filled learning 