Some Of The Ignored Performance Ratios By Small Investors

Generally, being a small investors, we tend to forget or ignore looking at some of the very important factors, which could drive the stock prices, and then, suddenly, we start questioning ourselves that, in spite of me being invested in very good company, why am I not getting good returns! That probably, could be, because my company, is not that good, on some of the below mentioned parameters.
However, that doesn't mean, that I will start considering only these factors, and ignore others.
These factors come into picture based on context and one has to realize that.

1) ROE (Return On Equity):

It is used as an indicator to figure the company's profitability against the money invested in it. It is calculated by dividing the net income by the shareholders equity.

ROE = (Net Income) / (Shareholder's Equity) * 100 %

ROE is generally calculated and useful, if on average basis for last 3, 5 or 10 years, because 1 year can't be used as an indicative parameter.
Make sure that we compare the ROE within the same sector, as it could be varying depending on the sector, and the average profit that the company in respective sector, makes.

We can expect a higher ROE for the companies with higher growth.

Some of the companies with Average ROE above 30 for past 5 years are Hero Motocorp, Atul Auto, Kaveri Seeds Company, Dhanuka Agritech, Ajanta Pharma, Suven Life Science, Mayur Uniquoters, Symphony, Page Ind, Asian Paints etc.

2) ROCE (Return On Capital Employed):

As we saw that we are using Shareholder's Equity as dividend while calculating ROE. Here in case of ROCE, we will add debt liabilities also as part of dividend, which will make the figure known as total capital employed. Also, instead of using net income, we will be using earnings before interest and tax, as a parameter to calculate ROCE.

ROCE = (Earnings Before Interest & Tax) / (Total Capital Employed) * 100

This is one of the factor which takes a hit, if we have a high debt company. As ROE, ROCE is also generally considered as an average for last 3, 5 or 10 years, and based on sector.

A higher ROCE is indicative of the fact that company is making more effective use of its capital.

Some of the companies with Average ROCE above 30 for past 5 years are Atul Auto, Cera Sanitaryware, Kaveri Seeds Company. Avanti Feeds, Dhanuka Agritech, Mayur Uniquoters, Symphony, Page Ind, Wimplast, Asian Paints etc.

3) ROA (Return On Assets):

It is a measures of what a company earns per each unit of the asset it holds. It represents how efficient the management is in generating income from the assets it has. It is calculated by dividing the net income by total assets on annual basis.

ROA = (Net Income) / (Total Assets) * 100

Again, it varies tremendously based on sectors, so inter-sector comparison is not advisable at all.
The higher ROA is considered better, because the company is earning more money on less investment, which is always taken as positive.

Some of the companies with Average ROA above 30 for past 5 years are Atul Auto, Hero Motocorp, Cera Sanitaryware, Kaveri Seeds Company, Dhanuka Agritech, Mayur Uniquoters, Ajanta Pharma, Symphony, Page Ind etc.

Note:
The entire concept of putting the examples of companies,  qualifying each of the selected criteria, is to make readers aware that, why these companies are trading at such high valuations. Just look at all the names mentioned, and check their present value. All may seem trading at very high price, but there is a reason behind it, which is justified above.

Hope it helps!!!!

Swiss Glascoat Equipments - Can The Hopes In New Sector Deliver?

Sorry for posting my new study in a weekday, but I won't be available on this weekend for a complete write up of this post. Hence decided to go ahead today. However, I will be replying to the queries if any.

Swiss Glascoat Equipments Ltd. (SGEL) is based in western part of India, specializes in design and manufacturing of Carbon Steel Glass Lined Equipment viz. Reactors, Receivers / Storage Tanks, Driers, Filters, Columns, Agitators, Valves, Pipes & Fittings.
Swiss Glascoat Equipments caters to requirement of leading Pharmaceutical / API, Specialty Chemicals, Dies / Colors, Agro Chemicals, Food Processing and allied Industries.
Experience spanning two decades, a portfolio comprising over 8,000 glass-lined equipment and as pioneers of many customised processes, Glascoat is well-recognised for excellence in glass-lining industry.

The Company's glasscoat product range consists of both ready-made and custom-built equipment. Apart from names mentioned above, the company's other products include Glass Lined Flush Bottom Outlet Valve, Bellows-Sealed Valve, Glass Lined Diaphragm Valve, Flanged Pipe, Flanged Elbows 90, Flanged Crosses, Reducing Flanges and Flanged T- Pieces with reduced connection.
The core element of the Glass line industry lies in the technology for manufacturing of glass frit and its applications.
Swiss Glascoat Equipments has established itself as an One-Point-Solution-Provider for glass-line products of any type, size, output plus a complete range of accessories.
More details related to products of the company is shared in the video below.

This has led to company attracting plenty of big companies in pharma, speciality chemical and agro sector.

Some of the major clients of the company are:
1) Aurobindo Pharma
2) Divis Lab
3) Glenmark Pharma
4) Themis Medicare
5) Shasun Pharma
6) Sanofi
7) Atul
8) BASF
9) SRF
10) Bayer CropScience
and many more.......................

In a way, we can conclude that success of these companies will indirectly lead to success of Swiss Glascoat Equipments. Most of the names mentioned here, are already big players and are likely to continue posting good growth going ahead, which enhances my confidence in this company and its growth.

