Monday, November 14, 2016

Q2 FY'17 Result Updates

I am sharing few thoughts initially, which are strictly mine and has no intention of driving any investors to any conclusion.

Since the last post on this blog, we had series of events which made the markets heavily volatile. Though some of the government initiatives might prove to be very good for India in future, its short term implications cannot be ignored.
In fact, it is predicted that almost all the sectors will be benefitted from this move, but it will take its own time. The reason why markets might react negatively on this is because of uncertainty that it has imposed. However, I personally feel that the impact could be more on un-organized sectors, rather than on big organized players.
Talking about impact on specific stocks, almost all of us know that biggest loser is going to be Real Estate, as it is assumed that 70% of the cash flow in the sector is in black. This move could lead to a break in demand for the sector, and hence reduction in property prices going ahead.
If demand in the sector is affected, it is indirectly posing a risk to some of the home furnishing and paint companies. This was seen in some of the stocks taking a hit during last week. Apart from some big players, names that we are tracking also saw some negative impact. Cera Sanitaryware fell from 2700 to 2200 and Somany Ceramics fell from 650 to 550 within no time.

Apart from this, there was another big event in past week, which was of course, the most awaited event of this year, US Presedential Election. Again, the results went against what most people were expecting and hence we saw a big fall, at least for some time, on the day following the election results. We cannot assume that everything the candidate spoke about during campaign is going to be followed blindly, as of now.
There was a very good line in media, that followed post his election victory speech:
"President Trump looks quite different from Candidate Trump"
This is always going to be true, during elections in any country. Republicans are now expected to do what is best for the States, as predicted by some experts across the globe.
The fall because of results, was mainly due to uncertainty about the policies that Republicans might implement, unlike the win of Democrats, where policies and approach might have remained as it is.
You never know in such cases. The new things might seem difficult to digest initially, but sometimes can prove to be much better than the old one. Just a thought!!

The dual events together led to the fall of India markets, which was much more than other emerging markets in Asia. The mid-cap and small-cap lost even more than the big players, as there is high uncertainty about the impact of demonetization on such small companies.

I don't think I am qualified enough to speak more on these topics. One can do more research on these, by digging more into the comments made by some experts rather than following me on these topics. :)

Finally, coming to where we have the larger interest. We are here to discuss more on long term prospects of some of the companies followed here, rather than some of the short term impacting events.

As we have started the trend from Q1, we will be focusing more on the new names, unless we have some major positive or negative impact on some of our old names. But still, we will have at least one liners on our old stocks, if not more.

Starting with the oldest and the best, Ajanta Pharma has never disappointed us so far. However, the growth has started to slow down a bit, compared to past few years, when it used to show tremendous growth every quarter. These things are bound to happen as you keep on growing, and eventually, you start posting the growth which is in line with the industry average. Having said that, Ajanta Pharma is still better than the average so far. The growth drivers in future would be the sales coming from US markets, where they had negligible presence so far. Now, they have started receiving many approvals from the country, which is why we are able to see, more than 1000% jump in sales from US markets since last 2 quarters. It might continue at least for short term. Because of the same, currently it is trading at highest P/E among all the pharma names, which are almost equal or greater in size.

Granules India, continues to post decent numbers as their margins have kept on growing owing to the fact that they are concentrating more on high margin products. The Q2 numbers were anyways expected to be subdued on account of negligible contribution from Omnichem JV. As per the concall, the same is expected to contribute slightly more in Q3 and most likely to contribute very well in Q4. If things go well in future, we can expect good things to happen in FY'19-20, looking at their plans as of now.

Capri Global saw a major run-up off-late. Not aware of any major change in fundamentals, apart from some positives in Annual Report this year. No added comments from Ganesha Ecospehere from our last discussion. The results were much better this quarter.

Can Fin Homes and Dewan Housing Finance kept on outperforming the industry for a long time, but unfortunately, last week's event proved to be slightly negative for both. However, I personally feel, this sector is likely to benefit from such moves.
That's my personal opinion.

Cera Sanitaryware and Somany Ceramics posted very good numbers, and they got accordingly rewarded, until last week post the event which might have put them under pressure.

SSWL saw another good quarter considering the fact that they passed some 20% reduction in raw material prices to their customers. Interestingly, even after such run-up in last 9 months, it is still trading around 13 P/E, which is much lower than the industry average.

Garware Wall Ropes saw another great quarter, where their sales were up despite reduction in raw material prices. Profits also shot up heavily, reporting some 70% jump. At this stage, it looks like they are well placed to post an annual EPS of more than 40, which makes the stock currently trade at <13 P/E. The balance sheet has kept on strengthening from time to time and now they are almost debt free. Management is confident of reporting strong numbers in Q3 and Q4 as well.

Camlin Fine Sciences has kept on frustrating me with numbers and this quarter was no different. Views expressed about losing quite a bit of interest remains as last discussed.

Dhanuka Agritech and PI Industries were expected to deliver strong set of numbers on account of very good monsoon this year, and neither of them disappointed. In fact both the numbers turned out to be above expectations. Accordingly both of them have been rewarded with good jump in share prices. The stupendous growth in PI Ind was on account of some orders that were taken earlier then expected. However, management is still confident of delivering 15% growth for the full year. The profits would be much higher, of course. It will continue to be steady compounder. The order book continues to be strong at 800 million dollars.

FIEM Ind posted another good quarter especially in terms of sales growth. 23% growth in revenues can be considered one of the best in the industry. Profit growth was moderate this quarter, but with such high sales growth, future looks good as of now. One of the key growth driver continues to be LED segment. They have invested further in 2 of their plants which is likely to aid further growth.

Lincoln Pharma disappointed to an extent. It was probably the first quarter after long time that we saw company reporting de-growth in sales. However, profits and margins continued to impress, and hence the valuation, to an extent.

Salzer Electronics grew pretty well in Q2 and in line with management's expectations. The good part was that their core business grew very well in the quarter. The profits were in check, mainly because of lack of business from EMS segment, which is their high margin business. Barring the EMS segment, which is quite random from Q2 FY'16 vs Q2 FY'17, the results would have looked quite good. However, I am still very hopeful on the company's growth looking at the performance of core business and their future plans, which is very well described in the result presentation.

