A review of FY12 Results [Updates]

Filed under Stocks, Update by on May 13, 2012 at 5:45 PM {12 comments}

Comparison of Stocks against Sensex

The annual results are coming out and it’s a good time to re-evaluate the portfolio and also start considering what lies ahead for FY13. Here is an update on the performance of some of our ideas:

Gujarat Reclaim Rubber: We had first discussed about this idea at 875 levels and provided multiple updates. The stock did very well despite the weak markets. The Q4 nos are pretty weak and below expectations in terms of profitability though the top-line growth is intact. We feel that one should consider the annual performance also wherein the company has grown the topline by 30% for the year and net profits by 45% despite the weak Q4. It may be just a weak quarter due to several reasons like – write off of Plant & Machinery due to fire in the last quarter and loss of production (majority to be recovered by way of insurance), increase in employee cost due to one time bonus etc. and fluctuation and appreciation of rupee resulting in lower margins.

As per notes to accounts, the company has partially started the new production capacities and may be the growth will bring back the profitability. For FY 13, we do expect the company to grow 25-30% once again.

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Article: Using Accounting Ratios to Find Better Investments

Filed under Investing Mantras by on May 4, 2012 at 10:30 AM {4 comments}

Hello Friends,

I wrote an article on the using of accounting ratios to find better investments after completing my CA for The Chartered Accountant Journal. The same has got published in the May 2012 edition. It covers few important benchmarks, some rules of thumbs and a brief about other important financial variables. Happy to share it with you all.

Using accounting ratios to find better investments from The Chartered Accountant Journal

Manali Petrochemicals Ltd. – A safe midterm stock idea

Filed under Stocks by on April 29, 2012 at 8:21 PM {30 comments}

A look at growth

Manali Petrochemicals Ltd. has posted an excellent set of numbers for FY 2012 and looks undervalued based on the improving financial numbers & growth ahead:

Particulars Mar 12 Qtr Mar 11 Qtr % Variation FY 2012 FY 2011 % Variation
Sales 161.87 127.80 26.70% 573.03 451.90 26.80%
PBIDT 24.29 13.30 82.60% 66.69 40.76 63.60%
Tax 4.60 2.67 72.28% 15.21 9.03 68.44%
PAT 17.54 8.48 106.80% 43.68 25.28 72.80%
EPS 1.02 0.49 2.54 1.47

*All Financial figures are in crore rupees (except EPS).

Manali Petrochemicals is a leading producer of Propylene Oxide (PO), Propylene Glycols (PG) and Polyols in India. These products find application in industries such as Pharmaceuticals, Polyurethane, Resins etc. Below are some extracts on the growth prospects from the last annual report of the company:

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Cheers for Gujarat Reclaim & Rubber Products

Filed under Update by on April 10, 2012 at 6:48 PM {18 comments}

Hello friends,

Congratulations to you all for participating in this superb run of Gujarat Reclaimed Rubber. Thanks for all your wonderful comments and your continuous support. Even in this relatively dull market, GRRPL has done remarkably well.

The stock has been a major outperformer and has more than doubled since our initial recommendation @ 875 about 2 years ago to Rs 2,000 now. We have been repeatedly providing updates on Gujarat Reclaim Rubber and the high allocation & conviction has been possible due to the regular feedback by our readers and friends. We would encourage you all to invite more of your friends & colleagues and keep exchanging more ideas.

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Ansal Properties–Dark Horse?

Filed under Stocks by on March 27, 2012 at 2:57 PM {51 comments}

Ansal

BSE: 500013 | NSE: ANSALAPI | Market Cap. : ~510 Crore

One asset class where huge wealth creation has happened over last few years is real estate, where the maximum appreciation has happened in Tier 2 & 3 cities over the last 3-5 years. Yet real estate stocks haven’t performed well over last 3 years. The reason is the irrational exuberance the sector had witnessed during the 2007-08 boom. Most of the stocks are down 80-90% from 2008 highs. Lets rewind back to IT boom of 2000 and similar thing had happened but after the circle of extreme optimism and pessimism things came back to normal and genuine good companies were rewarded by the markets. We feel that real estate sector is also going through extreme pessimism and there could be selected winners going forward. One such stock idea might be – Ansal Property. They were one of the first to start the big township concept in these Tier 2 & 3 cities and going by the appreciation in land prices in these cities, they may be perfectly placed to reap the rewards going forward.