A Virtual Tour Video Of The Company:



Talking about risk and other details, according to my study, there are 3 main players in this industry, with GMM Pfaudler, being the only listed company other than Swiss Glascoat Equipments. However, as per annual reports, it is seen that 2 more companies have entered this business, which is likely to challenge the company and might affect their profitability. Lack of expertise in manpower is also one of the negatives. Apart from that, rising inflation over last few years, was also a worry, along with rising fuel and electricity charges.
This is one part of challenge which seems to be neutralizing as this year, we have seen a good dip in inflation as well as fuel cost.

Talking about the numbers, it has remained flat over past few years, but things are expected to change now, as the company is gaining popularity among the big names in pharma, chemicals and agro space. The compounded sales growth and compounded profit growth i.e. CAGR for past 5 years has been 12% and 15% respectively, which is moderate.
Results in FY'14 were not that attractive when compared with FY'13, as sales and profit remained flat for the entire year, but there are some positives this year.
So far, for the first six months ended Sept 14, the company has reported 39% growth in sales and 33% growth in net profit. The debt levels reduced to half in FY'14 when compared with FY'13, though it has increased slightly in first six months of this year. The debt to equity ratio is below 1, which is also good. The cash flow of the company at operating level has always remained positive in last 10 years, which signifies the excellent operational efficiency of the company. The dividend payout so far has been excellent and the average payout ratio has remained around 28% which is very good for such a small company.
Speaking about its comparison with GMM Pfaudler, the largest listed player, in terms of market cap, GMM Pfaudler is trading at 7 times the value of Swiss Glascoat. Swiss Glascoat is trading at market cap of close to 50 Cr, where as GMM Pfaudler is trading at around 350 Cr, though one has to also consider the fact that GMM Pfaudler has a more stable fundamentals than Swiss Glascoat at present.
The challenge for the company now is to fight this battle and keep growing bigger, and probably challenge GMM Pfaudler one day.
On the basis of FY'14 earning, where company reported 7.61 EPS for the full year, it is currently trading at a P/E ratio of 13. However, for the first six months this year, the EPS stands at 4.26, and the company looks promising to kiss levels around 9 for the full year this time, which will make the P/E come down to 11 at current market price.

Note:
Looking at overall data, I like the company, their prospectus, and their numerical data so far in terms of quarterly results and balance sheet. However as always, the decision to invest in company or not, is up to the reader to decide, and the author doesn't take any liability for the same.
Off-late, we have seen plenty of volatility in markets, which has scared many small investors. For them, I will reply once again, that it is very difficult for me to comment on short term movements of specific stocks, as I believe in long term investments for good returns.
If there is any negative news flow related to any company discussed over here, even that will be shared with all readers. So, all the updates will be given, but that just has to be used as reference by all readers, and make their own decision based on their belief.

Happy Investing!!!!!

Garware Wall Ropes - Unique Company With A Tag Of Textile Sector

Garware-Wall Ropes was established in 1976 by the visionary philanthropist late Mr. B. D. Garware in collaboration with M/s Wall Industries Inc. USA. Subsequently, the Cambridge educated Mr. Ramesh Garware took over the reins of the company. At the helm of affairs till end of 2011, he infused dynamism and the culture of time bound result orientation across the organization. Weaving the core competencies of the organization to suit the emerging needs of the customers, he introduced a slew of far-reaching initiatives like capacity expansion, forward integration of operations, setting up a dedicated netting plant, launching new and fabricated products etc. His entrepreneurial instinct coupled with a humane approach has laid the platform for further growth and consolidation of the organization.

Solutions Provided By The Company:

1) Fisheries: As an innovative solution provider, the company caters to the global requirement in the active and passive fishing with products of Synthetic Fishing Ropes, Twines, Nets, Fabricated Products.

2) Aquaculture: The company offer Customized Synthetic Cages, Predator Nets and Mooring System Ropes for Aquaculture that are used in marine, inland and brackish water environment.

3) Shipping & Industrial: The company meets the stringent requirement of the various users in the Heavy Engineering, Shipping, Transmission, Safety and allied industries.

4) Yarn & Thread: The company's yarns and threads are used for Industrial Stitching purpose in diverse industries ranging from Fertlisers, Food Grains, Foot Wear, Filter Fabrics and other allied industries.

5) Sports: Customized sports nets conforming to international standards and specifications are used for different indoor and outdoor sports and games like Cricket, Football, Tennis. Hockey, Volleyball, Golf, Swimming Pool etc.

6) Coated Fabrics: Coated Fabrics used for various applications ranging from transportation to sports. Available in an array of different colours, the company's PVC Coated Fabrics offer high tensile strength, UV stability, Waterproofing, tear resistance and a variety of other benefits.

7) Agriculture: Development of various types of nets, cords and ropes, used for Protected Cultivation, protection Of Horticultural crops, support for Floriculture and Vegetable crops, utility products for Post Harvest Technology and Sericulture.

8) Geosynthetics: The company offers turnkey solutions in diverse applications such as Rockfall Protection, Coastal & River Protection, Erosion Control, Landfill and Lining Systems, Earth Retention Systems and Ground Improvement Techniques. The solutions are environment friendly and cost effective.

