rmukhija

Wednesday, 28 September 2016

ELDECO HOUSING AND INDUSTRIES LIMITED

COMPANY NAME- ELDECO HOUSING

SECTOR- REALITY

Market Capitalization: 144.02 Cr.

CMP- 675 RS

OPM 5Year: 16.55%

Return on equity: 19.93%

Return on invested capital: 18.04%

PEG Ratio: 0.16

Interest Coverage: ₹ 6.70

Debt to equity: 0.50

Book value: ₹ 583.69

Number of equity shares: 0.20

TTM EPS: 104.06

Eldeco Housing & Industries Ltd diversified and modernized its operations & is a Public Limited Company with a diversified range of products for supply to customers in both, domestic and international markets. The Eldeco Group has forefront of Real Estate development in North India since 1975. The group is synonymous with timely and quality delivery in a number of cities like Luck now, Kanpur, Agra, Noida, Greater Noida and NCR of Delhi. In the construction and real estate development Eldeco has delivered more than 200 projects spanning townships, high-rise condominiums, row houses, malls and office complexes. In addition, 30 projects are in various stages of active execution. The aggregate constructed area stands at more than 40 million sq.ft with more than 17000 satisfied customers. Currently apart from the towns mentioned above, Eldeco is developing integrated townships in Panipat, Sonepat, Ludhiana, Jhansi and Jalandhar. The transparent and principle driven business philosophy has widely recognized. The business activities rest on the principle of high quality, superior construction technology and high consumer satisfaction. Eldeco stands firm in its commitment to ‘creating value and cementing trust. The Group has two main companies
Eldeco Housing and Industries Ltd. (EHIL) The company incorporated in the year 1985, has held an uninterrupted market leadership position in most major towns of UP, most notably Lucknow and Kanpur.
Eldeco Infrastructure and Properties Ltd. (EIPL) It was incorporated in 2000 to professionally undertake projects in the NCR, EIPL in recent years has had rapid growth in other regions as well. EIPL is a closely held unlisted company that also acts as the promoting company for many projects specific special purpose companies. Projects • Residential • Commercial • Industrial

compounded Sales Growth:

10 Years:: 14.69%
5 Years:: 25.35%
3 Years:: 13.63%
TTM:: 159.93%

Compounded Profit Growth:

10 Years:: 18.75%
5 Years:: 46.99%
3 Years:: 28.45%
TTM:: 216.85%

Return on Equity:

10 Years:: 16.75%
5 Years:: 14.89%
3 Years:: 16.11%
TTM:: 19.93%; The company’s net sales

Thursday, 28 July 2016

GST -BOONER or CHOKER

GOODS SERVICE TAX IS NOT THAT GOOD.

GST is trending now a days.Market nowadays is moving northwards on two things Monsoon & GST.If you believe that after GST running a business will become so easy then wait a sec!!! You need to read the GST act carefully.
We know that government acts and rules are very boring and cumbersome to read but when we read GST act we will come to know that it is not that biggest tax reform;it is going to be a biggest difficulty and a web which are going to create
GST has two motives
1-There are several taxes in the country which is the biggest hurdle in making India a common market.GST will ensure tax imposed on manufacturing; sales and services with a common rate due to which India will emerge as a common market place.
2-It will reduce inflation as there are different taxes -direct ,indirect which increases inflation. Apart from Custom Duty all parts of Taxes excise,service,vat,octroi,state and central direct and indirect taxes will be united whichWill decrease the rate of tax.With GST the tax levied from manufacturer or service provider at different stages will be vanished and there will be single tax to be levied on final product ,sales or service.which is expected to reduce inflation and will provide a very gentle tax administration framework which ultimately will reduce complexity.
With these reasons GST hopes are taking Market to a higher level.But GST is not going to fulfill all , in fact it is going to do almost Opposite to this.There are many provisions in this which will push backwards our tax systems instead of propelling in forward directions.For example let us take registration which is the basic aspect of taxation.If GST comes one has to do several registrations.According to GST act there are three layered taxes in it-State,Central and Integrated. One who supply or is selling to whole country has to do three registrations in every state and one has to file separate return from all three and take care of Taxes and also there will be infinite no of registration to be done.
Also if a company is doing several buisness then it has to do registration separately.
One more provisions is there that if a company send a product or service to its unit or branch then the tax will be imposed on unit and branch , the receiver will have to apply for tax return afterwards.
Now Input tax credit is the soul of GST.according to which during manufacturing or supply tax paid will be returned on raw material or service provided.This system will vanish Multiple Taxes on one final product or service but as per GST if the supplier does not pay tax to govt then the manufacturer who use the raw material from the supplier can not apply for tax credit-return.It will increase legal issues and notices.
In this three layered tax system there will be no stamp duty,no motor vehicle tax and tax on petrol diesal covered and even octroi in some states.The Rate of GST is most contentious.All type of direct and indirect taxes are around 24pct So it has toAround 18-20.so in turn service tax has to be increased by 4-6 pct.which can increase inflation.
In my opinion with such complexity the compliance cost for tax rules will also be increased. Now its the government can only tell that how the GST will ease tax system with infinite no. Of tax registrations.we all are hoping that with GST we will get advanced easy and long lasting tax system but this system will also open gate for complexity and dissatisfaction.