The other stocks which I mentioned that I am following since past few months were mentioned towards the end of last 2 posts:

Out of these, Force Motors has surprised the most. There was big re-rating which was seen from our first discussion, where the stock saw almost 100% jump. Again, there was no change in fundamentals, it was just that stock went from being undervalued to being fairly valued now, in my opinion. It has been witnessing very good growth for past many quarters, mainly because, apart from its vehicle sales, they are getting good business from Mercedes and BMW, for which they have separate dedicated plant for making engines and axles.
The only negative that I could think of is management's lack of interest shown towards investors. They have never given much insights about their business in public. In some places, it is acceptable, as there is some confidentiality clause when they deal with Mercedes and BMW. However, there is hardly any detailed info given about their core business also. Being such a big company, they should ideally give result presentations, as well as try to connect with investors through con-call.

Srikalahasthi Pipes was another one mentioned earlier. The company was mainly considered because I saw a big valuation gap when I compared it with APL Apollo Tubes. I understand that APL might be much stronger in fundamentals and may be with future prospects, but still, I don't find it enough to justify the present gap. The margins and return ratios are much better for Srikalahasthi, but still it is lagging. The debt position is almost same for both.
The gap may be because of again, lack of information given by management to common investors, as well as non-performance of other group companies. The result for the quarter is not yet out, but it could be slightly weak, considering their furnace plant being shut down for 1 month in the said quarter. However, management is confident for the full year growth as expected. Let's see how things churn out.

Pricol and Poddar Pigments are delivering very strong numbers and are likely to continue doing same for coming quarters. Both seem to be very well placed as far as business growth is considered.

Kitex Garments and Torrent Pharma, may have disappointed many in this quarter, but I am still hopeful about their business prospects and growth returning back. Both have had their issues which led to such numbers. Kitex had issues with one of its major client, which ceased taking its orders from the company, plus there was some deferment in order delivery this quarter which will be passed on to Q3. Management's confidence in retaining its earlier guidance for the full year, in spite of poor H1 seems to be unbelievable. If that happens, that could reward investors big time. But obviously, it is a big risk.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Friday, September 9, 2016

Q1 FY'17 Result Updates

This time, as I do not see any changes in fundamentals of our old stocks, so I will cover only new names in discussion of Q1 results in detail.

But before jumping onto new names, here is the quick update on some of our old names.

Ajanta Pharma posted another spectacular quarter which led stock to new all time high and a landmark figure of 2000, which makes the stock as our first 20 bagger company in exactly 4 years since its initial discussion here :)

Granules India saw another good quarter, where Omnichem JV started giving desired results. However, according to new accounting practice, the sales from JV cannot be considered in company's income from operations, which is why we saw moderate sales growth. However, profits were included and hence we saw close to 40% growth. The sales from JV is likely to be flat for Q2 and Q3. So, one can expect moderate results in those 2 quarters, as profits will be minimum on back of low sales, but Q4 is likely to be very good. JV is likely to post 90 Cr sales in Q4, and profit share of Granules could be roughly around 5 Cr.

Capri Global Capital and Ganesha Ecosphere's investors finally saw some reward with stock hitting new highs off-late, and showing more than 100% gains from our first discussions on respective companies.

NBFC sector saw a tremendous rally off-late as the future expectations from the sector are pretty high. From our list, we had Can Fin Homes and Dewan Housing, and they didn't disappoint either. Dewan Housing has turned out to be 4-bagger and Can Fin Homes, a massive 12-bagger companies for us, since their respective inception on this blog.

Suven Life Sciences, Gulshan Polyols, Plastiblends, TCPL Packaging, Control Print, Somany Ceramics, Flex Foods and Cera Sanitaryware posted moderate results, and it was one of the reasons, why they didn't participate in recent rally. However, don't think any of them is going fundamentally weak. They have already given us good returns.

Camlin Fine Science has been disappointing from last few quarters, and hence I am losing a bit of interest in the company. The higher valuation is just because of its monopoly in certain products, however, results are not giving good vibes, about the company. Last quarter was slightly better. Since it has already given us more than 700% returns and now trading above 30 P/E, I would be neutral on the company.

The best performers off-late for us are Steel Strip Wheels (SSWL) and Garware Wall Ropes to an extent. SSWL is the classic case of patience paying the investors. For 5 years from Mar 2011 to Mar 2016, there was no growth in stock price, in spite of moderate to good performance over the same period. And since Mar'16 to Sep'16, we saw a 100% jump in stock price. Improving sales in terms of volumes, improving margins, improving return ratios (because of improving margins), continuously strengthening balance sheet, receiving healthy orders from some of the best auto brands, all together led to increasing investors confidence, and some respite for small retail investors like you and me in terms of some good return after long wait.

Now going through results of some of the newly followed companies

1) PI Ind:
This is one company, where I feel the fundamentals are as strong as Ajanta Pharma, in terms of growth, return ratios and strength of balance sheet. Definitely the stock has performed over the years based on its performance, and there is no sign of undervaluation, however, time and again, it has posted numbers which seem to be slightly above expectation especially on profit front, because of its operation efficiency, good product mix and better tax management. On revenue front, where, for first time, we saw subdued performance in FY'16, has also shown good improvement, with sales growing 15% in Q1, on back of 20% growth in CSM business. One of the reason for poor performance last year, was lack of growth in domestic agro chemicals business, which was attributable to poor monsoon. The same is also looking good this year, with country registering normal rainfall. This could lead to even better Q2, where we can see around 20% or more sales growth.
The company order book is continuously strengthening and it now stands at 850 million dollars.
Apart from 15% sales growth in Q1, the net profit growth surprised again with 48% growth yoy.
Company continues to remain almost debt free.
Because of stock already being traded at high P/E, one can think of it as a steady compounder, but if the performance continues to impress, it can lead to even better P/E ratio going ahead.

