Financial Results & Limited Review for Sept 30, 2013
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Rising Demand from Paper and Plastic Industries Drives the Global Calcium Carbonate Consumption, According to New Report by Global Industry Analysts, Inc.
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Above is one of the reports on demand of Calcium Carbonate, which is encouraging, as Gulshan Polyols Ltd produces over 19 grades of Calcium Carbonate. I found similar reports on demand of Sorbitol also, which shows that sales of Sorbitol will continue to grow at 3.5% till 2018.
Looking at this quarter's number. the sales did continue to grow in the manner it has been in last 4 quarters. But the stock still looks far away from getting the correct valuations, based on its strong book value and consistent profitability.
Net Sales stands at 77.65 Cr Vs 68.39 Cr YoY, which shows 14% growth.
Net Profit stands at 5.13 Cr Vs 4.74 Cr YoY, which shows 8% growth.
Hence the EPS now stands at 6.07 Vs 5.61 YoY.
My Views:
There is still nothing wrong in investment made in Gulshan Polyols at this point of time, but only issue is that, we are not sure when it will start moving up. If you look at any fundamental data, all will suggest you to buy this stock, but still it is stagnant. Promoter holding as on Sep 13 has jumped to 71.94% from 68.87% last quarter. Book value of the company stands at 174 Rs.
Half yearly EPS stands at 14. Even if it continues to report same sort of numbers, it will be able to make annual EPS of close to 30. P/E ratio will come out to be only 2 at current market price, where as the industry P/E stands at 28.
What we can do, is to wait for the stock to get re-rated. Until then, if you are a long term investor, you can definitely make an entry at this price. Otherwise, wait for the stock to start moving up with strong volumes, and then make an entry. The only assurance that can be made now, is that the downside in this stock is very limited.
There's still some hope related to Photoquip with some light thrown by the management:
ReplyDelete[HI Kunal
Hope you have had a great Diwali and a rousing start for the New Year.
As informed earlier we have very ambitious plans for our CORVI range of products and we are on course. As of date we have logged a turnover of Rs. 1,162 lacs since the commencement of the operations in December 2012. Out of this Rs. 250 lacs was in the the previous financial year 2012-13.
Additionally this month we are launching 3 new products to expand our current range from 4 to 7 products. With their colour / wattage variations the total product portfolio is 72 SKUs as of now.
To repeat we foresee a bright future for CORVI.]
If you see the turnover figures, this year, in six months they have earned 11.62 Cr - 2.5 Cr = 9.12 Cr from CORVI sales which is great...
So, for the full year, we can expect about 20 Cr from CORVI sales, which would be great...
Dear Kunal,
ReplyDeleteWith respect to the industry PE of 28, can you please explain where you got this data from.
Can you provide examples of similar listedcompanies like Gulshan Polyols?
I think for a raw material supplier like Gulshan Polyols , the PE should not be more than 10 as raw material means lower margin on sales.
Regards,
Pratul
Hi Pratul,
ReplyDeleteSorry for the delay, but I was busy in some function.
http://www.moneycontrol.com/india/stockpricequote/chemicals/gulshanpolyols/GP9
For eg, when you open any particular script in moneycontrol, you will get all the basic details related to company, one of which is Industry P/E.
Now, when you search for Gulshan Polyols, they accumulate data related to all the companies falling in sector chemical/speciality chemical....
So, even some loss making companies are considered among all... and hence the Industry P/E represents the average P/E of all such companies.
Some of the peers would be the likes of tata chemical, pidilite ind etc., which are trading at very high P/E... because of their big brand name, and some good speculations...
ReplyDeleteDear Kunal,
ReplyDeleteThanks for replying. I dont think moneycontrol provides an accurate picture as the PE is based only on standalone numbers.
However, I do think Gulshan Polyols deserve a rerating but to expct a PE in excess of 8 for a raw material supplier may not be correct. Results were okay in my view as Sales are improving.
Kindly explain if Granules and Cera sanitaryware are good investments at this point
Hi Pratul,
ReplyDeleteAgreed! It doesn't give me an exact figure.
But what I need is the approx figure, through I can judge any company.
And dont think much about the fact that, the ratios will change significantly, when consolidated numbers are considered.
Among a particular sector, there will be very rare companies, which will have consolidated figures, that are very different in terms of ratio when compared to standalone numbers. So it should not affect the industry P/E heavily.
Cera and Granules are excellent stocks to invest, but only if you are ready to wait for longer term, as I cannot guarantee you anything in short term. The best approach for long term investment would be to buy in parts. Use dips to average out, in case it goes down.
Cera, I dont think will prove to be a multibagger (i.e. more than 2x), but definitely, it will give you very good returns. I expect it to go to levels of about 1000 Rs in next few years.
Granules on the other hand, will definitely prove to be a multi-bagger in longer term.
It is way under-valued right now, when compared to other pharma stocks.
A strong re-rating is expected but not sure about the timings as always. :-)
Something like Ajanta is expected, which has jumped from 97 to almost 970 in 2 years time. (adj price)
Again, these are my speculations. You take your decision wisely :-)
Kindly let me know if you need any other info.
Regards,
Kunal Banker
Ricoh India- Board Meeting on Nov 11, 2013 (to consider Voluntary Delisting of Equity Shares)
ReplyDeleteLink: http://www.moneycontrol.com/livefeed_pdf/Nov2013/Ricoh_India_Ltd1_081113.pdf
Suven Life Sciences presenting the positive pharmacology data of 4 NCEs at Society for Neuroscience (SFN-2013) Annual Meeting at San Diego, USA
ReplyDeleteLink: http://www.bseindia.com/xml-data/corpfiling/AttachHis/Suven_Life_Sciences_Ltd_081113.pdf
Excellent Q2 numbers posted by Ricoh India.
ReplyDeleteSales have very close to doubled, and reached 300 Cr.
But the results hardly matters now, as there is something much bigger in offering, in form of delisting...
I would have loved if they would have kept the company listed, as it is looking good for much more levels from here...
Ricoh India: Outcome of Board Meeting (approves Delisting Proposal)
ReplyDeletehttp://www.bseindia.com/xml-data/corpfiling/AttachLive/Ricoh_India_Ltd_111113.pdf
Suven Life Sciences zooms once again on way better than expected numbers....
ReplyDeleteIf the share would have continued to be listed, I expected a price of 300-350 in two-three years' time !!!!
ReplyDeleteAgreed, but I have noticed that nowadays, its very difficult to judge timelines for our targets...
ReplyDeleteLook at Ajanta pharma, and Suven Life Science is even smarter.... 200% in 6 months... its unbelievable.... :-)
What do say?