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Posts tagged Value Pickr

Vidhi Dyestuff Management Meet (07-10-2015)

Hi

  1. I agree Valuation is a bit stiff at this price and I wish I had met the mgt few months ago.
  2. Mgt did explain that synthetic colours will take a long time to be replaced by natural colours due to several reasons (naturlas have less variety in shades, they are expensive, it is just the propoganda that several countries have made naturlas food colour obligatory, it is like govt. making organic food in all the restaurant mandatory smile
    1. Regarding customers: If you are getting same quality stuff at a substantially cheap rate from a branded player who is positioned second in the industry, would you buy? that is how Mr. Manke explained.
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Vidhi Dyestuff Management Meet (07-10-2015)

Thanks for such a fast and nice reply.

With Vidhi, I continue to have these doubts

a. Valuation – I feel its too high – ofcourse that is as per analysis of individual investor

b. Why is the leader giving up on such a huge market share. Is Vidhi investing in an obsolete technology.

Is it possible to get inputs from customers of Vidhi as to why they are buying from them.

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Vidhi Dyestuff Management Meet (07-10-2015)

  1. As you can see from Sensient’s website, they are now focusing on Naturals market. Due to high entry barriers (explained in note) and small market size, there are only four major players globally. Sensient with its deep pocket can buyout Vidhi (that question is covered in the note).
  2. In past few years Vidhi and Roha has gradually taken up a decent market share. How they did it? They are able to produce 30% cheaper than Sensient and they have established a brand as 2nd/3rd largest player in the industry.
  3. As explained by the MD, Mr. Manek, India had a poor reputation globally until a few years ago i.e. nobody believed we could be able to manufacture high quality colours. In last decade the scenario has changed substantially and Vidhi and Roha both have taken a huge market share from Sensient.

Now how will Sensient give a comeback or are they even interested in a comeback? Is synthetic colour market too small and insignificant for them? Will they acquire Vidhi and Roha? Story yet to be unfolded smile

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Triveni Engineering – Special Situation- Loss making business hived off (07-10-2015)

Triveni Engineering stock price has moved up significantly along with stocks of other Sugar company’s.

Currently, there is an expected shortfall in Brazilian sugar production and in India in 2015-16 which has led to a ~20% increase in Sugar prices. The other part of the equation is the export subsidy / state administered pricing which has to fall in place to make sugar mills operationally profitable. But I have still not figured out why the mills continue to crush sugar if it is an unprofitable proposition? I would love to be enlightened.

Even if the sugar business of Triveni (revenues Rs.2000 crores) is valued at Rs.200 crores in equity, the rest of the business at ~Rs.500 crores is a great buy. How much it will get valued in another 2-3 years depends on the follow through of the optimistic plans of the management.

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Vidhi Dyestuff Management Meet (07-10-2015)

Questions from my side

  1. Vidhi says it is the lowest cost producer (probably because it is in India). What stops other players, especially Sensient to produce from India

  2. Company says it wants to target 500 crores and 8400 MTPA by 2020. Since u mentioned Industry is growing at 5% only, this good growth can come only at the expense of taking market share away from leader. Do you think market leader would give away such a huge pie (almost 30% of its share) just because it is not producing in India.

  3. Why is there such a huge gap between Sensient and Roha. Is Sensient’s product and management so superior to command double the size to next competitor. If it is, how come it is not addressing question asked in Point 2

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My richdreamz portfolio – visit my portfolio to learn together! (07-10-2015)

Management is looking at 1 billion USD revenue by FY 2020 and I believe they can! Assuming debt levels, RoE etc do not deteriorate and in fact margins should improve from here due to CSM contribution increase, we can give the company a market cap of 5-6 times sales conservatively. You can do the math approximately. Once market fully realises the CSM potential, a slight PE re-rating is actually possible even from here.

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MPS Ltd (07-10-2015)

@srnarayan

Only if the acquisition is overseas, dollar strengthening will affect MPS….if it’s a major domestic acquisition then it might not have major impact…..

Apart from MPS, I find Syngene story to be very compelling…..discl- have been accumulating and have good exposure in both MPS and Syngene.

Rgds.

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Capri Global Capital-Yes your money matters! (07-10-2015)

As per BSE announcement, Capri GLobal has launched a wholly owned subsidiary for Housing Finance and has got registration from NHB.
Seems like a positive move.

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MPS Ltd (07-10-2015)

@ Mahesh
Thanks for your insights, in addition to the above, we must also keep in mind that dollar is strengthening on relative terms which distort the valuations of the acquisition, any further delay has to be rationally justified.

PS: What are the other stocks that you have in your radar?

Regards
Sreekanth

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Torrent Pharma Ltd (06-10-2015)

Hitesh ji, we have 4 different patent expiry dates (Apr 25,2016 ; Oct 25,2016 , Nov 19,2021 and May 19,2022) for N021286 ( Daichii Sankyo’s Benicar ) . How to make sense out of it ? when will this become a generic drug? ( As per fiercepharma, patent gets expired in 2016 October )

When looked at DMF (2Q2015 file) for olmesartan Medoxomil, very high number of API approvals are there ..

2012 sales for Benicar is 2.5 billion $ (source :- fierce pharma ) . How much can we expect this drug contribute to torrent when it gets final approval and launched after patent expiry ?

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