2) FIEM Ind:
Company continues to be the fastest growing company in auto-ancillary segment, among all the major names. The same is achieved on back of strong performance from 2 of its biggest clients namely., Honda Motors and TVS Motors. For Q1 FY'17, company reported around 20% growth in both sales and profit. Since its initial discussion on the blog, we have already seen 30% jump in stock price, on the back of such strong numbers. The balance sheet kept on improving over the years and this year was no different. The debt:equity ratio is going closer to 0.5 now. The return ratios have been spectacular considering the sector. ROE and ROCE both are close to 25%. Dividend policy also has always been very good and improving.
Management is further expecting the LED business to go up by 4-5 times this year with sustainable margins.The monthly numbers from Honda and TVS motors for the first 2 months of this quarter also has been pretty good, which should indirectly reflect in Q2 results of FIEM Ind.
On top of it, FIEM Ind has signed MOU to set up JV with Su Kam Power systems for the purpose of selling and marketing of LED lighting products. This way, they will make their presence felt in retail market as well.

3) Indo Count Ind:
Following the frightening events of Welspun India, we saw indirect impact on Indo Count. However, the issue has no link to Indo Count, and it would not be fair to assume that the same could happen with Indo Count as well. So far, Indo Count haven't received any intimation from any of its client for quality. In Q1 FY'17, company reported 8% growth in sales and 16% growth in net profit. Company increased its capacity last year to 68 million meters per annum, and they are planning to increase it to 90 million meters per annum by 2017.
Because of continuously management focus on improving margins, the company is currently the best in terms of return ratios in textile sector. ROCE stands at 48% and ROE stands at close to 60%. Almost unbelievable numbers for a company in such sector.
As I always mention, the improvement in balance sheet is extremely pleasing. From debt restricting in 2008, 2016 was the first year, when the Debt:Equity went below 1, almost close to 0.5. The good news is that it has improved further with management reducing the debt further in Q1 FY'17. They are planning to become debt free soon.
Having said all these, there are always some internal risk in textile segment, with some quality issues and fluctuations in raw material prices. So, one has to be careful and be aware, while thinking of investment in this sector.

4) Lincoln Pharma:
Already had so much discussion about the company in comments section even after Q1 numbers, I don't think I have anything more to add. It is good to see that management has started taking every effort possible to regain the investors confidence since the Tanzania ban massacre.

5) Salzer Electronics:
Started following the company since Mar'16, as mentioned in previous post. Its a complete new sector for me, so not much idea about the sectorial benefits or negatives that the company might be impacted with.
It is mainly into 4 types of businesses namely. industrial switchgear, copper wires and cables, building segment and the energy management services. Switchgear business contributes about 40% of their revenues at present. Copper wires & cables business contributes around 45% at present. The energy management business depends on the order book and hence the results or contribution from it could vary. For the year FY'16, the company posted 28% growth in sales and 42% growth in net profit.
For Q1 this year, the numbers were absolutely flat, but that was because the company received a contract from energy management service worth 15 Cr revenues and 1.9 Cr profit in Q1 last year, which was almost nil this year. Barring that, the results in Q1 were also pretty good, and management is confident of achieving 20% sales growth this year as well, excluding energy management service for known reasons.
The company has signed an agreement with IPD group in Australia, one of the leading distributor and wholesaler in Australia. They will be branding Salzer's products in Aus and NZ.
They have already shipped their first consignment for the same.
The company is still pretty small and has a long way to go, but definitely, there seems to be some potential to do so.

Some of the stocks which are currently followed by me but not mentioned here are Force Motors, Torrent Pharma, Srikalahasthi Pipes, Talwalkar Better Value Fitness, Pricol and Poddar Pigments.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Tuesday, July 5, 2016

Q4FY'16 & FY'16 Annual Result Updates - Part 2

1) Steel Strip Wheels:
Finally some good reward for the long awaited story. Have been waiting for many quarters of good performance to reflect in stock prices. But finally, consistency in performance paid off to an extent. Another good quarter by the company with sales going up by 5% and net profit up by a whopping 55%. The sales numbers look flat on account of price reduction passed on to customers because of lower steel prices. In terms of volumes the growth was pretty decent compared to its peers.
For the entire year, company saw a 55% jump in net profit, which had led the EPS for the entire year stand at 40. All the performance ratio have seen significant improvement because of higher profits. The debt to equity ratio also improved on account of higher reserves and debt levels remaining almost flat against last year.
The capacity utilization at 3 of its major plants have gone up by 4%. The management is confident of achieving at least 10% volume growth this year. However, if you see the monthly numbers so far, it is seen around avg 14%, which is very good. Results might continue to impress for few quarters hopefully. Korean company being allotted around 2 Lac shares at a price of 640 Rs per share, is also indicative of business strength the company possesses.

2) Dhanuka Agritech:
So far so good, as far the monsoon is concerned this year, and this would give a huge sigh of relief for the agrochemical companies. One of the bigger beneficiary would be Dhanuka Agritech. The fundamentals of the company has always been strong with a good business model, great management and an impressive balance sheet. The only thing going against the company was poor monsoon in last 2 years. This year, it is looking good so far, and IMD is still confident of country getting 107% of long moving average rainfall in the country. This could significantly boost sales for Dhanuka Agritech. The stock prices on account of the same has already escalated and it is again trading around its all time high levels.

3) Control Print:
Another blockbuster quarter for the company. Net profit was up 85% and sales was up 17%.
No change in views from last post shared here:
Currently the company enjoys 18-19% market share and they are confident of getting to 25% in couple of years.
The company also started trading at NSE.

4) Plastiblends Ind:
No updates on it after the last shared post here:
The result this quarter looked slightly better than the ones posted in past 3 quarters in FY'16.
Balance sheet had a little bit of negative as the debt levels increased from 20 Cr to 70 Cr. However, that seems to be mainly because of their new operation commencements.
One of its competitor is Masterbatches, Poddar Pigments is also looking very well poised for future growth. Both the companies are expected to perform in similar fashion going ahead, with the prediction of this industry expected to grow at 15-20% CAGR for next 5 years.

