I am invested in Page, but completely missed the other 3, in spite of the fact that Valuepickr and other forums have been saying good things about these cos for long. The wait may be very long and frustrating, but in my opinion we have no option but to wait for a significant price or time correction before we buy these cos. In the meantime, I have invested in more reasonably priced at growth cos like Ajanta and Kaveri.
1). Page
2). La Opala
3). Poly Medicure
Ashwin,
Donât look at Ashiana from earnings basis. Ashiana should be evaluated from cash flow from operations perspective. You can read about that in their ARs and presentations. If you compute valuations from cash flow perspective, it wouldnt look that expensive then.
Abhishek -
@ Abhishek - One of the best articles I read and re read to understand if I am paying too much is this one from Sanjay Bakshi - http://fundooprofessor.wordpress.com/2013/10/11/october_quest_2013/
Hope you get the insights that you are after!!
Ankit -
I own Ashiana housing and that is precisely the point I wanted to make. We should never value it by the earnings and theyâve changed the accounting system and earnings will be lumpy, etc. We canât just see that it is trading at 140 times earnings and it is expensive. GRUH from the time I was investing seemed expensive. If we know the business and the future potential well, then PE multiple is one of the worst way to value a business and base your buy/sell calls.
Mr. Market is no fool. I would prefer a 30-40 times earnings stock over a 7-12 times earnings stock if Iâd to invest blindly in a business! 
Ashwin, ankit, ajit and vivek - thanks for your comments.
@ vivek - I have read and reread that article many times. I have also however read that it is important to buy quality companies but at realistic and not obscene valuations. For example, in the book Warren Buffetâs Portfolio, he talks about always drawing a historical range of PE of a high quality stock. Most of his big bets, I have noticed were made at the lower end of the 10 year range. Poly Med has always been a fantastic high quality business - yet 3 months back it was available at a âlowâ PE of approx 25. How do you suddenly justify paying 50 times. Agreed there was a verdict on the patent battle but some part of that was always priced in. Same is the case with the other 4 stocks. They have always been high quality stocks. How do you justify paying twice the 10 year historic average PE for each of them. Page has been fairly well discovered in the last 3 years. Only about a year back, it was available at 30 times earnings. What has changed so drastically that it is now worth 60times?
On another note, can anyone post a DCF that they might have done on Poly med? It would be nice to see what that throws out. I just canât make any sane DCF which justifies something like this. Even at a 15% discount rate, you would need 10+ years of 25-30% growth to justify that kind of price. Where is the margin of safety on that?
Professor Bakshi talks about instant vs delayed gratification. But I am not sure if any of us here is smart enough to look that far down the line and say nothing is going to impact this business even 10 years down the line. I have a couple of such businesses in my PF - P&G is one of them. But I am never comfortable holding on to it.
I have made a lot of mistakes in my short investing experience of 3 years. This includes picking stocks with trashy fundamentals at low PEâs and averaging bad stocks on its way down. After 3 years, I have started to at least understand on a basic level the difference between quality and trash. I know investing is a journey and mistakes are part of it but I am now trying to avoid the next mistake of investing in quality but at the wrong price.
PS: Moderator/Admin - please feel free to ask us to direct this conversation to a new thread if it is necessary.
Quick qst to VP members - Where do you find historical PE data other than paid site such as Capitaline?
Thanks in advance
An update on the 100% FDI in medical devices-
damaging article on polymed promoters-vadra links on the IE site -
Thanks HG for reporting this. The article does look damaging to my untrained eyes.
Disc: Was invested since 2012 and got out after reading this article.
Ya - I also got out of it today. Not waiting to find out what happens next.
On googling, found that this news had broken out initially in early March 2013.
The prices have more than doubled since this news broke out. I do hold a very small percentage (< 2%) in my PF. Wouldnât have invested if I had known about these shady âconnectionsâ earlier!
Questions to ask
1.How Old is this news ?
2). Why hasnt the price reacted negatively ever
3). What are the facts of the news. Who will be punished for wrongdoing (if any) and what will be the impact of it on company.
Hi Ashwini,
Those are good questions and the price action today after I sold out made me think whether I should have held on Others might be able to weigh the sector tailwinds (FDI etc.) against the cons and still be invested. But, I realized I was not comfortable with what was mentioned in todayâs article and Iâm ok with having sold it off. Who knows - maybe it will all be âsettledâ and nobody will be punished. And maybe the price will double from here. So be it. I sold out coz I just did not want to deal with the uncertainty. It was >10% in my portfolio and I was loath to sell it but at least I wonât be thinking about it for nights to come.
