Wednesday, July 31, 2013

Can Fin Homes - Q1 Result

Financial Results & Limited Review for June 30, 2013
Link: Click Here

Another solid and consistent performance by Can Fin Homes. But I am not sure, how much it will show in stock price, because of weakness in entire sector.

Revenues have grown from 83.85 Cr to 126.59 Cr, that suggests growth of 51% YoY.
Also, it has grown from 113.23 Cr to 126.59 Cr, that suggests growth of 12% QoQ.

Net Profit have grown by almost 44% from 11.49 Cr to 16.51 Cr YoY.
It has also grown by approx 7% from 15.54 Cr to 16.51 Cr QoQ.

Such high profit has taken EPS to 8.1 Rs for the quarter, which is highest so far, as far as I believe.

My Views:
Numbers looks excellent to me, especially in poor times, where many finance companies has not been able to show good numbers. If you look at last few quarters, company has shown consistent growth, not just YoY, but also quarter after quarter, which has impressed me a lot.
The only problem with this stock is the sector, where almost all the companies are trading at 52 weeks low. Even a company like LIC is also hammered with stock trading at 170 levels.
One has to keep a long term view to get good returns from Can Fin Homes, in spite of tremendous performance from the company, because of heavy weakness in the sector.
As mentioned in earlier post, I still maintain my target of 200, but just that, it might take time to reach there.
We had another disappointment from RBI today, with Credit Policy. The scare of interest rates being increased by Banks might further put pressure on this sector.

Monday, July 29, 2013

Ajanta Pharma - Q1 Result

Financial Results & Limited Review for June 30, 2013
Link: Click Here

Results Press Release
Link: Click Here

Board recommends Bonus Issue:
Ajanta Pharma Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 29, 2013, inter alia, have recommended Bonus Shares in the ratio of One new fully paid-up Equity Share for every Two fully paid-up Equity Share.
Ajanta Pharma Ltd has informed BSE that the dispatch of bonus shares would be completed on or before September 29, 2013.

Another good set of numbers given by Ajanta Pharma. But still stock has seen some negative movements because of the fact that, we were so far, addicted with record revenues coming up with every quarter since last 1 year. That didn't happen this time. It didn't came in as a surprise to me, because even if you look at earnings last year, the revenues in June quarter were slightly less than Mar quarter. The difference was less last time, but still, there is something which is affecting June quarter numbers. What we consider as base of comparison, is the year on year factor.

Revenues stands at 219 Cr from 174 Cr, which represents growth of 26%.
Net Profit stands at 32.54 Cr from 19.58 Cr, which represents jump of 66%.
EPS for the quarter turns out to be 13.89, which is fabulous, in terms of profits made by the company.

My Views:
For long term investors, I would recommend a hold at this price, as we expect the company to grow further in coming quarters. We are still waiting for operations to begin at 2 new plants in Gujarat, which will also start contributing to revenues. But still, as per management those plants will be operational from 2014-15. Hence its about patience of each investor. Overall if you see, the target of 1000 in 2 years, which I posted in last September, is already achieved. But considering the fact that the growth shown by the company is tremendous, and we have 2 new plants getting operation by next year, I expect the stock to go to 1500 or above levels in next 2 years time.

Note: After the bonus is issued, the price of the share will 2/3rd of the last traded price.
Hence, if the stock is trading at 1000 on last day before issue of bonus share, then price will be 666 on the next day, once bonus shares are issued.
Hence the target of 1500 Rs in next 2 years, is equivalent to a target of 1000 Rs in next 2 years, after bonus share adjustment.

Thursday, July 25, 2013

Granules India - Q1 Result

Financial Results for June 30, 2013 along with Press Release
Link: Click Here

Management Expecting To Grow At Better Than 30% In FY14
Link: Click Here

The number reported by Granules India comes in line with the expectation.
I would say, in line with expectations, because, the stock has already appreciated about 40% in this quarter.
The numbers are outstanding, comparing with growth in past few quarters, mainly because of the contribution from expansion process.
As the expansion is still not fully scaled up, we can expect, plenty more terrific numbers from the company going ahead.
On consolidated basis, Revenues have grown 21% from 189.3 Cr to 228.3 Cr.
Net profit has grown 134% from 6.3 Cr to 14.7 Cr this quarter, which is phenomenal.
The ratio's are almost similar, on standalone basis as well.

Important Lines From Press Release:
The formulation expansion at the Gagillapur facility commenced operations during the quarter and the company expects to scale up production throughout the year as it receives customer approvals. The company expects majority of customer approvals to be in place by second half of the fiscal year.
Our results are harbinger of what is to come for FY14. The fiscal year, particularly the second half, will be exciting for us as we continue to shift sales to Formulation as our production ramps up.

My Views:
I would suggest people to continue holding and may be average out few even at these levels, as the management is pretty confident of what is to come in second half of this fiscal.
If all what they have promised, turns out to be true, then I would not be surprised to see tha stock above 250 levels in a years time.