Thursday, 8 October 2015

SHARE PLEDGING WILL PLEDGE YOU TROUBLE.

SHARES PLEDGING- PAINFUL TROUBLE.

WHILE INVESTING IN A STOCK WE TEND TO FIND OUT THE TRUE OR INTRINSIC VALUE OF THE STOCK AND COMPARE IT WITH THE CURRENT PRICE .WE TRY TO FIND OUT COMPANIES WHICH HAVE INTRINSIC VALUE HIGHER THAN THE THE TRUE VALUE.WHILE LOOKING THROUGH MY DATA BASE I SOMETIMES SAW SUCH COMPANIES WITH GOOD BALANCE SHEET AND FINANCIAL RESULTS,HIGH ROE, AND THEN I PONDER WHY THIS PARTICULAR STOCK IS NOT MOVING OR IS AT LOW PE THAN ITS PEERS.AM I MISSING SOMETHING WHICH I DONT KNOW.THEN THE PERCENTAGE OF PLEDGED PROMOTERS STAKE SHOOK MY HEAD RIGOURSELY.

WHAT IS A SHARE PLEDGING .? WHY DO COMPANIES PLEDGE IT? WHY MR MARKET DOES NOT WELCOME PLEDGING OF SHARES

SHARE PLEDGING IS A DANGEROUS FINANCIAL TOOL OF RAISING CAPITAL AND FUNDS BY THE PROMOTERS IN ORDER TO MEET COMPANY FINANCIAL NEEDS OR BUISNESSNEEDS,,AQUISITIONS.THIS METHOD SEEMS TO BE EASY AND CONVINIENT TO THE PROMOTERS AS WELL AS TO THE LENDERS . TECHNICALLY IT IS THE LAST METHOD AVAILABLE OR YOU CAN SAY THE EASIEST ONE TO RAISE FUNDS BY PROMOTERS.LENDERS GET TWICE OR THRICE TIMES THE VALUE OF THE SHARES AND THE LIBERTY TO SELL THESE SHARES IN THE OPEN MARKET IN CASE STOCKS FELLS DOWN.

FEW YEARS AGO WHEN THE INTEREST RATES WERE AT HIGH LEVELS AND THE INDIAN ECONOMY WAS STRUGGLING AND IN ORDER TO MEET COMPANY CAPITAL NEEDS PROMOTERS PLEDGE THEIR SHARES TO GET LOAN HALF OR ONE THIRD OF AMOUNT OF PLEDGE SHARES.TILL HERE THERE SEEMS NO HARM . BUT THE ROSES ARE NOT SO RED. THERE IS NOT AT ALL CONCERN IF EVERYTHING IS GOOD AND MARKET IS GOING UP. WHEN EVER MARKET GOES TO A CORRECTIVE PHASE THE VALUE OF STOCK GOES DOWN AND IN ORDER TO MEET THE COLLATERAL THE PROMOTERS HAS TO PLEDGE MORE SHARES TO THE LENDER OTHERWISE LENDER WILL SELL IT.FOR EXAMPLE- SUPPOSE A COMAPANY 'A' PLEDGED 1 LAKH SHARES OF 100 RS TO MEET THE COLLATERAL OF 1 CRORE RS AND IF STOCK GOES IN CORRECTIVE PHASE ,OR THE COMPANY PRODUCED BAD RESULTS AND THE PRICE GOES TO RS 80 THEN THE PROMOTERS HAS TO PLEDGE 125000 SHARES @ 80 RS TO MEET THE COLLATERAL OF 1 CR.(125000*80=1CR).AND IF THE PROMOTERS DO NOT PLEDGE MORE SHARES TEN THE LENDER WILL SELL IT IN OPEN MARKET CAUSING BIG CRASH IN THE STOCK PRICE AND A SUDDEN MASSIVE EROSION OF SHAREHOLDER WEALTH AND CONFIDENCE. THE SCENARIO IS EVEN WORSE IN CASE OF HIGH BETA COMPANIES.THIS CAN ALSO MAKE PROMOTERS LOOSING CONTROL OVER THE COMPANY.EXAMPLE- SATYAM COMPUTERS.

