In these volatile times, I’m happy to see some of our companies doing quite well and the stocks getting the due re-ratings. It just re-enforces your faith in the fundamentals and markets.
We had discussed about Smruthi Organics on 4th April, 2011 at price of 135 and had provided an update recently. The company has posted good Q1 numbers and the stock has had an amazing run – the stock had appreciated from Rs 140 to 250 levels all in 15 days!
Similar, we had discussed about Avanti Feeds on 13th March, 2011 at Rs 33. The company has posted fantastic Q1 results:
|Particulars||June 11||June 10||% Variation||FY 2011|
The markets have rewarded the investors in the stock quickly and the stock was up 20% to Rs 59 yesterday, making a new 52 week high. The sector is doing very well and the exports from India are expected to grow sharply this year so if the company can repeat a performance like Q1, the stock may continue making new highs:
On similar lines, we keep looking for stock ideas where the companies are doing well and valuations are very attractive. We are trying to avoid companies with high debt, high working capital or high outstanding loans. New idea on these lines is:
Indag Rubber (BSE code : 509162, CMP 110): The company is one of the leading player in manufacturing of tyre retreads in India. Though it may sound to be a boring business, but the company seems to be doing quite well and numbers look great.
Indag has been growing consistently at a CAGR of 25% for last 10 years! The company had a turnover of just 18 Cr in 2002, which has grown to 150 Cr last year. The profitability has also grown at a CAGR of about 25%.
The company is almost debt free and business generates good free cash flows. The company also pays out decent dividend and gave a dividend of 40% last year. Dividend yield at CMP of 110 is attractive of about 3.65%.
The Book Value is also strong at about 85. Stock seems to be trading cheap with a PE ratio of less than 4 on trailing twelve month EPS. The company has had ROCE of 30%+ for last 5 years.
It’s important to do a re-check of portfolio from time to time. One should re-access their investments and switch out from non-performers to better ideas. In the current scenario, one should stay calm and understand the long term potential of the stock markets and do value investing at regular intervals. I firmly believe that Equities are the best asset class and good ideas will be rewarded and will lead to wealth creation.
Financial Results of Indag Rubber: