Updates on latest quarterly results [Q4FY13]

“Market rewards you as per your perception about the market. If you treat it as a gambling den, it will prove a gamble for you” – Vijay Kedia

Presenting results

The results season is here and we are again busy tracking them. For those who still don’t use the alert feature in the Screener, we would highly recommend you to set an email alert for the Bulls Cartel Screen and the Growth Stocks screen (select alerts for the “new results”) to keep an easy tap of the results (that is what we do along with adding stocks to the watchlists to also get the updates about them).

On the performance side, most of the results look good and here is a brief review on the stocks we have discussed so far:

Avanti Feeds – The company has posted a fantastic Q4 result. This is the fourth year since the industry has changed and started doing well, and Avanti is delivering a super growth. Here is a snapshot:

Details 2009 2010 2011 2012 2013
Turnover 72.51 96.16 199.62 393.41 648.04
Net Profit -8.59 -1.20 3.42 28.06 30.20
EPS -10.74 -1.50 4.28 30.90 33.26

At CMP of 110, the stock is trading at just 3.5 times earning, less than BV of 130 and offering a dividend yield of 6%. The concern remains that this is a volatile industry, though we feel that the current price discounts the same.

Atul Auto – The company has again posted very good set of results. Despite a modest growth of 20% in turnover, the net profits have grown 66% for FY13. If one looks at the balance sheet carefully, several interesting things are happening:

  1. Excellent working capital management – AAL has been able to reduce inventory consistently from 15% of turnover in 2009 to just 6% in 2013. At the same time, creditors are increasing (thanks to advance from dealers too) and hence the company is now operating on negative working capital. The company is having a cash balance of close to 40 crores now (on a market cap of around 200 crores).

  2. Expansion of Net Margins – As the company has been able to grow from the same base, the operating leverage has been kicking in. The net margins have improved from just 2.5-3% historically to 7% in FY13. With the latest doubling of capacity at a very low incremental cost, this can surprise positively again.

  3. Expansion of product profile and geographical reach – AAL has been steadily entering new states and expanding its dealer network.

  4. Shareholder friendly management – AAL has been rewarding shareholders with bonus and liberal dividends. For FY13, the company has declared a 60% dividend.

We feel the company is quite under-rated and holds a good potential and deserves higher valuations. [Related interesting reading on expected performance of the 3-Wheelers in the upcoming years].

Astral Poly Technik – The company has posted yet another spectacular set of results – the topline has grown yet again at 40%. The compounded topline growth delivered by the company for last 10 years is of 52%! This has been one amazing growth story and the future seems equally bright. Given the growing product range, greater adoption of CPVC, growing real estate activity etc, the company should be able to maintain good growth rates for the coming years too. Key things to note in the results are the improving financial ratios – the ROCE has been improving over the years (almost 34% now) and the cash flows are excellent. This year the working capital management has been remarkable. The company has done well in building a PAN India brand. One should remain invested and try to buy on sharp declines, if any.

Kovai Medical – The hospital has done pretty well – delivering a 33% topline (turnonver) and 77% bottomline (net-profit) growth for FY13. Though our expectations for Q4 were more but nevertheless, the results are good. As the company hasn’t announced any major expansion, the peak debt may be behind us and now the company might focus on reducing the outstanding loans. Given their excellent cash flows, if the debt and the interest cost reduces (currently interest cost is more than reported net profits) the company should be able to deliver good profitability growth for the upcoming year. The debt equity ratio has corrected from 3.40 in FY12 to 2.29 in FY13. At CMP of about 165, the 700 bed hospital is available at a market-cap of 170 odd crores. [Related interesting reading on 150 bed Apollo expansion for Rs.120 crores].

Indag Rubber – Though on the face of the numbers, one might not feel excited but given the bad business environment for auto industry, we feel the company has done well. Most importantly the company has focussed on excellent cash flow management and both debtors and inventory have further reduced. Due to this, the current investments on balance sheet have swelled to 26.65 Cr vs 0.50 Cr last year. The dividend has been increased from 60% to 80% and yet the stock is trading at just 4.5 PE. One reason for the undervaluation is that the stock is under illiquid category but it may be an opportunity for the long term investors.

Kaveri Seeds – Usually Q4 is a bad quarter for this industry but Kaveri has posted good numbers (though as per the concall, few one time adjustments are there). As June quarter is the most important quarter for this industry (majority of the profits are reported), the balance sheet of Kaveri for March year end becomes really important as it gives a sneak preview of the upcoming season. As per the FY13 balance sheet, the inventory has increased almost 60% and the advances from dealers about 15-20%. The advances haven’t increased proportionately due to an intense competition in the industry but as per the concall and management guidance, the company should grow at least 20% for the upcoming year. Given the major increase in dividend (Rs16 vs Rs4 last year) and inventory, few are expecting a much better growth in the upcoming season.

Astra Zeneca Pharma India – AZPI has posted another quarter of poor performance but as per the notes to accounts and the recent presentations of the company, it seems the problems of the company are about to over. In a recent unheard move, the parent company has provided a financial grant of 119-140 Cr to the Indian subsidiary, showing their long term commitment. As per the SEBI guidelines, the company is diluting its shareholding to 75% on 28th May and would remain listed. We feel it might be a good opportunity for patient long term investors.

Mayur Uniquoters – The growth rate in MUL have come down to 15-20% vs. almost 40% growth rates over earlier years due to the poor economic environment but if one hears the management and their business plans etc, this is one high quality company. Also, the way the company has rewarded shareholders and maintained excellent financial ratios and transparency, it deserves better valuations when the growth is back. We feel, it remains a good compounding story.