SO WE CAN WITHNESS A CRASH IN PRICE UPTO 80% IN SOME STOCKS.SOME PEOPLE HAS MISCONCEPTION THAT IT IS A TEMPORARY PHASE AND THE STOCK WILL REBOUND AS THE INTRINSIC VALUE OF THE STOCK REMAINS SAME AND FUNDAMENTALLY IT IS GOOD STOCK. TO MY OPINION A FUNDAMENTALLY GOOD BUISNESS DO NOT REQUIRE SUCH TYPE OF METHODS TO RAISE FUNDS. A GOOD BUISNESS GENERATES CAPITAL ITS OWN.AFTER A BIG CRASH PEOPLE DO NOT TRUST IN SUCH COMPANIES MOREOVER THEY DO NOT KNOW HOW MUCH PLEDGED PORPORTION IS STILL WITH LENDER.TECHNICALLY THE STOCK CAN MOVE UP IN A SHORT TERM AFTER 80% CRASH BUT TO GET CMP EQUAL TO INTRINSIC VALUE THE CLOCK HAS TO MOVE FOR YEARS .THE SMART INVESTOR KNOWS WHERE TO INVEST AND ACE INVESTOR KNOWS WHERE NOT TO INVEST. IN MY VIEW ONE SHOULD KEEP A LONG DISTANCE FROM THE COMPANIES .

Sunday, 4 October 2015

CHEENI KUM-SUGAR STOCKS

Disclaimer: This Blog owner & creator is not a research analyst and expressing opinion only as an investor in Indian equities. He is not responsible for any loss arising out of any information, post or opinion appearing on this blog. Investors are advised to consult financial consultant before acting on any such information. Author of this blog not providing any paid service to anyone. For any further queries please contact rajatmukhija@gmail.com

CHEENI KUM- SUGAR STOCKS

SUGAR SECTOR IS ONE OF THE CYCLICAL SECTOR THAT EVERYBODY WANTS TO BET UPON AND WHY NOT AS TIMELY ENTRY INTO THESE STOCKS CAN MAKE WHOPPING 5X TO 10X RETURNS.DURING THE BAD PHASE OF THE CYCLE EVERBODY WANTS TO IGNORE IT BUT AS SOON AS THE TREND CHANGES EVERYBODY WANT TO MAKE A HAY WHILE THE SUN SHINES.IF WE CHECK LAST 25 YEARS DATA THE SUGAR STOCKS(PRICES)WERE IN PEAK IN 1994 THEN IN 2006 KEEPING THIS CYCLICAL TREND IN MIND THE NEXT PEAK SEEMS TO BE AT 2017-2018.MEANS IN COMING 2 YEARS ONE CAN EARN 5X TO 10X RETURNS WITH LITTLE WISDOM AND INTELLIGENCE.

THE BASIC HINDRANCE --

1) THE FIRST PROBLEM WITH THE SUGAR INDUSTRY IS THE DEMAND AND SUPPLY RATIO.NOW A DAYS THE PRODUCTION OF SUGAR ARE AT ITS TOP IN LAST 10 YEARS.IN THE YEAR 2014-2015 AS NEARLY 290 MILLION TONES OF SUGAR IS PRODUCED IN INDIA AND NEARLY 250 MILLION TONNES IS BEING CONSUMED MOREOVER IMPORTS ARE ALSO ALLOWED WHICH FETCHES MORE SUGAR IN THE COUNTRY.ALSO THERE WERE EXPORT RESTRICTION EARLIER (BAN ON EXPORT IS LIFTED FROM 1 OCT 2015 AS PER WHICH ALL SUGAR COMPANIES COLLECTIVELY HAS TO EXPORT 10 MILLION TONNES OF SUGAR).