Manufacturing Facilities:

1) Pune Plant: Spreads across 14 acres of land and produces Ropes, PPMF Yarns/ Twines, SPM System, Geo Textiles and Metal Gabions

2) Wai Plant: Spreads across 29 acres of land and produces all types of Twines, Nets and Coated Fabrics

The Dept. of Science and Technology, Govt of India, has recognized the R&D Centers at both the locations – Pune and Wai.

Company Website: http://www.garwareropes.com/index.html

Garware-Wall Ropes eyes Rs 1,000-crore sales by 2017

While going through the fundamentals of the company, the only issue I faced, is its sector, due to which it might face some resistance, and which I why, I was hesitant in writing about it in detail. However, with tremendous efficiency of the company and a very strong product portfolio, it doesn't seem that company is going to be affected by the trend in overall sector.
The company is managed by very well known group with good experience.
Speaking of numbers, over the years, it has not been impressive, but they have kept on posting decent growth with the kind of business they are in. Recently, the focus on R&D and technology has increased, which is likely to aid the company in posting better growth in future.
The company has paid good dividend over the years, and in past 2-3 years, they have made a significant attempt in reducing the debt levels, which is a big positive.
The debt as of now, stands around 56 Cr compared to somewhere around 125 Cr in 2012.
On account of such reduction, the debt:equity ratio is very stable at around 0.2
The book value of the company stands at 125 Rs per share.

For the first half of this fiscal, the company has posted a sales growth of 23% and net profit growth of  68%. As per management, they are expecting the sales to continue growing at 15-20% annually. Based on FY'14 numbers, the EPS stood at 11.4, which means the stock is trading at a P/E of 16. However, with good profit growth this year, the company is likely to post annual EPS around 16-20, which means currently, the stock is trading at a P/E of 10, based on expected annual FY'15 numbers. The ratio can't be considered less, when compared with overall industry, however, looking at above data, I think the potential is huge in future, and there is plenty of scope for margin expansion.
Current market capitalization stands at 425 Cr vs sales of 688 Cr and net profit of 27 Cr.
It will be interesting to see, how market will value the company. when the sales, as expected by management, reaches 1000 Cr, and net profit stands somewhere in the range of 50-70 Cr annually.
However, looking at its 52 weeks high-low, it seems the stock is in radar of many investors, as it has almost grown 4 times this year.

One of the bigger problems, with the companies in textile sector, has been extremely high competition, which is something I feel, should not be the problem with Garware Wall Ropes, because of their uniqueness & mastery in products. However, as every one knows, somewhere the sector, always influences the price of company.

Note: This is not to be considered as recommendation being given, but a company, which readers can refer to, as it has plenty to learn and study from. If reader wants to take any action on the counter, it will solely be his/her decision. The author is not giving any advice on the action that can be taken at current market price.

Tube Investments Of India - A Case Of Interesting Valuations

Founded in 1900, the Murugappa Group is one of India's leading business group. The Group has 28 businesses including 11 listed Companies traded in NSE & BSE. Headquartered in Chennai, the major Companies of the Group include Carborundum Universal Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd., Sabero Organics Ltd., Shanthi Gears Ltd., Tube Investments of India Ltd., and Wendt (India) Ltd.

In 1959, Tube Investments of India (TII) was formed by merging TI Cycles of India and Tube Products of India. TI Diamond Chain was merged with the parent company, in 2004. In 1962, the company saw a potential to leverage its engineering skills to address the market for roll formed metal products. So a new unit called TI Metal Forming was created to realize this potential. TI Diamond Chain was merged with the parent company, in 2004.

In the six decades of its existence, TII has built significant skills in engineering and metallurgy, which is fully supported by a central R&D function. A Total Quality Management approach has ensured a satisfied community of customers and TII is the preferred supplier in all the markets it operates. TII continues the tradition of financial discipline and prudence set by the founding fathers. It is this tradition that has earned TII the unique distinction of uninterrupted dividend distribution since 1954.

Company's Wide & Impressive Divisions:

1) Cycle & Cycle Components:
TI Cycles have introduced fun and entertaining stores across the length and breadth of India. The company has been proactive and was first bicycle company to change the cycle retail landscape, both in urban and rural areas. With the first urban store in 2007, Hercules is sold in over 200 exclusive urban stores known as 'BSA Hercules Exclusive Stores' which have revolutionized the way people buy bicycles in India. These stores are a one-stop premium shop for all Hercules, BSA & Montra products and have a customer friendly ambiance which serves as a model for other bicycle outlets in the country. In 2010, the company started “Hercules BSA Cycles” to provide the urban retail buying experience in smaller towns. In just over a year’s time, there are over 200 of these rural stores. For its retail innovation, the company received the certificate of appreciation for 'Excellence in Rural Retailing' at the ET Retail Awards 2011.
TI Cycles has plants at Chennai, Nasik and Noida, major Warehouses at Guwahati, Durgapur, Patna and Cuttack and regional offices, through which it serves it nationwide 2500 plus dealer network. Certified with ISO 9001:2000, OSHAS 18001-2007 and ISO 14001-2004, TI Cycles is a quality and customer centric organization.

