You are wrong here. Political connections are red flags one should be cautious about. One needs to be sure about how they have created value in the past and what is the gameplan for the future. Some point of time they WILL face adverse political situation and work against value creation. Tell me one politically connected enterprise among consumer businesses which has consistently created value?
Posts tagged Value Pickr
Oriental Carbon and Chemicals Ltd (17-10-2015)
Observations
Every year in annual report company have mentioned the total amount MT’s of insoluble sulphur sold, however I find it very surprising in FY15 annual report this figure was not mentioned. Since revenue from insoluble sulphur for FY15 being very near to FY14, the quantity(MT sold) will be nearby FY14 quantity sold which was 19224MT.
Assuming 11000MT new capacity being fully operational by FY 2019 we get new capacity of approx 30000MT which is 11-12% CAGR growth. And also not to forget they will have some debt by that time too. The ROA for last 3 years have been around 12% so the returns on incremental capacity seems decent but not great. At this point of time (11 PE). I see less margin of safety for new allocation. Will add if price goes below 430. Positives I see are company is able to generate good cash flows and management seems to be doing what they talk from Mundra Plant capacity addition experience.
Disc : Invested. Will add if there is correction from CMP of 515
INDIGO ready for takeoff :airplane: (17-10-2015)
Hi @BALASAHEB: Thanks for starting the thread. Based on the little info I have read:
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Indigo gave out a hefty interim dividend. Is it to strip the money off the company before going IPO? Management integrity in question (there will soon be minority shareholders).
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It is doing way better on most metrics. But load factor of the other airlines being higher might be a tell-tale sign that the others might take a hit on profitability to garner market share (a la Flipkart). And we know such measures hit businesses where the competition is fierce.
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A negative net worth compounded by #1 might not be very palatable to the value investor.
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The offer price has been raised from Rs 400 to Rs 700. Don’t know when the Rs 400 was decided on but have the business fundamentals improved so drastically to warrant a doubling of offer price?
I am also learning the fine art of value investing, so I await what my smarter friends have to say.
INDIGO ready for takeoff :airplane: (17-10-2015)
India’s domestic pax up 19% to 6.8m in Aug-2015
CAPA > Aviation News > India’s domestic pax up 19% to 6.8m in Aug-2015
23-Sep-2015 11:25 AM
inShare
© CAPA
India’s Directorate General Civil Aviation (DGCA) reports (Sep-2015) the following Indian domestic traffic highlights in Aug-2015:
Passenger numbers: 6.8 million, +18.7% year-on-year;
Load factor:
Air India: 79.3%;
Jet Airways: 80.8%;
Jetlite: 78.7%;
SpiceJet: 92.1%;
GoAir: 75.6%;
IndiGo: 76.8%;
Air Costa: 77.3%;
Airasia India: 72.1%;
Vistara: 62.9%;
Air Pegasus: 77.1%;
Trujet: 83.7%;
Market Share:
Air India: 16.6%;
Jet Airways: 19.8%;
Jetlite: 3.0%;
SpiceJet: 12.3%;
GoAir: 8.1%;
IndiGo: 35.3%;
Air Costa: 0.9%;
Airasia India: 2.0%;
Vistara: 1.5%
Air Pegasus: 0.2%;
Trujet: 0.3%. [more – original PR]
Wockhardt – A story with twist and turn (17-10-2015)
I think this company is due for rerating based on following observations
- US FDA issue is now 2.5 years old (started in May 2013) . Average time taken to resolve US FDA issues with other pharma companies is around 2 years. Wockhardt has data integrity issues so they are taking longer.
- Management started receiving US FDA approvals for individual drugs after gap of almost 2 years. In June 2015, it received approval of analgesic drug Oxycodone Hydrochloride. In Sept 2015, it received approval for Memantine Hydrocholride (for alzheimers’). This shows positive bias of US FDA towards the company
- Management continues to spend one of the highest spend on R&D in the industry. % of R&D Spend to Sales for Q1 FY 16 was 13.3% vs 11.5% for FY 15, 9.3% FY 14.