2) INPUT COST-NOW THE QUESTION ARISES THAT IF THE PRODUCTION IS HIGH THEN THE INPUT MATERIAL "SUGAR CANE" MUST BE IN ABUNDANCE. WHICH IS CORRECT AND IF IT IS IN ABUDANCE THE PRICE OF SUGARCANE MUST BE AT LOWEST LEVELS.WHICH IS INCORRECT. AS FOR THE PRICE OF SUGARCANE THERE IS A MSP(MINIMUM SUPPORT PRICE) SET BY GOVERNMENT BELOW WHICH COMPANIES CANNOT PURCHASE SUGARCANE .SO THE INPUT COST IS NOT IN HANDS OF COMPANIES

3) REVENUE- IF COMPANIES CANNOT CONTROL INPUT OR THEIR INPUT COST IS HIGH THEY CAN RAISE THEIR SUGAR PRICES IN ORDER TO EARN PROFIT. ANSWER IS AGAIN BIG NO AS THE COMPANIES CANNOT RAISE SUGAR PRICE AS ITS PRICE IS AGAIN CONTROL BY GOVERMENT.

SO IT MEANS SUGAR COMPANIES INPUT COST IS HIGH AND REVENUE IS LOW. EVEN LOWER THAN THE INPUT COST TO THE COMPANY. AT PRESENT THE COST OF PER KG SUGAR TO THE COMPANIES IS AT 36 TRS KG AND THE SUGAR PRICE IN MARKET IS AROUND 31 RS. SO THE COMPANIES ARE AT HUGE LOSSES AND CANNOT PAY TO FARMERS . THE CURRENT DEBT WITH ALL COMPANIES STANDS AT RS 24000 CR . TO CLEAR THIS DEBT AND TO GIVE RELIEF TO FARMERS AND SUGAR MILLS GOVERMENT IS GIVING INTREST FREE LOANS TO MILLS .BUT THAT GIVE BENEFIT TO LARGE PLAYERS ONLY. SMALL MILLS ARE SHUTTING DOWN OR ON THE VERGE. BUT STILL PRODUCTION IS NOT HAMPERRING NOW AGAIN QUESTION ARISES THAT IF FARMERS ARE NOT PAID THEN WHY THEY ARE PRODUCING SUGARCANE .THEY CAN PRODUCE SOME THING ELSE AND WHY COMPANIES ARE PROCESSING SUGARCANE IN LOSS. THEY CAN PROCESS LESS SUGARCANE AS THEY HAVE LOSS PER QUINTAL. SO LESS PROCESSING LEADS TO LESS LOSS.THE ANSWERS ARE THAT TO GROW SUGARCANE THE ONLY THING REQUIRED IS LAND.FARMERS DO NOT REQUIRE MUCH INVESTMENT TO GROW IT ,ITS LIKE A FREE BUISNESS. SECONDLY COMPANIES CANNOT REFUSE TO PROCESS SUGARCANE AS THEY HAVE BEEN ALLOTTED PARTICULAR AREA AND THEY MANDATORY HAVE TO PROCESS IT EVEN AT LOSS.

4)EXPORT THE EXCESSIVE SUGAR- TILL 30-9-2015 COMPANIES CANNOT EXPORT SUGAR ALSO . BUT NOW COLLECTIVELY THEY CAN EXPORT 40 LAKH TONNES OF SUGAR IN AYEAR.AND IMPORT OF SUGAR IS ALSO ADDING TROUBLE TO THEIR BUISNESS.

SO IN VIEW OF THE RECOVERY OF THIS CYCLE FEW THINGS SHOULD BE WATCHED-

1) LOW MSP OF SUGAR CANE- NOT LIKELY TO BE IN NEAR FUTURE

2) INCREASE OF SUGAR PRICES FROM CURRENTLY APPROX 31 RS TO 45 RS( PEAK IN 2006). SO ANYTHING ABOVE 45 WILL BE WELCOMED BY THE MARKET.

3) EXPORTING OF SUGAR(WHICH IS PARTIALLY ALLOWED WITH CONDITION) AND RESTRICTION OF IMPORT.

4) KEEP A WATCH THAT WHEN PROMOTERS INCREASE THEIR STAKE IN COMPANY AS THEY ARE BEST JUDGE FOR THEIR COMPANIES .

FEW COMPANIES THAT CAN BE TURNAROUND ARE RENUKA,BAJAJ HINDUSTAN,DCM INDUSTRIES LTD,TRIVENI INDUSTRIES,DHAMPUR ETC.