Wednesday, July 24, 2013

Dewan Housing - Q1 Results

Financial Results for June 30, 2013
Link: Click Here

Dewan Housing Finance Corporation: Outcome of AGM
Link: Click Here

Dewan Housing Finance Corp Q1 net soars 54% to Rs 120 Cr
Link: Click Here

Another good set of numbers posted by Dewan Housing where revenue increased 52.5 percent to Rs 1,126.2 Cr from Rs 738.5 Cr and net profit jumped 57.1 percent to Rs 288.3 Cr from Rs 183.5 Cr YoY.

Right now, with most of housing finance company, in downtrend, its difficult to predict the movement even after such strong numbers. At most, we can predict that downside in this counter is limited.
There is a huge upside potential, but I think, it will take some time to unveil that.
Not sure about short term investors, but definitely, long term investors, can hold this stock with confidence, as even promoters have increase their stakes in the company off-late.

Monday, July 22, 2013

Thangamayil Jewellery - Q1 Result

The numbers posted by Thangamayil Jewellery is way above my expectations.

Revenues have grown almost 20% YoY as well as QoQ, even in bad times, largely because of the expansion in form of opening new branches.

Net Profit stands at unbelievable 13.75 Cr, where many expected another loss in this quarter.
In any case, it stands at a net profit of 13.75 Cr Vs a loss of 5.72 Cr QoQ.
On YoY basis, net profit is down to 13.75 Cr from 15.13 Cr, which is marginal, and expected as the gold situation was way better last year.
EPS have gone up from (-)4.18 to 10.03 QoQ and from 11.03 to 10.03 YoY.

Company says that it accounted the entire publicity and advertising expense incurred in the current quarter as per the Accounting Standards Requirement. Whereas the corresponding quarter of last year, a sum of 5.35 Cr were transferred to Deferred Revenue Expenditure. If the same treatment is given for the current quarter, the profits would have been higher by 1.26 Cr on comparable basis.

Company started 4 new branches this quarter and they all are performing satisfactorily.

Link: Click Here

My Views: Excellent numbers have been posted by the company, and I would recommend a strong hold/buy at current levels. With more and more branches coming up, we can expect a very strong performance by the company in coming quarters. The only worrying factor is the prices of gold which is fluctuating heavily, but with their expansion, and probably, very good demand in south india, I dont think company will face any problems in growing their business.


Friday, July 19, 2013

Stock Bonus Vs Stock Split

Well, after the announcement of Bonus issue by Ajanta Pharma, I have got this question from many, as to what are the differences between bonus share issued by the company and stock split. Hence I thought of covering that topic with example of our favorite stock, Ajanta Pharma.

To understand the similarities and differences between these 2 terms, it is very important to understand the meaning of company's share capital.

Company's Share Capital is number of shares issued by the company multiplied by the face value of each share. For eg., if a company issue 1000 shares with a face value of Rs 10 each, then the share capital of the company is 10000 Rs.

Stock Bonus:
When a certain company decides to give stock bonus, it eventually results in increase in the share capital of the company. This increase in share capital has to be paid from reserves & surplus of the company.
So, if in above example, the company decides to give 1:1 bonus, each investor will get 1 share as bonus per every share held by him. If he has 20 shares, he will now have 40 shares with him after bonus.
So, to give that extra shares to each investors, company has to generate another 1000 shares of face value 10 Rs each.
Hence the share capital of the company will now rise to 20000 Rs. Face value of the share is still 10 Rs, but number of shares in the market has doubled.
Issuing bonus share is like giving 100% dividend to its shareholders. This, in a way, reflects the confidence of management in the company.

Stock Split:
This is slightly different, in a way, that company does not have a pay any amount in case of stock split. The calculation is very simple.
In stock split, company decides to split the face value of each share.
For eg., in above case, company decides to split the face value of share from 10 Rs to 5 Rs each.
Hence the number of shares in the market will get doubled.
Earlier, we had 1000 shares of 10 Rs each. Now we will have 2000 shares of 5 Rs each.
So, the important thing to observe is that, here, the share capital of the company did not change at all.
1000 * 10 = 2000 * 5
Hence, company does not have to pay any amount to increase share capital in case of split, unlike bonus.
Split of shares is generally done, to increase liquidity in market. For eg., if we have a stock, which is of face value 10 Rs and current market price of 4000 Rs per share. Here, we would rather be hesitant in buying, as it is costly. So, management decides to split the share share into 1 Rs face value from 10 Rs. So the price of share will come to 400 Rs and number of shares in the market will be 10 times. Now we can expect some frequent trading in this stock.

In both the case, price is adjusted according to the ratio of split/bonus.