2) Engineering:
Tube Products of India Ltd was established in 1955, in collaboration with Tube Products (Old Bury) Limited-UK, as a measure of backward integration with the bicycles plant.
Today, TPI is the most preferred supplier of precision tubes, Electric Resistance Welded (ERW) and Cold Drawn Welded (CDW), to major automotive companies in India and abroad. TPI is India's undisputed market leader in CDW tubes for the Automotive industry. It also has significant market presence in power plants, boiler, textile machinery, general engineering. It is the Market leader in Telescopic Front Fork Inner tubes and Cylinder bore tubes for shock absorber and gas spring applications, Propeller shaft tubes for Automotive segment. Other Speciality products include Rear Axle Tubes, Side Impact Beams, Tie Rods, Drag links, Heavy thick steering shafts and Hydraulic Cylinder tubes.

3) Metal Formed Products:
Established in 1965, TI Metal Forming is a pioneer and leader in precision value added sheet metal formed components. TIMF manufactures car door frames, window and guide channels, impact beams, hydro-formed parts, frames for various types of motor casings etc., For Railways, TIMF manufactures and supplies roll formed sections for wagons and coaches apart from sub-assemblies of sidewalls, end-walls and roof.

TIDC India – The Complete Chain Company. Incorporated in 1960 in collaboration with the global company from USA, it is now a wholly owned SBU of Tube Investments of India.
TIDCs chains find wide acceptance in variety of applications in the following industrial segments:
-General Engineering
-Construction Equipments
-Agricultural Machinery
-Automotive Industry
-Printing & Packaging
-Process Industries (Cement, Mining, Power)
-Material Handling Industries.

4) Technology:
Corporate technology center works on business driven R&D projects with specific focus in "metal forming", "thermal processing" technologies and the “engineering design” oriented towards products and process simulation and analysis.
TII is a pioneer today in innovating & engineering products for the future with proven expertise in:
   a) Modeling – Products & Processes – with stress analysis (FEA)
   b) Prototyping - Products & Processes
   c) Testing – Mechanical, Endurance, Corrosion and High Strain Rate testing
   d) Investigation – Optical (Micro & Macro structure), Scanning electron microscope, Micro                    hardness and Dye Penetrant test.

Subsidiaries:
1) Chola MS General Insurance Company Ltd
2) Cholamandalam Investment & Finance Company Ltd
3) Sedis
4) Shanthi Gears

Interesting Valuation Case:
Cholamandalam Investment & Finance Company is a listed company in Indian Stock Market, and is trading at a market cap of above 7000 Cr. As per the annual report of FY'14, TII holds 50% stakes in the company.
Apart from that, they have 74% stakes in Chola MS General Insurance Company. The company is not listed in Indian market, but as per the annual report, it is mentioned that company reported about 1855 Cr of Gross Written Premium in FY'14, and a net profit of 70 Cr. It reported 13% growth over last year. Hence can be concluded that it is also a good growth company with strong presence.
Over to minnows, Shanthi Gears is also trading with a market cap of 1000 Cr, where TII has about 70% stakes.

Now, looking at all these data of its subsidiaries only and keeping the core business aside, it seems TII would be a very big company with a very healthy market cap. However, to one's surprise, it is trading with a market cap of only 6000 Cr.
As we come to its standalone business, that is not small either. The company reported 3500 Cr sales last year, with a net profit of close to 100 Cr.

One of the reason for not moving up further might be lower margins that company is operating with. However, that should resolved with time, especially in developing country like India.
The product portfolio of their core business itself is outstanding, and should do well if India reverses its growth cycle, which seems to be happening.
The results of first half of this fiscal has been encouraging.
They have reported 12.4% growth in total income so far, over first six months of FY'14.
Net profit has gone up be 14.4%.
Annual EPS is expected to be around 20 in this fiscal, which makes the stock trading at around PE of 17, which might seem fair to many, right now, but with growing business, aided by its subsidiaries, the EPS should go up to 30 in coming 2 years or so, especially with growth cycle returning to normal.
The data is not the only positive. The management as seen above is highly trustworthy.
They are continuously looking at increasing their product portfolio further with few more engineering products.

All in all, one can conclude this as a company, giving a good case study of valuation, with strong management, and excellent future prospects.

Note:
This should not be considered as recommendation. This was just an interesting story which I wanted to present before all readers.
The decision to go with it or not, depends on reader, and I, by no means, will be able to help readers with that. My views are already presented above.

Somany Ceramics - Expensive, Yet Worth A Look

First of all, let me take this opportunity to wish every reader, a Very Happy Diwali, and a Prosperous New Year ahead.

Somany Ceramics has established its presence as a leading and formidable force in the Indian tiles sector. Since 1969, the brand has endeavoured to adorn homes with delight, exuberance and vivaciousness resounding with the quality, strength and life of its products. The company has manufacturing plants in Kadi, Gujarat and Kassar, Haryana and other joint venture plants, generating a production capacity of 41 million sq mts annually. The company is a complete solutions provider in terms of décor solutions with widest product selection categories – Ceramic wall and floor, polished vitrified tiles, glazed vitrified tiles, digital tiles & sanitaryware and bath fittings as well as tile laying solution.

Along with being considered the epitome of quality and durability in India, it also has its presence in international markets. Brand Somany has established itself as an unchallenged leader of innovation and design in Europe to the Middle East and from Asia to Africa.