Poly Medicure – As discussed earlier, the forex problems are over and now the real picture of the superb financial performance of the company is coming forward. The key thing to look in the performance is the way the operating profits (excluding forex losses) have increased over the years to 26-27% now and the efforts of the company to maintain 20-25% growth going forward. The company has also announced a 1:1 bonus.

Among new ideas, we are working on Bharat Agri, Noida Toll Bridge and NMDC.

Do share your views on the above through comments. In the meantime, we have also built-up a small utility app to share and collect the best investment related stories around the web.

 

  • ayushi

    Hi ayush
    Mps results declared… what ur viewabout the same and also about canfin results…
    Thanks

    • Ayush

      Hi,

      Results of MPS are decent and inline with expectations. Results of Canfin are good and they should do well in FY14 too.

  • Naveen Vaidya

    Hi Ayush,
    I think NMDC can be picked up from a long term view. If fact I think there is limited downside here. If there is some positive news action on mining, this stock will hog limilite. I am wondering with your pick on Noida toll bridge. It has done nothing significant. Anything that I can know? please share. By The way would you have time to look at SPARC, Alembic Pharma, Finolex Ind, Pidilite and Kolte-Patil. I was watching kolte patil management interview. Do you thing this would be a turn around story. Sorry for such a big question. 🙂

    • Ayush

      Yes, especially the liberal dividend they have declared should help in protecting the downsides.

      The interesting development in Noida toll bridge is that they have raised toll rates recently and the debt has also come down.

  • Bharath Kumar

    Hi Ayush,
    Any idea on Cochin MInerals. They have delivered poor results.

    Bharath

    • Ayush

      Sorry, we don’t track the same.

  • Mallikarjun

    Hi Pratyush/Ayush
    Thank you for the new Utility App
    Regards

    • Thanks for the appreciation 🙂

  • Vivek Gautam

    I am interested in making an entry in Atul Auto. I think the size of opportunity is quite large n ROCE very decent. How has been the track record of the co? Has the co been able to replicate successfully it’s Gujarat model in other states ? What abt the competition from Piaggio,Bajaj, Mahindra 3 wheelers ? Or is the pie big enough for everyone? Is there anything unique abt Atul products I. Terms of features,mileage, warrantee, upkeep etc which acts as moat for the co?

    • Ayush

      The track record of the co has been excellent. Yes, as per the feedback, they have done well in some of the new states they have entered – like AP, Kerala, Assam etc.

      Piaggo is the biggest player having a dominant market share…atul is trying to grab small % from them. Also, over long term there is a huge potential for exports.

      The co’s product GEM has done very well and scores very well on the above parameters. It has been one of the best sellers.

  • Vivek Gautam

    Any updates on Canfin homes? The price is not moving anywhere. Is it because of comparatively poor ROCE n ROA nos.?

    • Ayush

      Its upto the market to recognize the potential or not. We can only invest based on the logics and insights at our end. Lets see how things unfold over a longer term.

  • Vivek Gautam

    Can Astarl poly be bought at, CMP ? Any updates on Blazemaster sales setup? What do you feel on buying Kaveri Seeds at CMP? Which are your top picks at CMP?

  • Prashanth

    Ayush,

    Request you to look at CHD developers

    http://www.screener.in/company/?q=526917&con=1

    A micro-cap real estate company with presence in North India (Delhi, Chandigarh, Gurgaon, Karnal, Haridwar…)

    They have executed some big projects including townships in Karnal, and have recently signed an MOU with govt of Uttarakhand for “development & construction of mega Food Park, Bottling and Food Processing Units at Integrated Industrial Area, Sitarganj, Uttarakhand.”

    Reasons for interest:

    -They’ve had a very good quarter and FY13 with increase in bottom and topline

    -Started paying out dividends from couple of years (div yield of 2.15%)

    -Debt is very less considering their sector

    – Promoters are increasing their stake with open market purchases

    Would like your views

  • Ayush

    Hi Prashanth,

    Thanks for bringing the idea with details and logics. There is a major problem with real estate cos as despite good projects they are not reporting the profits they might be doing and hence the minority shareholders aren’t getting value here. On similar lines, have a look at Ansal Prop…they have huge amount of land bank and good projects yet they report poor nos.

    Ayush

  • ashok

    Hi, just a query about Screener. When i run a screen, can i download the data in an excel ? If yes, how do i do that ?

    Thanks – the screener is awesome.

    • Hi Ashok,

      Currently the option to export the results in excel is not available for the users. The option is under development and will be made available for public soon.

      Thanks a lot for the appreciation :).

  • Anand

    Hi,

    What are your views on Mirza International? Seems to show up on most screens I try! Also, seems fundamentally very strong and the foreign exposure should help it given the weak rupee.

    Thanks,
    Anand

    • Ayush

      Hi Anand,

      We don’t track it closely but yes, it could be a good idea. They have been doing well, the valuations are cheap and they also have brand value.

  • Sreekanth

    Hi Ayush, with markets bleeding over the past week on news on Fed withdrawing QE… Could you list a couple of stocks where one can invest as bottom-fishing?

    • Vivek Gautam

      Ayush due to fed action n FII selling mkt melting. How long will it continue . What’s your take on Tcs, Indusind bank, Page ind, Hawkins, Lupin ?

      • Ayush

        It has reversed in just 2 days, Vivek 🙂

        For long term investors, such falls may throw up some great opportunities so we are focussing on reading new ideas etc.

    • Ayush

      Have done a blog post

  • Prashanth

    Hi Ayush,

    Request your views on Kitex garments
    It could be one of the beneficiaries from Rupee depreciation as most/all of their business is in exports.

    I feel it is a decent stock for holding long term also.

    • Ayush

      Kitex garments looks good on the face of nos and past track record. We haven’t done much work on it but looks interesting.

      Being a textile co, wish it was available at lower pe multiples.