DISCLAIMER- NOT INVESTED IN ANY OF STOCKS .PLZ TAKE ADVICE FROM RESEARCH ANALYST BEFORE INVESTING.

Saturday, 3 October 2015

GST- THE MUCH AWAITED SO CALLED MAGICAL FRAMEWORK

WHAT IS GST- GST IS GOODS SERVICE TAX AS PER ABBREVATION AND IS ONE OF THE MOST AWAITED FRAMEWORK AND TAX REFORMS GST IS A SINGLETAX APPLIED IN THE SALES INVOICE AND IT REDUCED THE NO OF INDIRECT TAX . EVERYBODY IS LOOKING IN A WAY THAT AS SOON AS IT IS IMPLEMENTED THE INDIAN ECONOMY WILL REFORM BY LEAPS AND BOUND . IS IT REALLY SO.

WHY GST AND HOW IT IS DIFFERENT FROM VAT -

TILL NOW THERE ARE MULTIPLE TAXES LIKE CENTRAL SALES TAX,STATE TAX,ENTRY TAX,LICENSE FEES,TURNOVER TAX AND THAT ALL WILL VANISH AND WILL COME UNDER GST. SO BUISNESS MAN WILL GET A CLEAR VIEW OF TAX TO BE PAID INSTEAD OF THE HIDDEN TAXES.IT WILL PROCEDURES MORE SIMPLE AND TRANSPARENT.IT WILL BE A SOURCE OF REVENUE FOR GOVERMENT APPART FROM INCOME TAX AND PERTOLEUM TAX. EARLIER THERE WERE VAT IN STATE . DIFFERENT STATES HAS DIFFERENT VAT REATES AND REGULATIONS AND STATES CUT THESE RATES TO PULL INVESTORS WHICH IN TERMS GIVE LOSS TO THE STATE AND CENTRE.IT WILL GIVE A UNIFORM TAX TO ALL THE SECTORS AND ALL THE REGIONS. THE TAX OLLECTED WILL BE DISTRIBUTED BETWEEN STATE AND THE CENTRE WITH A ACCEPTABLE METHOD.STILL NOW THERE IS NO ACCEPTABLE FRAMEWORK READY TO DISTRIBUTE TAX BETWEEN CENTRE AND STATE.

WILL GST REDUCE INFLATION AND PROGRESS DEVELOPMENT-

DOES BY IMPLEMENTING GST A CONSUMER GETS GOODS AT CHEAPER RATE? AS THE NO OF TAX WILL BE OMMITTED BUT THE ANSWER OF THIS QUESTION IS NOT CERTAIN.IN INDIA THE RATE OF ALL DIRECT AND INDIRECT TAXES ARE AT 18% AND IN ORDER TO MAINTAIN THE CURRENT TAX REVENUE LEVEL IT SHOULD BE AT 18% BUT AT THIS RATE GOVERMENT WILL NOT BE ABLE TO DO TREMENDOUS DEVELOPMENT FOR WHICH ALL IS WAITING.IT IS BEING PREDICTED THAT THE TAX RATE WILL BE AT 24% IN ORDER TO BOOST DEVELOPMENT. BUT AT THIS STAGE ALL THE THINGS WILL GO VERY HIGH. THE SERVICE TAX WILL ALMOST DOUBLE FROM HERE. THE ARTICLES WILL BECOME COSTLY AND PURCHASING POWEWR OF PEOPLE WILL COME DOWN THUS DEMAND WILL BE LESS AND THAT ALSO HAMPERS ECONOMY REVIVAL. SO IT HAS TO BE IMPLMENTED IN A SMARTER WAY AND IT IS A LONG STRATEGY TO DO ECONOMIC REVIVAL AND WILL NOT HAVE IMPACT IN SHORT TERM . HERE ARE THE SOME SECTORS ON WHICH GST WILL BE HAVING IMPACT.

SERVICE SECTOR- BETTER CREDIT ACROSS GOODS AND SERVICE BUT THE THINGS WILL GO COSTLIER.

REAL ESTATE- SIMPLIFIES LEVY AND VALUATION,STAMP DUTY MAY CONTINUE TO APPLY.

BANKING,FINANCIAL

SERVICES AND INSURANCE- COST OF BANKING WILL INCREASE ,INTERST ON LOANS EXPECTED TO BE TAXED UNDER GST.