A brief look at the tremendous client tele of the company:
https://www.somanyceramics.com/our-client/

The company is, and will be facing stiff competition in the sector, and is currently, the third largest player in organized tiles market. Kajaria Ceramics is probably the largest listed player in the sector. The new venture by Cera Sanitaryware to enter into tiles segment, will also be part of competition faced by the company.
Inspite of such competition, the company is growing at a tremendous pace and is likely to continue, as this is one of the sector, which will be benefitted the most, when a country is moving from being a developing nation to becoming a developed nation. Hence the available competition should not hamper the growth as far as names like Somany are concerned. The smaller and probably less popular faces, might feel the heat, hence I am not looking much into smaller names in this segment, in spite of the expensiveness in larger players including Somany Ceramics.

Few Initiatives By Modi Government that would help the company grow even better:
1) Swatch Bharat Abhiyaan.
2) Development of 100 Smart Cities.
3) Mission of Housing For All by 2022.

A look at company's excellent Debt Management:

Recently, the management made their intentions clear that they won't be adding any debt soon, which is also positive.

This was one of the factor, which drove 2 big institution to buy heavy stakes in the company.
However, the same move led to tremendous increase in stock price over past 1 year.

Out of the total dealer network of more than 1700 dealers across India, the company added around 40 dealers in the past quarter itself.

Apart from that, the company also added about 10 showrooms across India. Both the numbers are likely to increase in near future.

The company recently bought 26% stakes in Sonec Sanitaryware, which is a large company with a capacity of about 3 lakh pieces per year. The company is expected to increase their stakes to 51% in the company. Also the company is looking to expand its current capacity to 55 million sq mts by Mar'15.
Sanitaryware and Fittings is still operating at a very small level, and contributing to about 9-10% of total revenues. The good thing is to see that the sales of Sanitaryware jumped 83% yoy, this quarter. The percentage of revenues coming from this segment, is expected to be at same levels for some years.

Talking about the numbers, the company is growing at a cagr of 18.5% annually in sales in past 5 years, which is pretty good considering the amount of competition in the industry, and it is expected to grow at an equal or even better pace in coming years, with above factors.
Looking at recent Q2 FY'15 performance, the company reported sales growth of 22% and net profit growth of 68%. For the half year ending Sep'14, the company reported sales growth of 24% and net profit growth of 54% compared to half year ending Sep'13. The numbers looks pretty impressive, especially when the company is investing a lot in expansion and brand building.
As per management, irrespective of whether its a good year or bad year, the second half of fiscal is always better than the first half. So, the awesome results in first half is just an indicator of what is to come in second half of this fiscal.

Currently, Kajaria Ceramic and Somany Ceramics, both are trading around same valuation. However, margin expansion in Somany Ceramics later would be interesting as the P/E ratio will come down significantly, from current levels, which is around 37 or so.
In terms of market cap, Kajaria is trading almost 4 times to that of Somany, but they currently have about 4 times the NPM as that of Somany. So, it will be very interesting to see, what happens when margin expansion takes place in Somany, after so much of expansion and brand building.

Looking at all the above data, the company looks very strong fundamentally. The expensive valuation currently is justified and is likely to improve further, as future look very promising.

The only negative, would be the current hike in gas pricing, which is still moderate, when compared to what was decided earlier. However, in the long run, the company will get over these things, by price rise, and other factors. Hence for long term, it won't be a big problem.

No targets and no action will be recommended here. This is just a case of company, which one can study and take his/her actions accordingly.

Happy Investing!!!!

Capri Global Capital Ltd - Revisit After A Long Time

First of all, the link where the stock was discussed for the first time here:
http://fundamentalstockideas.blogspot.in/2013/04/money-matters-financial-services-ltd.html

A US based real estate investment group had taken the control of the company when it got its name changed from Money Matters earlier, to Capri Global Capital Ltd, (CGCL) and they own about 50% of the shares.
Quintin E Primo III is non executive chairman of the Capri Global Capital India.
Details about board of directors and their profile:
Link: http://www.cgcl.co.in/about-us/board-of-directors.html

This should significantly reduce the risk that one feel investing in the company, after what happened in 2010, which is given in previous post.

As part of business activities, CGCL is predominantly focused into Asset Financing and Lending business. The Wholesale Lending Business segment provides specialized and holistic solutions to Indian corporates helping them build and grow their businesses with initial funding, mezzanine financing, acquisition financing etc. We focus on products in the structured credit space backed by adequate collaterals and cash flows to build a secured and quality wholesale lending portfolio.

In FY'14, the wholesale lending division disbursed loans amounting to 380.10 Cr, with overall income from the division’s lending book increasing by approximately 28% to 103.44 Cr as compared to 81.03 Cr earned in the previous year.
The division’s outstanding disbursement stood at 505.11 Cr as on March 31, 2014, growing from ` 391.17 Cr during FY'13.
Loan Book of the Company stood at 736.16 Cr in FY'14 as compared to 426 Cr in FY'13 showing a growth of 73% during the year.
Disbursements to the MSME sector in FY'14 was close to 224 crores, an increase of 564% over the previous year, while the disbursements to wholesale lending business aggregated 379 crores in FY'14, showing a healthy growth of 29% over the previous year.

The Company continued to drive the businesses with renewed energy and build on the platform created over the last two years. Company has identified industry clusters with high business potential and has opened branches at Delhi, Mumbai, Ludhiana, Ahmadabad, Pune, Surat & Rajkot to tap customers in the Micro Small & Medium Enterprise (MSME) segment.
Going forward it is planned that the MSME vertical would far exceed the disbursements of the Wholesale lending vertical. Management also has plans to leverage balance sheet during the next fiscal and has received encouraging response from public sector banks.

