Can Fin Homes & other updates

Can Fin Homes (BSE: 511196, NSE: CANFINHOME) is a housing finance company promoted by Canara Bank (having 42% stake). Housing Finance has been a very rewarding sector in past (look at HDFC, LIC Housing and GRUH Finance). Thus the discussion on Can Fin caught our immediate attention.

Can Fin focuses on affordable individual home loans and is concentrated in the southern India. Until 2011, the company had been growing at a marginal pace of around 7%. The Silver Jubilee year and the change in management seems to have brought about a new enthusiasm though. Since then the business has been growing at a rapid pace of about 30% p.a.

Details 2011 2012 2013
Disbursements 472 859 1814
Loan Book 2207 2674 4016
Branches 40 52 69
Gross NPA 23.47 crore 19.01 crore 15.66 crore
Gross NPA % 1.06% 0.71% 0.39%
Net NPA 0 0

Looking at the support by the government towards cheaper financing for affordable housing, there seems to be good growth opportunity ahead. Continue reading Can Fin Homes & other updates

Kovai Medical Centre & Hospital and other updates

BSE: 523323 | NSE: KOVAI

CMP: Rs.165 | Market Cap: 175 Cr | PE ratio: 9.50 | BV: 71
Screener link
| Company Website

Kovai Hospital

Kovai Medical Centre and Hospital (KMCH) is a 691 bed multi-disciplinary super speciality hospital located in Coimbatore. The company has two satellite centres at Ramnagar, Coimbatore (10 beds) and Erode (65 beds). In addition the company through its subsidiary “Idhayam Hospital” operates another speciality hospital (58 beds) in Erode. Coimbatore has emerged as one of the major medical centre in South and is attracting a lot of medical tourism.

KMCH had undertaken a major capex of Rs 269 Cr for increasing the number of beds from 320 in 2008 to 691 beds, completed in phases till Aug, 2012. The company has been reporting very good results in recent quarters. Healthcare industry is an evergreen industry and due to health insurance and medical tourism, the sector should see consistent growth. Continue reading Kovai Medical Centre & Hospital and other updates

Update on Quarterly Results

Markets Cartoon

The third quarter of the financial year 2013 has generally been very weak. The common problem has been the demand slowdown and the pressure on margins due to inflation and competition. In most of the cases results have been below expectations. On the positive side, these challenging times are the best times to re-structure your portfolio. One gets to accumulate high quality ideas at low valuations, (often) due to temporary problems. The important thing is to maintain liquidity and discipline.

Starting off with the good results:

Ajanta Pharma: The company posted stellar results and the stock witnessed a strong activity and appreciation. We discussed about the company here.

The company has posted a 37% growth in the topline from 164 Cr to 225 Cr and 75% growth in the net profits from 18.50 Cr to 32.57 Cr. The results are remarkable as the growth in profits has persisted despite higher taxation. Usually 4th quarter is the best quarter for the company, hence the company may be able to repeat similar performance in Q4FY13 too. We feel investors can continue to hold and try to buy on sharp declines, if any. Continue reading Update on Quarterly Results

Caplin Point & Poddar Pigments

We earlier talked about some developing ideas for 2013. This post is to discuss them in more detail.

Caplin Point (BSE: 524742)

This seems to be a very interesting pharma company at an early growth stage. We have been tracking it for some years but it really caught our interest when we received its FY12 annual report few months back. Few snapshots:

Balance Sheet

Caplin Balance Sheet

The interesting thing was that the company’s topline had grown by almost 35% in 2012, and yet the efficiency improved. The inventory and debtors remained at very low levels, debt reduced and the cash on balance sheet increased. The company has been getting efficient over the last few years: Continue reading Caplin Point & Poddar Pigments

The Best Ideas and stuff of 2012

Best wishes from Dalal Stree team

Welcome 2013!!!

Hello Friends, we wish you and your family a very Happy & Prosperous New Year!