ENTERTAINMENT AND

HOTEL INDUSTRY- ELIMINATES MULTIPLE TAXES,SIMPLIFY COMPOSITE TRANSATIONS,

IT AND TELECOM- END TO CLASSIFICATION DISPUTES ON SOFTWARES,SIM CARDS,FRANCHISEE FEES.

MANUFACTURING SECTOR- ENTRY TAX IN STATE WILL BE ELIMINATED.

INCREASE COST OF PRECOURMENT,NEGATIVE WORKING CAPITAL IMPACT.

Friday, 2 October 2015

VIDHI DYESTUFFS ----ADDING COLOURS TO YOUR PORTFOLIO.

VIDHI DYESTUFFS MANUFACTURING LIMITED BELONGS TO THE SPECTIALITY CHEMICAL SECTOR AND IS A GLOBALLY LARGE PLAYER OF SYNTHETIC FOOD GRADE COLOURS,DYES AND PIGMENTS.INCOROPRATED IN JANUARY 94 AS ' VIDHI DYESTUFF MANUFACTURING PVT LIMITED ,IT IS RENAMED AS VIDHI DYESTUFF MANUFACTURING LIMITED AND BECOME PUBLIC LIMITED COMAPNY IN MARCH 95.IT IS A ISO 9001: 2000 CO,ISO 22000:2005 COMAPANY AND HAS "HACCP",KOSHER AND HALAL CERTIFICATION.THE MANUFACTURING UNITS HAS BEEN AUDITED BY "USA FDA".THE COMPANY HAS CLIENTS IN ALL OVER THE WORLD IN MORE THAN 85 COUNTRIES AND HAS STRONG RELATIONS WITH THE VARIOUS LEADERS OF PHARMACEUTICAL,FEEDS,DAIRY INDUSTRIES BUILT OVER TWO DECADES.

SECTOR OVERVIEW-

WITH THE APPROVAL OF 100% IN CHEMICAL SECTOR AND REDUCED EXCISEE DUTY FROM 14% TO 10% ARE ADVANTAGES AND WEAK RUPEE HELPS TO INCREASE OPM AS 95% OF THE REVENUE ARE FROM EXPORTS.

HIGHLIGHTS

1) IT IS A GLOBALLY LARGE PLAYER AND LEADING MANUFACTURER OF SYNTHETIC FOOD GRADE COLOURS, DYES AND PIGMENTS WITH A CURRENT CAPACITY OF 2500 MTPA. THE COMPANY IS EXPECTED TO INCREASE ITS CAPACITY TO 3500MTPA IN A YEAR AND TO 8000 MTPA BY 2020.

2) THE COMPANY PLANS TO BE LISTED IN NSE WHICH WILL INCREASE ITS LIQUIDITY

AND ALSO BUILT CONFIDENCE IN SHAREHOLDERS.

3) HEALTHY REVENUE GROWTH FROM 2008(30.69 CRORES) TO 202 CRORES IN 2015. ESPECIALLY IT REGISTERED 47% GROWTH IN Q1FY16.LAST FIVE YEARS COMPOUNDED SALES GROWTH IS AT 30%.

4) ROBUST PAT GROWTH WITH 0.82 CRORES IN 2008 TO 13.78 CRORES IN 2015. LAST FIVE YEARS COMPOUNDED PAT GROWTH IS AT 29%NET PROFIT SHOWS 56% JUMP IN Q1FY16 AS COMPARED TO LAST QUARTER.

5) OPM INCREADED FROM8.40 % IN MARCH 08 TO 14.93% TTM AND COMPANY IS EXPECTED TO INCREASE IT TO MORE THAN 20% TILL 2020.

6) LAST FIVE YEARS ROE IS AT 15%.

7) THE DEBT TO EQUITY RATIO IS DECRESING AND THE INTERST COVERAGE RATIO IS ALSO QUITE IMPRESSIVE.

8) COMPANY IS MAKING PROFITS AND IS PAYING HELTHY CORPORATE TAX.

9) THE COMPANY IS PAYING DIVIDEND AT 22%

10) THE COMPANY IS EXPECTED TO GROW AT 24% CAGR IN REVENUE GROWTH AND 40% PAT IN THE COMING YEARS.