Few important and good points to have a look at:

1) The company continues to stay debt free.

2) On account of that and others, the book value of the company has gone up to 272 Rs per share now, which means the stock is trading at 0.6 times of book value.

3) Again in the first quarter of FY'14, the promoters accumulated 5% shares from open market, taking a total promoter holding to almost 74%.

4) The company is still trading at a P/E ratio of close to 7.

Major Risk:

1) Rajesh Sharma still holds about 25% share of the company.

2) Cash flow continues to remain negative since FY'11, though it has come down a bit.

Disclosure:

Valuation wise, the company may be trading cheaper, but as I always say, conviction is the biggest factor in stock markets. What happened earlier, will always be at the back of every big investor's mind. Hence those, who are not prepared to make such investments, can still prefer to be with Dewan Housing and Can Fin Homes, on a safe side, which were recommended earlier on this blog.

The only point for bringing this here again, is that, I genuinely feel, this is among rare stocks which haven't been given any appreciation in the just past rally, though with a reason.

No targets will be given. The recommendation is just about company's performance, which is expected to improve further.
Those with a decent risk appetite can consider this as a seriously good option for long term investment, especially those who missed it earlier
Please go through all the details given here so far, as well as on internet, before deriving a conclusion on the same.

ALL THE BEST!!!!

Control Print - Printing Their Own Way To Glory

Utilizing close to two decades of experience in the Coding & Marking Industry, Control Print has developed a philosophy that consists of partnering with the leading global players technologically. The company utilizes their unsurpassed local manufacturing infrastructure and highly motivated skilled workforce to provide the best engineered and most cost effective products and solutions for the entire range of manufacturing industries which include Automotive, Agro-Chemicals, Metals, FMCG, Pharmaceutical, Food & Beverage, Wire, Cable, & Pipe, Construction Materials, and Commercial Printing.

With company's extensive nationwide coverage of more than 120 well trained sales and service engineers, 9 offices, and 60 back end staff, Control Print provides the highest levels of pre and post sales support for a consistent, reliable, high quality customer experience.

Control Print Limited has two modern manufacturing centers located at Vasai, on the outskirts of Mumbai, and Nalagarh, Himachal Pradesh. Aesthetically designed and fully equipped, these facilities are complete with all the necessary support tools, services and amenities required to ensure the highest quality of products and services consistently. In addition to manufacturing capabilities each center has comprehensive service training facilities for external as well as internal customers.

Solutions Provided:
1) Continuous Inkjet Printer
2) Large Character Printer
3) Hot Roll Coder
4) Thermal Transfer Overprinter
5) Laser
6) Consumables
7) Digital Printing
For details, visit http://www.controlprint.com/solutions.html

Strategic Partners:

1) KBA Metronic:
KBA-Metronic Aktiengesellschaft is a medium-size technology company which specializes in the development, design, production, marketing and service of printing and coding systems. Metronic AG is also a leader in patented innovation.

2) Macsa:
Macsa has an impressive history with more than 90 years of experience, and to know its history, one must go back to 1908 when the company Framun located in Manresa (Barcelona) set up the manufacture of rubber stamps. A few years later, this company started to distribute machinery and consumables for rubber stamp manufacturers all over Spain.

My Views:
Thanks to some of the viewers of this blog, that I came across this company, and was highly impressed at the first look itself. Later on, as I kept studying the details, I found it more and more attractive, with lots of potential seen ahead for the company. Currently, they are operating at a very small level, but are expected to keep growing and achieve greater glory in future.
In the process of studying itself, I found stock appreciating from 140 to almost 200 levels, but I still feel, it has plenty more to achieve.
The company is virtually debt free, plus management has been paying very good dividend over the years.
The company has been growing at a CAGR of 15% in sales and 43% in net profit. Over the years, the company has been able to maintain very good net profit margins and last year, they were able to see it at 15%, which is generally considered very high for company with market cap of meager 176 Cr.
Last year, the company posted an EPS of 15.55 annually, which accounts for P/E ratio of 12.5 at current market price. The Q1 numbers for FY'15 were attractive enough to boost our confidence in the company, and expecting it to grow very well in all parameters this year.
The company is trying to mark its presence is entire sub-continent, with company completing the registration of its branch in Sri Lanka and is currently under the process of obtaining other statutory registration for the branch to be operative, as seen in notice of FY'14 annual result.
The balance shows a good growth as far as company's fixed assets are concerned which is another good sign. I am expecting the company to post annual sales of 110 Cr this year, with net profit of close to 18-20 Cr.
Since May 14, the stock price has almost tripled from 65 to 200 levels or so. Hence one can make entry based on his/her risk profile, and according to what one feels is the correct price to enter.
I feel the company should keep growing at a good pace, and price should follow.

Off-late, I have seen plenty of stocks getting appreciated very quickly and giving returns in excess of 100% within few months. I hope such experiences do not change the entire concept of long term investment in the mind of investors. When I say, long term, it still means, that I am talking about an investment with a time frame in excess of 2 years, with a constant check on the updates from company time to time.

Flex Foods - Can Success Be Achieved, The Natural Way?

