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 :)
http://fundamentalstockideas.blogspot.in/2012/09/ajanta-pharma-rewriting-future-of-india.html
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.
Discloure:
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.
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 :)
http://fundamentalstockideas.blogspot.in/2012/09/ajanta-pharma-rewriting-future-of-india.html
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.
Discloure:
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.