2012 has been a good year for our financial markets with the sensex gaining over 25% this year and beating all other asset classes. The best thing was that the mid caps (the area we focus on) outperformed the broader markets and the high quality stocks were the major wealth creators. Those feeling that they might have missed the bus and it is late, have a look at this stat – markets are still 4% lower than they were 5 years back. It may be just a start of a long term bull market.

We went through the timeline and compiled the list of the best articles, learning and experiences of 2012. (They are not in any particular order):

Favorite Articles:

New Finance Blogs:

In 2012, we had some very interesting new finance blogs; we would love to congratulate them. We expect to see more new investing blogs in 2013.

  • Alpha Ideas – Nitin shares the best of the finance articles, videos and reports – everyday
  • Safal Niveshak – Vishal simplifies the teachings of the investing geniuses and makes them understandable in Indian market’s context
  • Value Investing by Dhwanil – Discusses value investing stock ideas with a clear thought process
  • Safir’s Picks – Safir is an opportunist investor, always with many interesting and winning ideas in his pockets (do follow him on Twitter too)

Best Videos:

Best Company Visits:

  • Astral Poly Technik – We met with the dealers and plumbers in Ahemdabad to do groundwork and were amazed by their feedback for a strong conviction
  • GRP – We were amazed by sincerity and knowledge of the management. Looking forward to attend AGM of 2013 too
  • Mayur Uniquoters – The grip and vision of the management on the business helped us in increasing the conviction

Our Best performers during the Year (with percentage change):

  • Astral Poly Technik (171%) – The growing brand presence and stock discovery led to high returns
  • Atul Auto (142%) – Company went pan-India from its home market of Gujrat
  • Liberty Phosphate (134%) – Favorable government policies for SSP sector led to mis-pricing opportunity
  • Mayur Uniquoters (130%) – Fantastic financial ratios along with growth led to a good re-rating
  • Apcotex (101%) – Earlier part of the Asian Paints group, this company did well on growth and dividends

The close runner-ups were up 100% each: Poly Medicure, Indag and BKT

Market learning of 2012:

Earlier we had a lot of focus on undervaluation while looking at a stock ideas. Now we have also started giving more weightage to the business quality and the scale of opportunity available. The three of the worst performing ideas were: Piccadily Agro, Faccor Alloys & BNK Capital

The common thing among all of them was that though they were good on ratios temporarily, but they had a poor business model or management.

Developing ideas for 2013:

Screener Developments:

During the year, we experimented with lots of ideas and things. We are highly excited about the developments on Screener and the feedback of users. Our favorite features of Screener are:

  • Export to Excel – Screener is the first website in the world to provide such a customization functionality
  • Alerts for Screens – We love to set the email alerts for the favorite screens in the Screener to keep an easy track of the latest results

Plans for 2013:

We are expecting the credit rate-cuts in early 2013 and are optimistic about the markets ahead. We plan to create more new tools to make investing happier and easier. We hope to discover more new stocks ideas. And above all, we look forward to your comments and support!

Wish you a very happy and prosperous new year ahead.

Best Wishes

Ajanta Pharma and MPS Ltd

Ajanta Pharma ranks among the Top 50 Pharmaceutical companies in India (IMS ORG MAT March 2012) with sales growing at 27% CAGR over FY06-12.

Link to company financials – http://www.screener.in/company/?q=532331

Main Generic Brands:

  • Ophthalmology (Olopat, Diflucor, Zaha, Unibrom, Nepaflam) 
  • Dermatology (Melacare, Pacroma, Salicia KT, Sunstop)
  • Cardiology (Atorfit CV, Met XL, Rosufit) 
  • Anti-Malarials (Artefan – Artemether & Lumefentrine) 
  • Gastroenterology (Lafutax – Lafutidine) 
  • Male Erectile Dysfunction (Kamagra – Sildenafil Citrate)

In the Dermatology segment, the company ranks 18th and has 34 generic brands – with 4 leading brands and more than 10 first-time products. In the Opthalmalogy segment, the company is ranked 7th and has 30 generic brands – with 9 leading brands and more than 16 first-time products in India.  In the Cardiology segment, the company ranks 31st and has 51 generic brands – with 3 leading brands and more than 6 first-time products in India.