5) Gulshan Polyols:
After a poor performance in Q3, the company made a strong comeback in Q4, and registered a 21% jump in sales to go with 27% jump in net profit. For the year FY'16, company saw a 10% jump in sales and 20% jump in profit, which is quite reasonable.
I have to accept the fact the company has not shown the growth expected out of it. One of the biggest reason is that they have faced stiff competition in market off-late. Earlier, there were products where they had monopoly of being the sole producer. The situation is not same now, with good competition around. The balance sheet also seemed poor with increasing debt levels.
One of the positives is that the company is conducting trial run of maize based processing plant and aims to start production of starch powder from Q2 FY'17. Also, the company is still trading around 10 P/E which seems slightly less when compared to the industry P/E.
Overall I would be neutral on this company, as I am not sure on how company will deliver in growing competition. FY'17 would be interesting to watch out as far as their growth is concerned.

6) Ganesha Ecosphere:
For the first time in their history, the company has achieved debt to equity ratio of less than 1. The ratio was more than 2 till FY'14, but it has improved significantly in past 2 years. Apart from that, the numbers also has been impressive this year, and the trend is likely to continue. No other updates from last post.

7) Camlin Fine Science:
Again, a bit of neutral view on this. The result for the past year was not impressive. However, they continue to enjoy good market share for some of highly used products. The company is continuously looking for acquisitions to grow further. We will have to wait and watch if that pays well for the company. The company's new presentation look very promising:

8) TCPL Packaging:
Off-late we saw another re-rating, after the first one which was massive and it took stock from 100 odd levels to 500-600 levels. The second re-rating saw it jump from 550 levels to 750 levels in no time. No doubt, one has to agree with the fact that it seems fairly priced now. But, we have seen plenty of reports which says that with monsoon playing out well this season, we could see a uptick in fmcg space, which would indirectly benefit TCPL packaging.
Both ROE and ROCE now stands above 20%, which is phenomenal.
Dividend has also picked up well since last 2 years on higher profitability.
Found one interesting article on TCPL recently:

9) Garware Wall Ropes:
Another company with flat topline growth and again due to lower crude prices. The net profit growth was superb for all the quarters this year, and they finally ended the year with 43.7% growth.
On business outlook, there is no change from the last post:

10) PI Ind:
One more company, which could be benefitted from good monsoon. However, it is not the sole factor for PI Ind, unlike Dhanuka Agritech. Good amount of their revenues comes from CSM segment. For Q4, the company posted 9% growth in sales, and 58% growth in net profit, mainly due to lower taxation this quarter. For the full year, sales grew by 9% and profit by 29%. One has to agree with the fact that this has been their lowest growth for past many years. The management has attributed this to below average monsoon and some deferred payments in CSM because of softness in global markets.
However, on the positive side, the management is confident of achieving 18-20% growth this year. Their CSM order book has strengthened further from 790 mn $ to 850 mn $. Debt to equity ratio stands at 0.11%, which is quite good. Interesting the company mentioned that they initiated business in pharma segment through CRAMS, which will be high margin initiative. 3 of their molecules got commercialized last year, and 3 more are expected this year. With agro chemical spaces contributing about 40% of their revenues, it will be interesting to see, how results will look, if we have above normal monsoon this year. On top of it, we have strong order book for CSM, which enhances my confidence in their growth outlook.

11) FIEM Ind:
Excellent numbers reported by the company, with sales growing 25% and net profit up by 45%. For the entire year FY'16, the sales were up by 20% and profit was by 35%, which can be considered as one of the best performance in its sector. The benefit was largely due to LED segment, which reported sharp growth.
One of the major positives to look forward to is that the biggest client of FIEM Ind, Honda Motors, reported excellent growth in first 3 months this year. This would get reflected in Q1 numbers of FIEM Ind. Infact, sales of its second biggest customer TVS Motors was also pretty good. Also, their order book in LED segment is not yet complete. This will also help in reporting good numbers.
Plenty to look forward to as far as growth in concerned. However, one also needs to note that stock price has appreciated by almost 50% since we started discussion here, and it is now trading very close to 4 figure mark.

12) Indo Count Ind:
In FY'12, the company stood at Reserves of -1 Cr against debt of 350 Cr. In FY'16, the company stands at reserves of almost 600 Crs against debt of 320 Cr. This speaks highly about the management's competency, and the strength of business. The ROE and ROCE both stands at close to 50% this year, which is outstanding. As far as results are concerned, in Q4, they posted 15% growth in sales and 135% growth in net profit, largely on account of CDR payment of 25 Cr last year. Barring that also, the results looked quite decent, and better than most textile companies in India. On business front, there is no change in views from what was shared here:

Apart from these names, off-late, I am tracking Salzer Electronics, Torrent Pharma, Srikalahasthi Pipes, Kitex Garments as a comeback story, Force Motors and Talwalkar Better Value Fitness since past 2-3 months.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Tuesday, June 28, 2016

Q4FY'16 & FY'16 Annual Result Updates - Part 1

1) Ajanta Pharma:
Again, starting with the strongest name as far as fundamentals is concerned, which I have been mentioning time and again on this blog, and the good part being, there is no change in my opinion even after latest results. Company ended the year with 17% sales growth and 30% net profit, when most of the company in pharma sector found difficult posting good numbers. The margins for the year stood at 23%. The company reserves saw a big jump up from 768 Cr to 1107 Cr, whereas there was no change in debt levels, and they continue to remain almost debt free company. In spite of huge jump in equity on account of growth in reserves, their ROE continues to remain above 40%, which is phenomenal. Off-late company has received good number of ANDA approval from US, which might trigger their sales coming from US, which currently stands at around only 3% of total revenues, which leaves plenty of scope for future growth.

2) Granules India:
Very good quarter for the company in terms of operational performance, however, the sales figure didn't seem up to the expectations. The reason for both those things was same. The company is slowly reducing its exposure to low margin products and shifting to high margin products, which is why slight flattening was seen in sales growth but net profit growth stood at 48% yoy. The debt to equity ratio after 3 years went below 1, which is also a big positive, as this was one of the biggest factor which kept the price to earning ratio in check for past 2-3 years. The things now seems to be much stabilized and company has already started trading consistently around 25-30 PE. For the entire year, the company posted 11% sales growth and 30% net profit growth. High margin CRAMS business from Omnichem JV is expected to contribute about 200 Cr in sales this year, which could be a big positive. In general management is expecting 10-15% sales growth in FY'17 and profitability is obviously going to be much higher on account of shift towards high margin products, better operation efficiency and contribution from Omnichem JV. Overall, I feel there are plenty of growth triggers going ahead for the company.