	Mar 09	Mar 10	Mar 11	Mar 12	Mar 13	Mar 14	TTM
Sales	26.25	24.25	30.36	30.69	39.29	71.14	98.05
Expenses	24.56	22.81	27.66	28.11	35.35	65.74	90.98
Operating Profit	1.69	1.44	2.70	2.58	3.94	5.40	7.07
OPM	6.44	5.94	8.89	8.41	10.03	7.59	7.21
Other Income	2.20	0.94	0.41	0.44	0.37	1.23	0.78
Interest	0.26	0.36	0.59	0.66	0.84	1.16	2.26
Depreciation	0.77	0.86	0.87	0.89	0.96	1.00	0.92
Profit before tax	2.86	1.40	1.65	1.50	2.51	4.47	6.03
Tax	0.75	0.26	0.63	0.68	0.89	1.62	2.35
Net Profit	2.11	1.14	1.02	0.82	1.62	2.85	3.68
EPS (unadj)	4.02	0.23	0.20	0.16	0.32	0.57	0.74
Dividend Payout	35.55	0.00	0.00	0.00	0.00	0.00	0.00

SUMMARY

SO WITH ALL POSITIVES FOR THIS SECTOR AND INCREASE IN CAPACITY OF ONE OF LARGEST MANUFACTURER. AND REDUCTION IN THE DEBT IN COMING YEARS, THE REVENUE GROWTH , PAT AND EPS IS EXPECTED TO INCREASE. IN COMING YEARS.
Disclosure: I am not holding any stocks of this company. Please do your own due diligence and do research before buying the stock.

Friday, 18 September 2015

BASIC TIPS FOR INVESTING A STOCK

Learning Valuations .-- In the BSE ,NSE Exchange there are more than 6000 companies listed ,out of this about 3500 actively trades and and out of this 2500 are of no use or worth investing. out of 1000 left if we keep aside the large chips we are left with 400 stocks out of these look at stocks with 30% growth,25% roe. and very low pe about 8-10.and try to find these .Mid caps or Small Caps if invested wisely can create handsome returns irrespective of sensex returns.

Before Investing any stock go through a checklist and try to find out the answers of some questions.

Business and Managment Analysis.

1) Try to undersatand company business.what does company do and what are its source of income.how does it earn and make profit.Get a s brief of this.if you cant understand the business try to avoid the company.a quality sustainable monoploy buisness is the excellant one.

2)The company is in which sector ..Does that sector is a growing or stagnant sector .

3) Is the company leader in the sector or has a sufficent market share to enable its presence.

4) Does the promoters believe in his company and has more than 40 % stake

5) Is the company best in its sector and where it stand with respect to its competitors.Is it one of the best option available in that sector.

6) Look for a quality and efficent managment ,experienced managment with good past track record and shareholder friendly

7) The pledging of promoters should be zero (or very very low-- below 8-10%)

Financial checkout.

1) Has the company incresed its growth over the years.does the revenues,netprofit,operating margins increase over the years.

2) Has the roe and roce increased over the years .invest in companies with roe and roce of last 3-5 years more than 15%.the companies of roe more than 25% is worth a look.

3) what is the debt to equity ratio of company. is it in comparison with its peers. as it depends upon sector to sector. generally it should be between 1.2 to 1.5. but prefer to find a company with low or zero debt to equity or debt to equity below1.

4 ) what is the cash per share?

5) Is the company cash flow positive.net cash flow as well as operating cash flow must be positive.

6) Avoid companies which dilute equity often.Good companies generate income from there business not from investors.

7) Does the company pay tax. be cautious with the company which pays tax below 20%.generally the corporate tax is 33%. but if it below this there could be number of reasons like tax exemption etc . dig out the reason as the company may be generating malacious balance sheet.

8) Company must be paying dividend every years.

9) How the operating margins will suffer if intrest rates go up,inflation goes up,rupee depreciates ,crude oil impact or there is a cheap import from other countries.

Valuations Checkout-EPS growth.PE,PEG,P/B.

1) Profit margins must be sustainable or increasing.

2) EPS growth should be above 25%.

3) Try to find out the intrinsic value or expected valuation using DCF growth or eps growth Method.

4) P/E should be below 15.

5) P/B should be less than 3.

6) ROE should be more tthan 25%.

7) Large part of profits must not be eaten by interest and debt.

8) Entry point should be good. check P/E of nifty /sensex. be cautious if it is at above P/E of 20. at P/E of 14 is excellant

9) Do not buy a stock only if it cheap only.

10) Is stock reacts in accordance to its profit growth nos.in pastas there can be some hidden or unknown fact you are not knowing