So,
This issue can be resolved through position sizing
If you had gone through this thread, in March 13 ,concerns were raised on this but then it was ignored & price almost tripled from that level & in the bargain lost the opportunity :),so mkt always have its own logic on response to the news.
Oops! 
Went through the thread and saw your comments posted during those days. For a change, I seem to have profited (minor though) out of my lack of time for basic reading.
ArghhâŚanger directed at promoters caused me to sell out of a high allocation in polymed. Even though a decent amount was made, I really shut myself out from future gains. One of my goals this year was to make less mistakes - but what a mistake this is. Feeling bad/sad/angry at the same time. A good lesson learned for meâŚthough Iâm feeling bad/sad/angry all at once 
This stock has come on the radar of FIIs. Grandeur Peak and Matthews India Fund has bought this stock. After being up 80% I sold the stock in December 2014 after reading that article. Have bought back every share I sold at a 5% higher price.
Also see latest interview on moneycontrol http://www.moneycontrol.com/news/business/poly-medicure-eyes-22-25-growth2-yrs-rs-100-cr-capex_1264311.html
Finally a solid3QFY15 by the company. Sales up 22%, EBITDA up 37% and Recurring PAT up 43%. 9MFY15 Recurring PAT is up 20%.
| Year End Mar31 (Rsmn) |
1Q |
2Q |
3Q |
4Q |
FY14 |
1Q |
2Q |
3Q |
|
Net Sales |
678 |
778 |
784 |
808 |
3,048 |
813 |
939 |
958 |
|
Growth |
19.9% |
26.9% |
28.0% |
18.1% |
23.1% |
19.9% |
20.7% |
22.1% |
|
|
||||||||
|
EBITDA |
155 |
192 |
150 |
167 |
664 |
178 |
219 |
206 |
|
Growth |
101.4% |
146.8% |
2.1% |
2.7% |
43.0% |
14.7% |
14.2% |
37.0% |
|
Margin % |
22.9% |
24.6% |
19.1% |
20.7% |
21.8% |
21.9% |
23.3% |
21.5% |
|
Depreciation |
(31) |
(33) |
(34) |
(37) |
(135) |
(40) |
(45) |
(48) |
|
EBIT |
124 |
159 |
116 |
130 |
529 |
138 |
174 |
158 |
|
Growth |
153.7% |
226.9% |
0.1% |
-2.1% |
52.8% |
11.0% |
9.7% |
35.8% |
|
Margin % |
18.3% |
20.4% |
14.8% |
16.1% |
17.4% |
17.0% |
18.6% |
16.5% |
|
Other Operating Income |
28 |
18 |
19 |
10 |
75 |
15 |
18 |
16 |
|
Other Income |
2 |
3 |
0 |
6 |
11 |
5 |
8 |
40 |
|
Interest |
(14) |
(16) |
(20) |
(29) |
(79) |
(19) |
(17) |
(28) |
|
PBT |
140 |
163 |
115 |
117 |
535 |
138 |
182 |
185 |
|
Growth |
232.1% |
255.9% |
-0.8% |
-12.5% |
58.4% |
-1.5% |
11.8% |
61.1% |
|
Margin % |
20.7% |
20.9% |
14.7% |
14.5% |
17.6% |
17.0% |
19.4% |
19.3% |
|
Tax |
(45) |
(52) |
(31) |
(37) |
(166) |
(41) |
(51) |
(66) |
|
Rate % |
31.9% |
32.2% |
27.2% |
31.6% |
30.9% |
29.8% |
27.8% |
35.6% |
|
Recurring PAT |
95 |
110 |
84 |
80 |
370 |
97 |
131 |
119 |
|
Growth |
213.3% |
217.0% |
1.5% |
-13.2% |
53.9% |
1.7% |
19.0% |
42.5% |
|
Margin % |
14.1% |
14.2% |
10.7% |
9.9% |
12.1% |
11.9% |
14.0% |
12.5% |
|
Exceptionals |
37 |
49 |
86 |
196 |
||||
|
Tax Adjustment |
(10) |
(15) |
(26) |
(54) |
||||
|
Reported PAT |
95 |
110 |
111 |
114 |
430 |
97 |
273 |
119 |
My analysis of Mar 14 Annual Report and the latest results show that this company is not able to generate sufficient cash to pay CAPEX. For consecutive 2 years, owners CF is negative. We have to ignore one time income of Rs 9 cr for last year and 19 crs this year. Be cautious with your investments as this business is also capital intensive.