3) Dewan Housing & Can Fin Homes:
No change in opinion from what was shared last time here:
Off late, I am not strictly tracking these 2 companies, so can't comment much in detail.

4) Suven Life Sciences:
After so many subdued quarters, Suven Life Science finally came out with strong set of numbers in Q4. Sales were up by 49% and profit by 83%. Overall for the full year, sales were down 2% and profit was down 13% mostly because of decline in CRAMS business by some 15%. The specialty chemical business made up for some of the de-growth and hence the annual numbers shows only 2% de-growth. The revenues from specialty chemicals is expected to remain at same levels, however, management is confident of achieving 15% growth in CRAMS this year. This will also lead to higher profitability as CRAMS operates at 30% margins for Suven. The balance sheet also continues to remain strong. Plenty of patent approvals will aid their growth in the long run.

5) Cera Sanitaryware & Somany Ceramics:
They continue to enjoy good period in one of the most favorable sector under Modi government. Both the stocks are currently trading at their 52 weeks highs and not to forget, Somany is actually trading at its all time high levels.
Cera posted another decent quarter this time, like they have been doing. For the full year, they posted 14% growth in sales and 23% in profit. Although growth of 14% might seem low when compared to 25% which they used post earlier, it is also important to note that it has still outperformed the industry. This year, the company expects to grow in sales by about 20% and profitability is expected to be much higher.

Somany has continued to outperform the analyst expectations for 2nd consecutive quarter especially in terms of profit growth, which has led to steep jump in stock price off late. It was another quarter where it performed much better than Kajaria, which is the leader in its sector, in both sales and profit terms. For the full year, sales grew at about 12.4% and profit growth was around 38%.
The expansion at Kassar plant in Haryana for Glazed Vitrified Tiles was successfully completed and commercial production was commenced from March end this year. The Company management is confident of making 0.5-1% increase on PBT margins in FY17. The management has also given 10-12% revenue growth guidance in FY17. The manufacturing unit at Kassar mentioned above will help topline and bottomline growth this year. Also the demand is expected to increase if monsoon plays out well this year.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Thursday, March 3, 2016

Q3 FY'16 Result Updates - Contd

1) Ganesha Ecosphere:
After 2 flat quarters this year, we finally saw company posting good results on both revenues and profit front. In Q3, company posted 13% growth in sales and 37% jump in net profit. However, considering the overall pressure on markets, it was expected that such a result would be considered a non-event as far as price movement is concerned. There was a common observation in this quarter numbers, that if you give good results, your price will continue to be there or will see only mild negative impact on the price. However, if the posted numbers are weak, 20% downside is bare minimum that you will have lose. Obviously, it is a short term trend. Eventually, performers will be rewarded. The flatness in sales and negativity in profits for the first 2 quarters was mainly on account of major fall in crude prices over last year, because their product prices vary based on raw material cost, and crude oil is one of the major. The demand is going up by 10% annually, as per management, but if they are able to attract more customers, and improve execution, it will surely reflect on their numbers going ahead and eventually lead to better market price.

2) Somany Ceramics:
This company has been like Cera Sanitaryware, and can be considered as one of the better performing company in its sector. In sales term, it was very good to see that the company posted close to double the growth posted by Kajaria, which is considered the leader in the sector. Somany Ceramics posted 11% growth in sales and 26% growth in net profit. Time and again, government has put more and more emphasis on Swatch Bharat mission, which is likely to aid Somany Ceramics in future. Via QIP, company recently raised 120 Cr, which was mainly done to strengthen the balance sheet.
As per management, they are expecting to grow at 12% in FY'16 and then 15% in FY'17. Currently they are investing heavily in branding activities, which will strongly benefit them in long run. They are also strongly looking to expand their presence in tier II cities.
Overall, in Somany Ceramics and Cera Sanitaryware, I strongly feel that in even is subdued markets, decent growth will continue for both, especially because of their sector, where there is always a huge scope when your country is on path of becoming a developed nation.

3) Garware Wall Ropes:
Superb R&D team has led the company hit new highs in terms of their business expansion. Another company, where we saw a sudden jump in share prices, however, consolidated later on account of poor market conditions. Inspite of flat growth this quarter, the company still managed to post 43% growth in net profit yoy. The net profit for first nine months also stands at 45% over previous year, which has taken the EPS to 20.38 so far. EPS is likely to be around 25 for the year, which makes the stock cheap considering its business model, growth prospectus and other fundamentals.
Company looks good to post revenues around 850 Cr this year, and to achieve their expected target of 1000 Cr sales by 2017, if things goes well for them. More details about this company has been posted earlier on this blog.
Continue to remain positive on their business prospectus.

4) FIEM Ind:
Another strong quarter posted by the company at a time, when almost all the companies are facing challenges because of slowdown in demand. For Q3, it posted 27% growth in sales and 55% growth in net profit, which was way above expectations. The higher sales was largely because of 45 Cr which came from LED segment of the company, which used to produce meager sales till then. For first nine months, the company has registered a sales growth of 18% and net profit growth of 31%. They are likely to end the year with around 53 Cr net profit which will translate to an EPS of around 40-45, which makes the stock still trading at a P/E less than 20, for such a fundamentally sound company.
The company has setup a new plant in Ahmedabad for manufacturing of automotive lightings and plastic parts. It has started commercial production from 11th Jan 2016. Also their Rajasthan facility is undergoing expansion, which caters to LED products. In terms of their total LED bulb and LED street lights order, till Dec'15, they have not even supplied half of it yet, which speaks volumes about the scope left in this segment for them in future.
The only downside is still their heavy dependency on 2 clients, one is Honda and other is TVS. Both of them together forms about 70% of their revenues. Unless they keep on delivering quality products, I don't think even that is an issue. Overall, I still remain position on their prospectus.