Flex Foods Limited, part of Uflex Group of companies, started its operations in 1992 as an Export Oriented Unit, located in Dehradun-Uttarakhand (foothills of Himalaya) engaged in Freeze Drying, Air Drying, Individually Quick Frozen(IQF) and Canning of white button mushrooms, fruits & vegetables, culinary herbs and green pepper corns catering to European, US, Canadian, Australian and Domestic market.. The company has its own captive state of art mushroom growing facility with fully equipped mushroom spawn and compost preparation facilities.
The company started its commercial operations in 1992 by establishing an 100% EOU for vacuum freeze dried vegetables mainly mushroom and culinary herbs with a total processing capacity of 2000 MTs per annum.

List of countries where company export:
-USA
-North America
-Canada
-Europe (U K, Germany, Denmark, France, Belgium)
-Australia
-South Africa
-Middle East countries

Flex Foods offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits/vegetables, meeting strict quality & hygiene standards. Canned button mushroom in various shapes and sizes is also available as per the customer requirement. Flex Foods Limited is a single point source of supplier of Frozen / IQF (Individually Quick Frozen), Air Dried, Canned as well as Freeze Dried products to the customers as per their requirements. A tempting food i.e. retail packs of Culinary Herbs for Indian customers are also available in four varieties in Flex Foods.

New Products:

• Air Dried & IOF – Stevia

• Air Dried – Sugar Beat

• Freeze Dried – Jalepeno Pepper – Red

• Freeze Dried – Jalepeno Pepper – Green

• Freeze Dried – Banana

• Freeze Dried – Green Capsicum10

Further, stevia & sugar beat has been cultivated and samples in Air Dried & IOF form have been sent to overseas buyers for their approvals. Customers have asked for improvement in the texture of the product, which will be developed soon. 

Major Risk:

• Increase in the prices of raw materials, packing material and fuel

• Food inflation in general

• Non-availability of raw materials

• Exchange rate fluctuations

• Changes in fiscal benefits/laws

• Competitive environment with diverse players.

To address these risks, the Company has a single point source supplier of Frozen/IQF, Air Dried as well as Freeze Dried products to the customers as per their requirements with high quality mushrooms and herbs. Though the competition is fierce, the goodwill and the quality of the products offered by the Company are great plus factors and the Company expects to overcome the competition. The Company had expanded its freeze drying capacity by adding print of art freeze dried cabinets.

My Views:

The company remained under my watchlist for long time, since I was busy understanding the scalability of business. But the product portfolio of the company looks good, plus their R&D, which has been continuously coming up with new products, will form its heavy usage, with increasing awareness among people regarding such health oriented products.

Investing in such a company, especially in food sector, is about your belief in the products that company has in its portfolio. If one asks me, I would say, the sale of some of the new products like Stevia, and some culinary herbs, is bound to increase with time. Major advantage I feel, in these products is that, the regular users of these products don't suddenly quit using it. Plus, awareness among people could bring about the increase in sale of these products further. 

The company has been paying very good dividend since long time, which increases my confidence in management, especially, when there has been concerns raised over its management.

The company is growing at a CAGR of 12% in terms of sales, and 22% in terms of net profit in last 5 years. For next few years, it might continue to similar, or slightly better growth, but with time, they will start posting very good numbers, after penetration of their new products in Indian markets.

For Q1 this year, the company posted sales growth of 19%, and net profit growth of approx 100%, which lays down the path for good growth, this year.

Even considering FY'14 earnings, the company is trading at a modest P/E of 7. This year, I am expecting the company to post EPS around 12, which will make the stock look dirty cheap at current market price.

Ganesha Ecosphere - Turning Waste Into Useful Resources

HAPPY INDEPENDENCE DAY TO ALL THE VIEWERS!!!!!

In his first Independence day speech, PM Narendra Modi said "Let us think about 0 defect - that our products are not defected and 0 effect - our products have no adverse effect on the environment". Our new pick is concentrating on the 2nd clause of that statement, by trying to reduce the environmental pollution with its innovations.

Ganesha Ecosphere is India’s largest waste recycling company (with 21% market share), primarily engaged in the recycling of Polyethylene Terephthalate (PET) bottles to produce Regenerated Polyester Staple Fiber.
It recycles more than 2 billion bottles annually and is one of the leading environmental friendly companies in India. The manufacturing plants are located at Kanpur and Rudrapur (Uttaranchal, India).
The company is having the most modern pet waste washing and recycling facilities, which ensure the recycling of waste in environment and people friendly manner. It is having all environmental clearances from concerned departments for its facilities.

How Does It Works?

Application Areas:

Details About Applications Of Products Manufactured By Ganesha Ecosphere:

http://www.ganeshaecosphere.com/applications.html

Recent Recongnizition:

The world’s biggest cola company – Coca Cola is recycling PET bottles waste into textile fibres in India, which in turn are turned into fashion items. Coca-Cola’s largest bottler in India, Hindustan Coca-Cola Beverages (HCCB), is demonstrating its commitment to sustainability by developing commercial solutions for recycling PET plastic. In collaboration with Ganesha Ecosphere Ltd. (GESL), the largest PET recycler in India, HCCB established the nation’s first bottle-to-fibre textile recycling operation.

The best thing about the company is that, their raw material itself is PET bottle waste. Nobody would deny that the use of PET bottle is going to increase in coming years. And with increasing use of PET bottles, the raw material will be easily available to the company. Hence the selection of a company, whose end product is linked to textile industry.

