How do you see Avanti’s valuation multiple in the context of Peter Lynch’s take on cyclicals? The P/E multiple of a cyclical company should rise at the bottom of the cycle as the ‘E’ in P/E hits bottom before it starts to revive. Would you start getting interested in Avanti when the price-earnings multiple peaks?
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Hello Hitesh Bhai,
I have just created one topic on Value picker for a company named 5paisa capital would like to see your replies on the same.
Thanks
Kapil
Sir, Stay away from Sankhya., one of those companies which much be not touched even with barge pole
Sir, may we know your views on Tridents Ltd ?
Sir, Could you share your points regarding sankhya?
As in past so many positive things happened in sankhya infotech like
- Mr. Bhaskar Pramanik joined the sankhya board as a Independent Director - Bhaskar Pramanik was the former Chairman of Microsoft India joined the
- The Audit Committee consists of Mr. Bhaskar Pramanik,
Chairman - Recent development- US Defense Major, General Atomics Collaborates With Sankhya Infotech For Providing Simulation Training Technology.
- LATEST NEWS : Sankhya providing training for upset recovery for B737-MAX
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Hitesh,
I’ve always wondered how big individual investors acquire large share positions in individual companies. Is it through demat accounts (with trading and related fees) like everybody else, through bulk deals (don’t know how they work and how one can get into it) or is there some other way.
Is it ok to ask which option you prefer.
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I had looked at unichem some time back since it was a cash bargain. The enterprise value comes almost equal to cash and equivalents in balance sheet and the usfda approved plants and the export business comes nearly free.
Concern here would be how much can you trust management not to siphon off money a la LEEL. But in unichem i feel management conduct till now has been above reproach.
Triggers could be another buyback/dividend, improvement in export business numbers. Till these triggers play out stock price could remain sideways
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I would love to be a big individual investor before answering the question. 
Just hope I am in a position to answer you as quickly as possible
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@hitesh2710 Hi Hiteshbhai,
Which according to you is a better company for long term amongst Hawkins and TTK prestige ? Hawkins is having great ROCE of about 60% plus but not that great growth and TTK prestige is showing good growth but decent ROCE of about 20% ? How do both companies compare in management quality and which is better for long term ? Many thanks .
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Hi
There is some contingent liability of approx 100 cr related to its UK subsidiary. I remember reading about this in quarterly result notes.
Regards
Disc. Tracking
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Roce without growth creates little value. And this is amply reflected by the difference in wealth creation by both companies in past 5 years. While ttk prestige has shown near consistent growth, hawkins has been patchy in terms of growth and hasn’t created much wealth in last few years.
Markets are usually obsessed by fast growth for long periods of time and thats where wealth is created.
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This year Hawkins could see a growth of nearly 20% could there be a investment case, or v have wait for 2 years of good growth for it come into investor radar
Hitesh ji, as per my discussion with company, sales from existing clients of mercator will be split between Mercator and Accelya and that too if and when the new platform of Accelya is deployed at the customer of Mercator. Also, major part of this revenue shall go to Mercator and a smaller part will accrue to Accelya.
However, the sales is institiutional and sales process is usually long and lumpy. Given the fact (as stated by you), non customers would also be tied in to competitors, it may become all the more difficult to break away the customers from competitors. A competitor can easily offer a lower rate on existing product as incremental costs are not there.
I think incremental revenues will come from more tickets with increase in passenger growth and also shift from legacy - owned software being used by other airlines + new s/w development work that may be offshored by parent + mercator.
I think a small part of incremental revenues (owing to growth in passenger traffic) + bulky revenues from one off lumpy deals is the right way to look at this stock. Happy to understand your veiws
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Thanks so much hitesh bhai . hows the management quality of ttk prestige compared to hawkins ?
Another reason i am asking is that i find lot of discussion on hawkins but not on ttk prestige ? am i missing something in ttk prestige. Many thanks
Hi Hiteshji,
Are you looking at commodity companies like sandur manganese , prakash industries, godawari power , etc. right now. Most of them are availlale at very low P/B . When the market emerges from a bear cycle these low value dirt cheap stocks are normally the first ones to rise or rise the fastest. Even if we assume most of them are at peak margins , due to low valuations they still provide a margin of safety. There seems to be a wonderful opportunity here or am I missing something?
Regards
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I have looked at the commodity companies. Analysing them fundamentally is beyond my undertstanding. But I find charts provide a good clue to the direction of stock prices of these companies can take. As of now I have seen inverted head and shoulders pattern in tata steel, sail, jindal steel and power. I also like the charts of godawari power. Overall if the chart patterns in these companies play out then these can provide decent and quick returns.
I agree with your assessment of these cyclical companies but cannot dig too deep fundamentally. Charts of most of them esp steel companies look good.
rgds
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Hi Hiteshbhai,
1 How are HDFC Life and HDFC AMC as 5 year investments ? Oppurtunity size seems big but am only concerned with steep valuation and also about HDFC AMC whose fees has been capped , so how much does it affect earning power ? Another thing is what kind of moat does both these companies enjoy ? Also does a company in order to enjoy moat need to be a market leader or am i missing something ?
2 How is page industries at current levels for same 3 to 5 year period ? It has great distribution network and can this be expected to grow at 20 percent annually in coming 5 years ? Can this be considered a better compounding business compared to pidilite ?
3 Apart from discounted cashflow, what other valuation methods can be used ?
4 Is technical understanding a must for deciding entry levels for fundamental long term debt and what source do you recommend to learn for the same ? I tried reading many post here on technical charts like head and shoulder pattern etc but didnt understand most of it frankly .
Many thanks Hitesh bhai.
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In another thread I had put up hdfc life and hdfc amc as long term picks. I feel the runway for both of them remains long and with a strong promoter, there should be comfort in holding for long term. AMC business can be prone to disruption but I feel disruption if it has to come could still be a few years away and in country like India the penetration of MF is quite low and can only increase with time. About valuations, I think it would be futile to comment as at the end of the day beauty lies in the eyes of the beholder. And if one wants to buy for next 5 years he can stagger the purchases for next 5-7 months to take the help of market gyrations.
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Page and Pidilite I would put in the same basket. Both seem to be great compounders. But here again one has to be patient in acquiring and take care not to buy too close to the top.
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I dont use DCF. There are plenty of valuation methods. You need to read few basic books and you would get a fair idea. We have threads on VP on the subject of valuation as well.
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Technicals is not everyone’s cup of tea. People like Buffett, Lynch who have never followed technicals have made tons of money. But on the flip side, if one looks at the list of guys who have compounded wealth at astounding rates for long periods of time a lot of guys in the list who feature are those who follow technicals.
Reading posts on technicals on VP should only awaken the “keeda” of technicals in you and should lead you to books on technicals. One book I am reading currently is Technical analysis explained by Martin Pring and its a very useful and practically applicable book. Easy to read and understand. I have finished 3-4 chapters and found it interesting to read.
Basically one needs to read books on any subject be it fundamentals or technicals and then figure out whether its applicable or not. If it interests you you can read it multiple times to grasp the maximum knowledge from it.
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