Over last 3 years, things seem to have really changed for the company. Ajanta is growing at about 25% CAGR now and at the same time its improving its operating margins, reducing loans and bringing working capital efficiency. Hence the ROE has improved from about 15-16% in earlier years to about 24% in 2012. The markets have noticed the same and the stock has been re-rated from usual 5-7 times PE multiples to about 10 now. However, we feel that given the strong branded formulation play and good rankings in several segments, the stock is available at a reasonable valuation considering the high multiples enjoyed by the pharma sector (Industry PE 26).

Continue reading Ajanta Pharma and MPS Ltd

Sree Rayalaseema Hypo and other updates

A brief update on some of our stocks discussed before:

Sree Rayalaseema Hi-Strength Hypo (BSE Code – 532842, NSE Code – SRHHYPOLTD): We had discussed about the company’s expansion plants earlier. In the September quarter, the company has reported a good growth of 27% in turnover and the stock looks quite cheap, if it is able to maintain this growth in up-coming quarters (which is should cause of the recent expansion).

The company is operating in a niche area of water treatment chemical – Calcium Hypochloride and it’s the only Indian company doing this work. The company has healthy operating margins of about 19-20% and the business requires little working capital. The valuations seem quite attractive as the stock is trading at a PE of just 3.5 times and the Price to Book Value of only 0.50. We feel it’s a value pick at these levels.

Negative – The promoters have been increasing stake by doing preferential allotment and merging of group companies.

Continue reading Sree Rayalaseema Hypo and other updates

Happy Diwali: Muhurat Picks and Quarterly result updates

Happy Diwali

Wish you a very Happy and Prosperous Diwali friends.

Tomorrow is the Muhurat Trading session from 3:45PM to 5PM and we would recommend all our readers to take part on this auspicious day.

Our muhurat picks are (in no particular order):

  1. Atul Auto
  2. Balkrishna Industries
  3. GRP
  4. Mazda
  5. Polymedicure

We are also studying Maithan Alloys and Aarti Drugs, and one may make an entry into them.

Further, the quarterly numbers have been good so far. A brief update about the latest numbers:

Continue reading Happy Diwali: Muhurat Picks and Quarterly result updates

Astral Poly: Management meet

We had recently mentioned about our trip to Gujarat and company visits there. Here is the detailed update on Astral Polytechnik.

We had first mentioned about this company in March, 2011. Since then the stock has done very well, rising from Rs 120 to 300 and we feel that it still has a good potential over a longer term. Here is a summary of the past track record of the company:

The company has had a fantastic growth – it has grown its turnover from hardly 13 Cr in 2003 to 578 Cr in 2012. We feel that the conversion from GI Pipes to CPVC is still catching up and hence the potential is still big enough and with the development and introduction of new products, company can continue with 25-30% growth rates for next few years. The stock may look fairly priced based on PE ratio but if one removes the forex losses (which are one time in nature), the stock is still reasonably priced, looking at the long term growth potential. Company is also focusing on creating a national brand.

Here are few excerpts from the management meet: Continue reading Astral Poly: Management meet

Liberty Phosphate – Exit

We had recommended Liberty Phosphate on 29th March, 2012 at Rs 64. The stock has more than doubled and created a new all time high @ 160 today. The stock has closed at about 148 today and we recommend an exit from the stock.

Liberty

Though the stock may seem cheap but there are several negatives/limitations:

  • The industry is highly dependent on Government policies. Any change can lead to significant change in prospects in a very short term.
  • The SSP industry though doing well as of now but its highly competitive. There are hardly any entry barriers and hence over a longer term, the margins should moderate.
  • The company’s equity has increased in past and the promoters had increased their holding at very cheap prices by doing preferential allotments to themselves. This is negative for minority shareholders.

We feel there are several better ideas we are invested in for long term compounding. One may switch to GRP, Smruthi, Sree Rayalseema Hypo, Narmada Gelatine, Sree Sakthi Paper, Sahyadri etc.