My Views:

I know I am once again, going with a company having higher debt, but there are some factors, which forces me to invest in a company. In case of Ganesha Ecosphere, the company looks very good fundamentally in all the parameters except the debt levels. As I said earlier also, if the company is involved in a strong business, with good growth and promising balance sheet, I won't reject the company just on the basis of high debts. Because of that, I know, the appreciation might be less or delayed, but other factors are too attractive for me not to invest in it. Being a long term investor, I won't mind if the stock price appreciation is less or gets slightly delayed. As far as I believe, if management is efficient, these things will get back on track, as the company grows in size.

Looking at numbers, the company is growing at a CAGR of 20% in sales and 22% in profit, in last 5 years, which is pretty decent. To add to that, because of recent collabrations with some of the top companies, the sales are bound to increase in coming years, at a stronger pace. The recent Q1 results proves exactly that, with a sales growth of 65% and net profit growth of 14% yoy. The net profit growth was sub-dued when compared to sales growth, but that was on account of almost double finance cost this year.

Currently, based on FY'14 numbers, the stock is trading at a P/E multiple of 6, which leaves plenty of scope for appreciation in future. As I said earlier, the stock might move slowly, but patience will pay in the long run, because I feel, the business they are involved in is great, and is expected to grow at a healthy pace, with companies looking forward to save the nature.

This stock is operating under a new sort of segment, hence difficult to give targets on it. And because of that same reason, I would suggest everyone to perform their own detailed study before investing in the company. As always, any investment you make, should be based on your belief and not only on someone else's thinking.

Q1 FY'15 Result Updates - Ajanta Pharma, Camlin Fine Science, Dhanuka Agritech, Dynemic Products and Gulshan Polyols

1) Ajanta Pharma:
Writing about the stock since Sep 2012, its almost 2 years now, i.e. 8 quarters, that we got to study, and no disappointment so far. That speaks volumes about the performance of the stock in past 2 years, and also, the news flow in press releases of every quarter speaking volumes about the continuation of such performance going ahead as well.
By far, it has been the best performer in the portfolio, with a staggering returns of close to 500% since its recommendation. But the saturation doesn't seem to be coming soon.
For Q1 FY'15, the company reported sales growth of 32.5%, and net profit growth of 80%, which was again, above my expectations. Not sure about others though.
With an EPS of 16 in the quarter, that has always been slightly sub-dued for the company, it looks like they are on track to achieve an annual EPS of close to 85-90.
I know this is happening time and again, but with such a performing company, my views are bound to become more and more positive. Revising the target price to 2000 now for long term.
Recommending a (hold / buy on dips) strategy on the counter.

2) Camlin Fine Sciences:
Another decent performance from the company, and it seems to have formed a good presence among intelligent investors, with likes of ICICIDirect coming out with their research on such a small company. The jump in share price also indicate the same thing, as it has been given a fair value based on current data, with market cap of the company almost kissing 500 Cr.
However, on the other side, the positive news flow continues with their subsidiary namely CFS Europe S.p.A in Italy successfully enhancing its manufacturing capacity to 1000 metric tons per month as against 600 metric tons per month from May-2014 and the facility is now operating at its enhanced level of production after successfully running at its full capacity in the month of June-2014 and July-2014.
Sales grew by a modest 14% and net profit grew by 50% yoy, and the performance is likely to improve going ahead this year. Recommending a (hold / partial profit booking if reqd) strategy on the counter.

3) Dhanuka Agritech:
The Q1 numbers might look disappointing to few on first overview, but that was on account poor rainfall, in the month of June. However the company has been successful in improving margins, over past few quarters, and this quarter was no exception to that. In spite of meager 7% growth in sales yoy, the net profit grew by healthy 18%, which was the best part of mediocre results.
The company hopes to perform better in second quarter. The company has received registrations for two new, scientifically advanced products recently and they will be launched soon for the first time in India, for the benefit of the Indian farmers.
Being in India, and India being an agricultural nation, one should continue holding the stock, even at these expensive levels.

4) Dynemic Products:
Once again, it is among the companies, whose performance has been quite mediocre in Jun quarters, historically. Still, the performance this time, was slightly better than previous years. The sales grew by 16%, which was decent, however, profits growing by only 8%, came as a disappointment to many. I, probably, wouldn't mind that too much until the sales keep growing in good fashion. The good thing, was the rise in sales, in both, domestic as well as export front. Even after such a mediocre 8% growth in profit, the EPS for the quarter stood at 1.94. The number should improve in coming quarters, as I am expecting the company to post an annual EPS of atleast 10-11, which makes the stock look dirty cheap at a P/E ratio of 4, in highly potential business.
Recommending a buy/hold strategy on the counter, after detailed study, as it is still, a very small company, when compared to some of the others discussed here.

5) Gulshan Polyols:
After 5 major announcements made by the company last quarter, there was lots of expectations from the company to deliver strong set of numbers. But the numbers came in flat with sales growing only 3% and a declining net profit yoy. It came in to surprise of many, but this time, along with results, the company came up with press release, indicating the reasons behind such performance after big announcements. The benefits of new plant and technology up gradation are expected to be come in from second half of this fiscal.
Expecting the company to achieve 15-20% sales growth in this fiscal, by covering up in later part of the year, and end it with annual EPS of close 40. If that is achieved, the stock is expected to be re-rated from this levels, by about 75%.
Recommending a hold on the counter for long term.