Lets now put both these events with Ajanta Pharma, as Ajanta Pharma split the stock from 10 Rs face value to 5 Rs face value last year in July, and now is about to consider issuing bonus share.
So, first of all, Share Capital of Ajanta Pharma is 11.80 Cr.
Hence when it came with 1.18 Cr shares of face value 10 Rs each.
Last year, in july, face value became 5 Rs per share, and number of shares in market went upto 2.36 Cr.
Hence Share Capital remained same at 11.80 Cr (2.36 * 5)

Now, if company decides to give a bonus of 1:1 this year, then the total number of shares will be 2.36 * 2 = 4.72 Cr, but with a face value of 5 Rs each, as earlier.
Hence Share Capital of the company after bonus will be 4.72 * 5 = 23.6 Cr.
So, this extra 11.8 Cr (23.6 - 11.8), will have to be paid by the company's reserves & surplus.

I hope I have made myself clear in this discussion.
Kindly put in your comments if you have any queries.

Sunday, July 7, 2013

Quarterly interest means depositors lose Rs 2500 crore per year - Interesting Article

Source: Economic Times

Depositors are losing close to Rs 2,500 crore every year because of Indian banks applying interest on deposits every quarter instead of every month, according to a report by the Indian Institute of Technology, Mumbai. This is in contrast to loans where interest is applied on a monthly basis.

To study the impact of this discrimination, one needs to compare the interest liability on a Rs 1 lakh education loan at the end of the year compared to earnings from a fixed deposit assuming interest on both was 10%. While the interest earned on the FD would be around Rs 10,381, the interest liability on the loan would be Rs 10,471. Such comparison is only possible in education loans where there is no repayment in the first year.

At present, the Reserve Bank of India (RBI) mandates banks to apply interest on deposits at quarterly or larger intervals. Banks also calculate interests accrued on a fortnightly basis but only for reporting to RBI.

The technical report by Ashish Das from IIT's mathematics department published this week is expected to be taken seriously by RBI, considering that the central bank itself had raised the issue in the past. The report, titled 'Interest of bank depositors in chaos', has studied interest application frequency on bank deposits and the methodology used by banks in calculating interest income.

The regulator also paid heed to earlier reports from the same author, which resulted in regulatory changes including recommendation that banks apply interest on daily balances in savings deposits. A subsequent paper had suggested that RBI directs banks to reduce fees charged to merchants for settling payments from debit cards since banks were merely transferring funds from customer accounts and not providing a loan to the cardholder as was happening in credit cards.

"The application of interest at six monthly rests has been more of a legacy. It was more from the ease and convenience of interest computation at the pre-computer era. Such a scenario no longer exists since the country today has a satisfactory level of computerization in commercial banks," said Das. The report points out that because of lax regulation some banks such as HDFC Bank (effective April 2011) moved from their earlier quarterly application of interest to half yearly application. "Such a move, though beneficial to the banks, is at the cost of their SB depositors," the report said.

If banks were directed to apply interest at the end of every month, the return for the depositor would rise by a around Rs 90 for someone with a Rs 1 lakh FD.

At a systemic level, total savings to banks runs into crores considering that there are 800 million bank accounts with Rs 15.5 lakh crore in savings accounts and Rs 45 lakh crore in FDs.

The study also finds that the amount of tax deducted at source can come down by Rs 400 to Rs 500 crore if banks applied TDS at the end of the financial year and paid the amount out of savings account rather than charging it to the fixed deposit.

Saturday, July 6, 2013

Few Good Documentaries on Finance & Financial Crisis

1) Too Big To Fail (Documentary):

Chronicles the financial meltdown of 2008 and centers on Treasury Secretary Henry Paulson.

Link: Click Here (Youtube)


2) Life Hidden Truth -  2013 Global Financial Crisis (Documentary):

The 2013 Financial Crisis True Structure Revealed
A must see documentary explaining how the world financial institutes truly operate.

Link: Click Here (Youtube)


3) Overdose: The Next Financial Crisis (Documentary):

With the US raising their debt ceiling, are we in a global bail-out bubble that will eventually burst? This doc offers a fresh insight into the greatest economic crisis of our age: the one still awaiting us.
The financial storm that has rocked the world began brewing in the US when congress pushed the idea of home ownership for all, propping up those who couldn't make the down payments. When it all went wrong the government promised the biggest financial stimulus packages in history and gargantuan bailouts. But what crazed logic is that: propping up debt with more debt? "They're giving alcohol to a drunk: it just sets him up for a bigger hangover."

Link: Click Here (Youtube)


4) The Ascent of Money: A Financial History of the World

The Ascent of Money: A Financial History of the World is Harvard professor Niall Ferguson's tenth book, published in 2008, and an adapted television documentary for Channel 4 and PBS. It examines the long history of money, credit, and banking.

Link: Click Here (Youtube)


Note: All these documentaries exists in different context and are to be viewed independently. None of them are linked with each other. People can select their area of interest and watch that documentary according.
I have seen these documentaries and liked it so much, that I thought of sharing with you guys.
There are plenty more such documentaries, which may be better than this, but since I haven't seen yet, its not proper to post it from my side.