Ansal Property is one of the oldest and biggest builder of North India. Some of the landmark buildings constructed by the company are – Ansal Plaza, Ansal Bhawan, Statesman House etc. Following are the major projects being undertaken by the company: (more…)

Liberty Phosphate Ltd.

Filed under Stocks by on March 9, 2012 at 8:25 AM {31 comments}

Agriculture

Liberty Phosphate (BSE:530273) is one of the largest manufacturer of SSP (Single Super Phosphate) Fertilizer. The fortunes of the company have changed over the last 2-3 years since the introduction of the Nutrient Based Subsidy (NBS) policy by the Government. Under the NBS, the subsidy amount for each fertilizer is fixed based on the nutrient composition in the fertilizer. This is the first time, the policy recognized Sulphur content in SSP while fixing the subsidy. With better subsidy, SSP is much cheaper to other fertilizers and hence the usage and production is increasing rapidly after years of stagnation. Hence the existing SSP manufacturers are witnessing growing turnover along with higher margins.

The stock looks interesting due to its cheap valuations at CMP of Rs.64:

  • Stock is trading at just 2 times its trailing twelve month earnings.
  • Stock is available at just 1.1 times BV.

Now the question comes, is this performance sustainable and growing?

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Quarterly Results Update (Q3 FY12)

Filed under Update by on February 21, 2012 at 8:28 AM {23 comments}

Q3 results have been generally good and most of our stock ideas have posted good performance. Here is a brief evaluation of their performance:

1. Balkrishna Ind: The company has yet again posted an excellent set of numbers and has surpassed the expectations. It is fantastic for a company with as large a turnover of about 2500 Crores to grow at 30%+ per annum. The company is in process of a greenfield expansion which should double their capacity in 2 years and hence the company has potential to keep growing at 30% p.a. for next 2-3 years. They are targeting 10% market share worldwide by 2014.

The stock has been a major outperformer in this market. Yet the stock is trading at just less than 10 times earnings. I do expect it to get further re-rated upwards with bigger investors coming in.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 757.08 492.93 53.60% 1996.94
PBIDT 133.47 86.60 54.10% 370.70
Tax 35.02 18.37 91.87% 89.38
PAT 72.88 38.21 90.70% 185.66
EPS 7.54 6.54 19.21

*All Financial figures are in crore rupees (except EPS).

2. Astral Polytechnik: This is another GEM of a company. The company has delivered a growth of 60%+, much more than the expectations. This quarter results were expected to be bad because of the abnormal forex movement over last few months (company imports majority of raw materials and the Indian rupee has fallen from about Rs.44 levels to Rs.54 against the dollar in a span of few months). But the rupee has now recovered to Rs.49 levels and as the company has also done some price hikes in last few months, we may see some fantastic numbers in upcoming results.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 160.51 98.49 63.00% 410.82
PBIDT 11.35 13.86 -18.00% 57.50
Tax 1.19 1.55 -23.20% 8.60
PAT 4.74 8.38 -43.40% 33.59
EPS 2.11 3.94 14.95

*All Financial figures are in crore rupees (except EPS).

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Gurus Speak – The road ahead

Filed under Interviews, Update by on February 13, 2012 at 12:52 PM {14 comments}

With the markets delivering a fantastic performance over last 1 month, there is a lot of debate whether the markets have started a new bull market or is it a sort term dead cat bounce. Here are some very important and useful articles from Gurus:

Warren Buffett on why stocks beat gold and bonds

In the article, Warren Buffett shows using past data that bonds usually don’t deliver returns more than the inflation. Over a long term, they cause a serious loss in purchasing power to the holder of the instrument. The above chart shows the fate of $100 and how equities deliver a much superior returns compared to any other asset class.