5) PI Industries:
The stock after fighting so much against the overall market fall, finally gave up after company was not able to live upto the investors estimate for 2nd time in a row. In Q3, the company once again posted flat sales, but net profit was up by almost 17%. Once again, the company attributed the lower sales to deferment of payment especially in CSM segment, which is why investors were not happy as they gave the same reason for flat growth in Q2, and said that H2 for the year would be better, which didn't turn out to be in Q3 atleast. CSM segment was expected to post growth of around 20-25% this quarter, which turned out to be only 9% because of above mentioned the reason.
The company has cut its revenue guidance for the full year from 18-20% earlier to 11% now.
They have however, maintained the 18-20% guidance for the next year. The other positive being that their order book for CSM has gone up by 50% yoy, inspite of overall dull market. Their Jambusar plant phase II and phase III has been commissioned recently. Talking about negatives, slow down in domestic demand has been a huge factor. However, believing in the fact that rainfall is expected to be good this year, one might see demand coming back in domestic markets as well.
Fundamentally, still, it continues to be one of the better placed company in its sector.

6) Indo Count Ind:
Outperformance continues for the company with another strong set of numbers. The company posted 17% growth in sales and 45% growth in net profit, in a quarter where all the majors of the sector were able to post flat or negative growth. The shift in company's focus to higher margin business of home textiles has led to significant jump in company's margin, and if I am not wrong, this quarter saw the highest margin ever posted by the company. The shift will also help the company in maintaining the profit growth over next few quarters.
The company is likely to post revenues in excess of 2000 Cr for the first time and profit in excess of 200 Cr, which will turn out to be a great achievement. The company ranking recently elevated from 13th to 11th in Home Textile Supplier segment to USA. In terms of bed sheets supply to USA, they are currently among top 3. Both ROE and ROCE has continued to remain above 40% including the current year which is exceptional. If one needs to have a look at some more facts and details about the company, one can review their investor presentation in this quarter. It is highly informative.
Still remain positive as healthy growth is likely to continue.

7) Lincoln Pharma:
There were strange series of events that happened with this company after it was discussed here for the first time. The first time I took the name of this company, it was trading around 160 Rs. In few days time, I went on with the discussions of few new names with their Q2 result analysis, where Lincoln was one of them. At that time, it was trading around 225 Rs. And again in no time, it went straight upto 300 Rs. To make all the bullish buyers turn into bearish sellers, one news was enough. The news said that Tanzania banned Lincoln Pharma's bacteria fighting injection in the country. As per the management, this was one of their major revenue generator. The stock which was already dispatched was also asked to be kept on hold and destroy. Due to this their raw material and packaging material for the same had piled up in their factory and is finally going as loss to the company. The language used in putting this notice seemed to be rude, especially when it was coming from company's management.
One more thing, in the Q3 result press release, it was mentioned that "Since the revenue from different segment is less than 10% of total revenue, segment wise results are not given."
If it is so, than why they feel the ban of one injection could affect their revenues so much.
However, because of the same news, the company lost almost 50% of its market cap from highs.
When Business Line had chat with management, they informed that "The ban came due to technical and administrative reasons. There was nothing wrong with the quality of the product. The registration of this particular product was due for renewal last month. We could not do it on time. We have taken up the action for renewal. The ban is not going to affect the overall business of the company in the African region."
After all the drama ended, the company came out with spectacular numbers. The company reported 67% jump in sales and almost 150% growth in net profit. However, till then that markets started its major fall, and it remained as a non-event in terms of price changes.
It will be interesting to see how Q4 pans out. Till then, safe investors could stay away, as I think there seems to be some management concerns in the company.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Friday, February 26, 2016

Q3 FY'16 Result Updates Continued...

1) Camlin Fine Sciences:
This is one company which is placed in a sweet spot because of its great product pipeline, where they find hardly any competition in India, as well as not much competition globally. In spite of such position, the numbers this year has not been up to the mark. All the 3 quarters have seen de-growth in sales, which is tough to believe.
On the positive side, the company has setup a new plant in Dahej, which is likely to boost their sales further as per management. It is expected to operational by FY'19. On the other hand, the company has acquired 65% stake in Mexican company for 53 Cr. The company manufactures specialty intermediate chemicals for feed and food manufacturers, pet food manufacturers and industrial customers.
It will be important to see how these 2 things pans out for the performance of the company in future, as it seems that there is no value unlocking left at this price. However, with company looking to expand in different geographies, there might be a scope for better performance in future and accordingly the price should move. Till then, I continue to remain neutral on it and hope for a better FY'17 in terms of numbers posted by the company.

2) Gulshan Polyols:
After a series of good quarters by the company, we finally saw a poor performance. For the first time in past 2 years or may be more, the company has posted a de-growth in sales for the quarter ending Dec'15. Even in the press release, there is nothing specific about the poor show in sales, but it seems that the overall poor environmental conditions in India could be one of the reason.
On completion of first 9 months, the growth still looks decent with 6% growth in topline and 18% in bottomline. After making a high of 450, the stock has now again started trading below 10 P/E, may be triggered by poor quarterly results.
Overall it still looks better poised for good performance going ahead, based on the updates that were posted here earlier.

3) Plastiblends Ind:
The results might not look the best, but the potential is certainly there. Currently the company exports to 60 different countries, and exports form around 35% of their total revenues. The company is likely to end the year with flat sales around 500 Cr, but the profit has improved by more than 20% over last year.
The company has setup a 4th plant in Kolkata with 66 million pounds capacity to cater to increasing demand in eastern India, which should be operational around Dec'16. Also, its 3rd plant in Surat is about commence operations in next 2-3 months.
Since the inception of discussion on this blog, it had already grew more than 4 times to make a high of about 520, and then on account of overall market conditions, it has consolidated a bit.
For longer term perspective though, it seems that numbers will improve going forward.

4) TCPL Packaging:
So far so good for the company. They have been able to post consistently strong numbers and the same has reflected in their price. It was discussed here 1.5 years back, around Jun'14, when it trading around 100 Rs. It made a high of 700 Rs, which implies staggering growth of investors money in very short period of time. On top of good growth in sales, the company has managed to post a significant jump in net profit over past 6 quarters which has led to such appreciation.
So far in FY'16, the company has showed 18% growth in sales and 23% growth in net profit.
The company's approach towards growth and modernization is quite evident here:

5) Steel Strip Wheels:
It is purely a case of one big negative holding all the positives back. The numbers have been fabulous even this year from the company. On top of it, the promoter buying from open market and one of the Korea's largest company in its sector investing in the company at 640 Rs per share are huge positives, though it seems to be completely ignored by the investors.
The biggest problem continues to be their debt levels, which is way too high but it is noticeable that Debt to Equity ratio has improved a lot in past 3 years. For the first nine months ended Dec'15, the company has posted flat sales growth of 2%, but a huge profit growth of 55%, which speaks volumes about company's increasing efficiency. Flat sales is mainly because of general slowdown in demand, but if one goes through the company's filings in last 2-3 months, we can see company has won significant amount of orders from various companies and countries, which should help them sustain growth in future.
If one asks for my opinion on this, I would say, patience and debt management is the key here.

