Sreekanth
Quite the contrary – growth is not what people chase always. Look at infy – they do acquisitions to get into a domain and scale that up using their SG & A capabilities. Happens all the time – you take someone with a good domain understanding and IP and allow for your sales force to sell it globally and it becomes a low risk, easy to integrate acquisition.
It all comes back to how well MPS can deliver steady growth of 10-15 % without sacrificing profitability.
Cement stocks are normally not valued on a PE basis. And are valued on an EV/Ebitda basis + Ev/Tonne basis (which is compared with EV/Tonne to set up a new plant). Also good to apply a discount on both the above parameters for a small capacity company (discount on say for e.g. to EV/tonne to set up a new plant). Current EV/Ebitda and EV/tonne should be compared with the above discounted value to arrive at a conclusion if it is undervalued.
Add to that other things like amount of debt component in EV. So company with minimal debt in EV is a better choice. Also add better to have a player with good margins and a company that is reducing debt constantly etc.,. (Deccan has been reducing debt constantly). So say a company that is reducing debt constantly would have a falling EV which will make its valuation better and this would be compensated by a rise in market cap of the company.
Throw in the scope of ramping up capacity utilisation depending upon current capacity utilisation.
Other things like WC cycle etc.,. can be considered as well while comparing with other players. How does receivable picture, credit period given, cash flows etc.,. look on comparison?
What is the current capacity of Panyam vis-a-vis Deccan or NCL, etc.,.?
Stating the above on the basis of my limited understanding.
Regards.
Check the performance of these small companies during the times of low demand. They were squashed. High debt, low margins and poor mgmt (main reason). It is not the company which has outperformed or has made a turnaround – its the industry in south which has improved. Let these companies flourish for sometime.
Deccan Financials –
EPS FY 16 (E) – 90-95 / –
CMP – 560/-
P/E – 6-6.15/-
Panyam Cements –
EPS FY 16(E) – 20-22/-
CMP – 91/- (Today’s Open).
P/E – 4.55 @ 20 EPS (E).
Clearly undervalued.
Further, answering to your concerns raised on rise of Deccan and other companies – are you expecting that the stock will command PE more than 6 or 7 ???
Its really a fancy story out there which is not sustainable. Its good to bet, earn and come out. Its not like ultra tech which commands PE of 38 !!
I hope I have answered to all your concerns raised above.
As of today, the P/E, P/B and Div. Yield of Nifty are 21.41, 3.18 and 1.44 respectively.
Above average, but surely not extreme valuations. However, if we are in a bull phase then a bear phase would surely follow, if history rhymes. Let’s use this thread to record the tell-tale signs of a bull market gaining momentum. May be we can look back after 7-10 years and come out wiser. Surely everyone would want to learn how to keep dancing as long as possible before the music stops? Would request you to share over here the tips your panwaala gives you (when he does) 
, without adding your own tips.
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Futuristic thinking without any material/rationale provided. Can you demystify both the statements?
Q2 FY15 results (comparision with Q2 FY14):
Revenue: 117 cr. v/s 140 cr.
PAT: 24.7 cr. v/s 24.8 cr.
EPS: 1.94 v/s 2.13
Results more or less on expected lines, don’t understand why management compares with Q1FY15 to give good picture even though they had given such prediction.
Facility at Vishakhapatnam has commenced operations.
Discl.: Sold off few weeks back as I felt there was no MoS. Remain bullish as ever on the business.
Hi People,
There is one more company – Panyam cements (located in Andhra only) which is doing phenomenal like other cement companies in south. I think it is still undervalued. NCL industries and deccan had their rise. Panyam has its results today. The results are expected to be good – June quarter was also good. We can think of beting on this stock. Mgmt shares were pledged and some of them have recently been released.
Disc: Not invested yet. Much interested in it. Analysis going on!
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While it is a worry, it shouldn’t be a surprise as there were reports of farmers going for low stocking with low shrimp prices being told as the main reason and fear of EHP disease being another ‘lesser’ reason. Shrimp processors have been struggling to get enough raw materials and this should help shrimp prices which have been raising. Regarding EHP, check this article:
https://www.undercurrentnews.com/2015/11/09/chamberlain-new-shrimp-disease-unlikely-to-hit-production-on-scale-of-ems/
Disclaimer: Major portion of portfolio, invested from lower levels and converted the recent dividend into shares yesterday.