For unproductive investments in Gold, he says that for total value of Gold in World:

…we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money…

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Q3-FY12 Result Updates

Filed under Stocks, Update by on February 5, 2012 at 5:48 PM {17 comments}

Dalal-Street Updates

When the majority were bearish, the markets surprised them by giving a strong upwards swing.  Most of the stocks prices have improved by about 20%+ in less than a month. This is why it is always advised not to time the markets. Rather than remaining on sidelines, one should target companies doing well and yet available at sane valuations. The Q3 results look good till now. Here is an update on some of our existing ideas:

1. Indag Rubber: The company has posted yet another good set of results. Top-line grows @ 55% and Net Profits @ 85%. Yet the stock is still available at less than 5 times earnings. It looks to have good potential ahead.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 57.45 37.17 54.60% 149.47
PBIDT 7.77 4.44 75.00% 16.69
Tax 1.59 0.85 87.10% 2.89
PAT 5.31 2.88 84.40% 10.75
EPS 10.12 5.48 20.48

*All Financial figures are in crore rupees (except EPS).

2. IFB Agro: The company has posted steady results with strong improvement in margins from the liquor business. The stock seems cheap as it is trading at just 4.5 times the earnings. Technically too the stock seems to be heading for new highs.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 120.97 106.80 13.30% 422.82
PBIDT 14.82 7.73 91.70% 36.27
Tax 4.14 1.86 122.60% 8.40
PAT 8.23 3.47 137.20% 17.82
EPS 10.28 4.33 22.26

*All Financial figures are in crore rupees (except EPS).

3. Gujarat Reclaim: The company remains to be our favorite with its repeated stellar performance. If one considers the superior business quality of the company, superior ratios, management quality etc., we feel this company deserves much higher valuations. Over next one year, the company is in process of expanding its capacity by about 40%+. This stock should get a high allocation in the portfolio.

Particulars Dec 11 Dec 10 % Variation FY 2011
Sales 62.68 46.20 35.70% 185.04
PBIDT 15.23 7.43 105.00% 33.19
Tax 3.96 1.56 153.80% 8.14
PAT 8.53 3.97 114.90% 17.62
EPS 63.98 58.12 132.16

*All Financial figures are in crore rupees (except EPS).

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Nesco Updates

Filed under Stocks, Update by on January 29, 2012 at 6:42 PM {5 comments}

Nesco - Bombay Convention and Exhibition Centre

BSE Code: 505355 | NSE Code: NESCO

We recommended Nesco recently after going through the wonderful analysis by Prof. Bakshiji. The stock has got good coverage by fellow value investors and business channels. Do go through the detailed post by Rohit along with links to posts by Neeraj & Ninad.

Our viewpoint and thoughts in brief:

The Bombay Exhibition Center covering area of about 4.5 Lac sq. ft., is a sort of monopoly in Mumbai with a lot of bargaining power. The growth in rentals can be observed from the table below:

Year Annual BEC Revenues (Million in Rs.) Space (sq. ft.) Monthly Rate (per sq. ft.)
2011 656.20 450000 122
2010 540.40 450000 100
2009 349.60 450000 65
2008 496.30 450000 92
2007 329.10 450000 61
2006 144.10 450000 27
2005 109.70 450000 20
2004 54.40 450000 10

Today most of the biggest trade events held in Mumbai are held here. Such kind of business is tough to find at reasonable valuations and I think most of us would agree that current valuations are reasonably cheap.

The trigger is: the company has already constructed IT Building – 3 which has a leasable area of close to 8 Lac sq ft. At a conservative rental of Rs.100 / sq ft, the company should be able to get a Net Profit of 70 Cr+ (post tax). This might happen over next 1 year.

Nesco made a Net Profit of about 68 Crores last year so if the profits are to double over next 1-2 years, the stock can also double out without any PE re-rating. Plus going forward, the company plans to build another IT Building and double the leasable at its Bombay Exhibition. Hence being a debt free company with about 180 Crore cash on Balance sheet, it seems to be a very safe pick at these levels.

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