- Promoters stake is around 75% and they did not reduce it in last 2 years, although interest shown by companies like Lupin. This shows their confidence about their future.
Disc – Invested from lower levels.
Talwalkars Better value Fitness Ltd – Good fundamentals (17-10-2015)
In last 6 months, promotors reducing their stake in the company, QIP of 107 Crores (at price of 305 per share) thereby expanding equity by 13.5% brought stock down from Rs 400 to current price of Rs. 250.Their 50:50 JV with David Lloyd Leisure Ltd UK in club business would be a drag for short term.
But I think health club business is a lifestyle play which is long term trend in developing country like India. % of penetrations of health clubs is poor as compared to developed world. With Market cap of 736 Crores, trailing PE value of 17 and 5 years compounded sales growth of 25% and profit growth of 40%, I think this stock is attractively priced.
Please see recent new item in money control
http://www.moneycontrol.com/news/recommendations/buy-talwalkars-targetrs-319-cd-equisearch_3634741.html
Disclosure : invested from lower levels. No new investment in last 90 days.
Top 5 Picks – optimistically, for the next 50 years (17-10-2015)
@srnarayan Hi Sreekanth,
That is true. Maybe consistent bad performers over 1-2 years should be replaced with new ones.
Reg NMDC, your right with the prices / margins. But, i feel 120 seems a fair price.
Reg Igarashi, I googled, but I’m not sure whats up with the de-listing you mentioned. Could you share some links reg the same?
I bought it @250->350 after seeing it on value-picks.blogspot. It had increasing ROCE the last 3 years, other ratio-numbers were also okay. And the Japanese partner who initially sold his full stake, later bought it back.
Growth scope seemed to be there, as these small motors keep on increasing in cars. And their stuff must hopefully have quality, because their clients are international car makers. If some small dc motor goes kaput while driving in the US, they will sue in big $$$. Though i hope it doesnt supply VW 
Top 5 Picks – optimistically, for the next 50 years (17-10-2015)
While its good to know that you have created a portfolio with long term horizon, IMO nobody knows how market will behave over 50 year period. A periodic look over ones’ allocation will help gauge whether your decisions are sailing in the right direction.
Regarding your portfolio, I am sure you know the best thesis to invest, esp. NMDC the margin of safety has greatly eroded with prices going haywire and dividend yields declining, its no longer a cash cow these days.
BTW curious to know ur rationale for igarashi motors (delisting?) and kse
Regards
Sreekanth
Top 5 Picks – optimistically, for the next 50 years (17-10-2015)
nice topic bro for 50 years i will go for BEL ….UNSTOPPABLE .
NMDC is cyclical .
SBI ……”.to big to fail ” and govt will exit from all core holding before 50 years .
Swaraj Engines – Great cash flows! (17-10-2015)
Hi @kunal_pawaskar, @siddharthshukla n all others,
Sid, I have been a follower of your blog since long. Any reason you have stopped blogging?
Kunal, I went through your analysis about the company on your blog, you have done a good research on the same. Regards to pricing power of the company, I have a different view from what you have.
As one can see, number of units sold has increased at a decent pace of 15.5% over 10 years, PBDIT per unit has shown a dismal growth. This is evident from the slowly falling PBDIT margins over the 10 year long period. I do not think the company has strong pricing power or may be it did have in the past, which is decreasing over the years. Hence, growth has come from increasing the units sold only.
Yes, there is a good chance that the company may increase the unit sold in the future as well however, we need to see whether margins are further going down or remain stable. There are other pros like, good cash flows, dividend payout. If we can get estimated revenue figures for the next two quarters (from a reliable source or management), then predictability would become a little easy. But, this will be medium term play and surely not a long term, IMHO.
Please correct me if I have gone wrong anywhere. Have made calculations in a bit hurry.
Views invited.