6) Control Print:
Repeatedly giving good performance across the year has finally paid the investors of Control Print, a great return over their investment in past 9 months. On top of it, such a small company giving bonus shares, added fuel to fire, which escalated the stock prices. However, because of overall market falling severely, good consolidation was seen off-late. Such a small company consistently posting 20% net profit margins is a huge achievement. For the first nine months, company has posted 20% sales growth and 26% profit growth.
Company has consistently paid good dividends and have maintained almost debt free status so far.
Overall, the business prospectus looks positive.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Monday, February 15, 2016

Q3 FY'16 Result Updates

First of all, let me clarify that whatever views that I post here are my personal views on quarterly results posted by the company.
Please speak to your financial advisor before taking any actions on any of the below mentioned names.

The views on result expressed below are mostly about company's performance rather than evaluating whether the company's price is fair or not.

1) Ajanta Pharma:
Another strong set of numbers by Ajanta Pharma. The price movement before the quarter indicated that most investors are under impression that their Africa revenues would be affected by slowdown in their currency. However, company duly informed that all the transactions in african countries are happening in USD, as far as what I understood. The same thing got reflected in their results, with revenue growth in african countries turned out to be 40% (probably the best among their geography :)). This could be one of the reason why the price didnt fell much in last week carnage in stock markets. Not sure about that though!!! However, in our discussion here, we are least concerned about stock price movements. In terms of growth yoy, company showed 16% jump in sales and 20% jump in net profit.
Net margins continue to remain near 25%, which is great. The company in their filing has also mentioned that their new facility at Dahej has started taking regulatory filing batches, and the company has started contruction of their new plant at Guwahati, which is expected to be operational by March next year.
All in all, I am still positive about the company and their growth story.

2) Granules India:
Good set of numbers by the company, as net sales were up 8% and profit was up by 15%. The company mentioned that some of their product's pricing is directly linked to raw material prices. Hence with falling crude, they were able to post sales growth of only 8%. The good thing that margins have continued to impress over past 6-7 quarters, and management is still confident of improving it further. The management is expecting 15% revenue growth in Q4, and 15-20% growth in FY'17 over FY'16. If these numbers are delivered and that too, with further improvement in margins, it could be great for the company. The net profit by the next year, could very well be above 150 Crs.
One more positive news came in for the company, which stated that company will start trading in F&O segment from 26th Feb. We can see even more participation from FIIs then. Not sure of its impact on price, especially in current circumstances. :)

3) DHFL & Can Fin Homes:
The overall finance sector has been under tremendous pressure, and most of the companies have been affected because of that. Still, in my opinion, both DHFL and Can Fin Homes continue to look good based on their strong numbers. When discussed here for the first time, DHFL was already a midcap name and Can Fin Homes was small cap co then. Considering that, it was expected that Can Fin Homes is likely to give more returns if conditions are favorable. That was exactly what happened. Now since both are decent size companies, they are expected to follow the market trend in terms of price movement, but their performance is likely to be good, and likely to be better than some of the peers in the sector.
However, considering the current scenario, it is advisable that you take inputs from a finance expert before taking any decisions on these two names, as my knowledge in finance sector is limited.

4) Suven Life Sciences:
This company can be considered as one, where we had plenty of expectations and which has disappointed big time, since past few quarters. Obviously, when we started discussion, it was trading cheaply at 24 Rs. Since then the returns may be good, but their performance off-late has not been upto the mark, and which has reflected in their market cap reducing almost 40% from the highs.
However, they are in business, where their successful research turning to commercial returns could take a bit of time, and hence one has to show patience, if one wants to remain invested here. Lots of commercialization of their products is likely in next 2-3 years.
One can refer to the investor presentation published by the company which is quite elaborative:
The decision in this company can be taken based ones own conviction, as the numbers in this company is not as predictable as may be something like Ajanta Pharma.

5) Cera Sanitaryware:
The company even in the worst of times, is still able to post more than 10% growth in sales, which is commendable. The revenues this quarter were up by 12% and net profit up by almost 25%. The company has attributed the current slump in demand, as a reason of posting lesser growth, as they had guided for 20-25% revenue growth for FY'16, which doesn't seem to be happening after the end of first 3 quarters. The company as usual, gets good amount of government orders in Mar quarters, which is likely to aid growth this time also, as per management. On top of it, their recent acquistion of Anjani Tiles, is about the commence production in middle of march, which will aid some growth for the next year. Till then, it seem, we have to wait for improvement in macros, for company to get back to their historical growth every quarter.
Again, it can be considered as a conviction bet, especially in current circumstances. If one believes, that schemes like housing for all, and few others will succeed, then it will definetely lead to better performance from this sanitaryware giant.

6) Dhanuka Agritech:
Finally, some respite for this agri company, as after 2-3 very flat quarters due to monsoon deficiency, it has finally got back to growth days. Revenues this quarter were up by 15% and net profit was up by 3%. The environmental conditions in India has kept the company's growth in check this year, but still they were able to post decent growth this quarter.
Once we have a good monsoon, the company would be one of the bigger beneficiaries.
The company's 4th facility at Keshwana, Rajasthan is expected to be operational very soon.
Their distributor network has more than doubled in past 8-9 years, which is good to see.
The company operates in one of the better sub-sector in agro-chemical space, which is plant protection, where the consumption is still lowest in India as compared to other countries. We all are aware of how much crop is destroyed by Insects, Fungus and Weeds every year.
All in all, it seems the company has very high capability of delivering good numbers! Let's hope for some respite from rain gods this time!!!

More result updates to follow!!

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.

Thursday, January 28, 2016

How Important Is Knowing Your Risk Apetite?

Off-late, we have seen tremendous amount of volatility in markets, and people have started wandering where they should put their money. Ofcourse, I am not authorized to guide you on where should you put your money, but I am just presenting my views on overall scenario at present.

The Repeated Market Behavior:
               Time and again, we face situations where markets starts behaving violently in series of global events, which triggers fear among many investors including the large institutional investors. However, they as an investor or trader, have full time job in market, and they will definitely find a way of making profit even out of the worst scenarios, may be few of them!!!
However, we as small investors, have lesser choices, and we mostly prefer deploying our money in equities, and that too, mostly as medium/long term investor, rather than being a trader. We go by this method, as we are not able to spend enough time in market activities, and be a full time trader.

This probably can prove to be the biggest boon for us, if we are in long term bull market, and similar could prove to be worst of curse in longer term bear market. Hence, we need to understand what we are capable of, and then take our actions.

The Concept Of Risk vs Reward:
              I, as an investor has followed one policy from the beginning and that is, I will invest only that amount in equities, which I can afford to lose. So, in circumstances, where I see a risk worth taking, I don't mind going ahead with it. Simple example being, that after buying Granules India some 3.5 years back at 18 Rs (adj), it went down to 9 Rs (adj) within 3-6 months, where it became highly risky and people were hesitent in buying the same. However, I had some risk apetite and I utilized the dip to buy more, because I was ready to lose my money. if anything goes severely wrong from there. Now after 3 successful years for the company, we know it is not the same company it used to be then, in the eyes of investors today. Obviously, that can change anytime based on future performance.
This may not be true for every company and the policy might not be the same for everyone.
I have seen people investing in markets with a sole purpose of earning few extra bucks, even at the cost of risking the much needed money in hand.
Thirdly, there are also people who are relatively safe players and not ready to take risk in smaller companies even if they like their fundamentals.

The theory says that the amount of risk that you are ready to take is, most of the times, directly proportional to the reward you are expecting to get out of your investment. That happens because of the fact that reward is generally more in micro to small caps where value unlocking is pending, and we invest in those names considering the possible bright future of the company based on our conviction. Now, that can lead us either ways. In good scenario, the company will outperform consistenly and slowly move on path of transforming from small -> mid -> mega, whereas, in some bad scenarios, the company might not be able to sustain in highly competitive market, and finally investors might lose their hard earned wealth. Any stock which was discussed earlier on this blog with market capitalization of less than 1000 Cr can be considered in this category.

On the other hand, most of the companies, which has strong presence in markets, and are growing at 20-25% CAGR, which is also likely to continue for next few years, because of the growth visibility in the respective companies, are most of the times faily valued, and one can expect mediocre returns out of it, if market is stable/good. The good thing here is that in case there is a major downfall in overall market, the downside risk is limited in such companies, atleast less risky than some of the small cap companies. For e.g. companies like PI Ind, Ajanta Pharma etc today.

The Best Facing The Worst:
        Obviously, the scenarios mentioned above are not considering any major postive or negative news flow, which can drive stocks to any levels. The examples of worst being happening to some of the best names can be seen in case of Kitex Garments and Marksans Pharma off-late. There may be more names, but these are the ones I am aware. In bear market, investors/traders are looking for that one trigger which could lead to heavy downside in any company with any sort of fundamentals they have or had before the trigger.
Both the companies has lost more than 50% from their highs on account of different reasons.
Kitex was once considered a model company, and people used to study its details for good understanding of a fundamentally strong company. However, now every body seems to be off-loading their stakes in the company, as many people have found corporate governance issue, many have found results to be very poor, and few have some issues with Balance sheet.
In Q1, company said that their order book is full for the year, and they are not going to take any more orders for this year and they are expecting about 600-650 Cr revenue in FY'16. However, after Q3 results, it is highly unlikely that company will be able to reach those numbers.
Conference call with the management will be very interesting this time.
In case of Marksans Pharma, everything was going buttery smooth, until there was a news on Economic Times which stated that "Marksans Pharma Goa plant get notification of deficiency in GMP from UK MHRA. 40% of Marksans Pharma revenue comes from UK."
As per the clarification from management, it seems those were minor observations, and company has responded to those observations in time. They also mentioned that their supplies to UK has been continuing, as of now.
Now, there is either a disappointment because management was not prompt in reporting the same to SEBI as and when the observation were informed to them, or there is something unexpected coming out from company sooner, which few insiders may be aware off. Lets see what happens in coming days now.

These sort of things are quite common in markets from time to time, and hence I used to mention, again and again, that distributing your money in various companies is the way to go and not lay all your eggs in one basket. Sometimes, it takes only one quarter for a company to become fundamentally weak from being fundamentally strong in the eyes of investors.

The Zero Risk Investment:
             If you are a highly safe player and are looking for zero risk investments, then also we have options in equity markets called Liquid Bees. It is an Exchange Trade Fund (ETF) by Goldman Sachs. The price of single unit of this fund is 1000 Rs (face value), which will not change. The only way to earn is by getting dividend which is calculated on daily basis and deposited to your account on monthly basis. If I am not wrong, you will not get dividend in form of cash in your account, but as new units of same fund. One can check internet for more details on the same.

The Final Word:
                The conclusion out of all these would be to first figure out your risk apetite in the market. If you are looking to take risk, then always assume as if we are not that far from dooms day and then decide what is the amout that you are still ready to invest (ofcourse if you want your lost wealth to not affect your health :) ). If you are a long term investor and want to play relatively safe, then you can look at some of the decent companies, with good history, good management, good balance sheet, and good growth visibility.
For poeple who are new to markets, it is always advisable that you first be aware of all the basics and history about market & its behavior and then invest your money wisely into the same.
The most important thing, especially for new investors, is to make sure that you are not investing in markets only to earn, but to learn and invest in good companies, which you can be proud off. Earnings will definitely follow, sooner or later.
All the best!!!

These are solely my views and I will add more to this later.

I am not a research analyst, nor an investment advisor. Through this post, I am only putting my views, and which has nothing to do with any action that can be taken by readers on any specific company.