The maiden Valuepickr-Mumbai meet kicked off on Sunday 11 Sep 2016 at Somaiya Polytechnic, Vidyavihar. Defying the lure of a Sunday siesta, 45 valuepickrs converged at Somaiya, with extreme enthusiasm-around 50% reached well ahead of time, and the event started on time. It kicked off with a brief introduction of those attending, we had a mix of engineers, commerce graduates, MBAs, FRMs(often those with ALL of them) with diverse work experiences across sectors (nuclear power,shipping, investment banking, exporting, manufacturing, healthcare) and functions ( finance, research, sales, operations, investor relations). The introductions were quite witty eg 'I become an investor when the stock went down' and provided some laughs.
The presentations then started
Paints-Samir Gharpure @samirvg The presentation focused on the industry and key segments/companies. Discussion included difference between decorative and industrial paints(profit margins, pricing power, distribution, competitive edges) and growth drivers(real estate, painting cycles coming to 5-6yrs instead of 10yrs) and trends(do it yourself). Attention also emerged on Akzo Nobel very high 10yr ROCE, and on Shalimar Paints.
**Suven Life Science- @krishari This PPT used the business model canvas to explain the business model of an Indian innovator. A small piece of a big pie when grows can make the stock a multibagger-also virtuous effects of a reinforcing business model came into play-when speciality chemical business is awarded as a tie in to the CRAMs/IP business. Interesting discussion also on company as a 20P/E play with a free call option on the innovative molecules. Also, owner earnings may be depressed due to the company conservatively recording R&D expenses instead of capitalizing them. Key events to double revenues in 3yrs would be new orders and phase 2 approvals.
Cupid-Varun Rajwade @varunrajwade Contraceptives are not a very easy thing to explain(just ask any parent who gave the 'birds and the bees' talk. Varun managed to explain about the leading market player in female contraceptives, and why it would grow. The PPT kept everyone engaged and resulted in questions on market adoption, social trends(once used then continue to use), risk of government businesss(clarified that mainly NGOs/global organizations), capacity(male and female condoms use different lines). it is a credit to the maturity of the audience that there were no sniggers or red faces Points also came up on spotting inflection point(change in segment revenue and margins due to male/female condoms mix), and B2C business.
Sharda Cropchem- @Yogesh_s This company was described as the 'Caplin Point' of crop protection. The presentation focused on reasons for entry barrier(registrations being company specific, need to execute well on asset light model). Certain governance concerns were raised on IPR not being in company name as flagged during the IPO, and their not excelling in any specific thing, rather seemingly a generalist.
HPCL/Balmer Lawrie @sekhar Chandrashekar PSUs are usually unloved and the PPT focussed on 2 which may benefit from key tailwinds. In HPCL's case, stock selected due to cheap valuations on P/E ratio etc, while it would be increase in transport due to smart cities/deregulation. Balwer Lawrie is an interested example of profits margins depressed on revenues inflated by low margin transport business, however under IND-AS, with transition to net revenue reporting, the overall margins should go up with decrease in revenue. This is also a GST play due to the logistics business contributing to its profits.
The following presentations were prepared but could not be presented due to time constraints
How to read Annual Reports-@andy161161VP Steps to Read Annual Report.pdf (672.4 KB)
Technology in Value investing(as presented in FLAME)-Varun Goenka
Flame VG ppt.pdf (1.2 MB)
The meet saw extensive participation from all and sundry, and participants actively sharing industry views/experiences/insights-for example, no relation between crude oil prices and Gross refining margins, scuttlebutt of HPCL & Cupid, IPR issues in Shardha cropchem, viewing a company as a call option eg Suven, tests for too good to be true companies(Op cash flow<<PAT for a long time, receivables days), and questions(If this is so good why only 70% capacity utilization, what will make it transform). The preparation by presentors was quite apparent with most questions getting answered with facts and numbers without need to refer/'get back'. This shows the extent of passion and interest by those with full time jobs. Kudos to Chandrashekar for finding a good venue at short notice, and to all for attending and participating with interest
The meet concluded with the planning of the next one-we would have this on Oct 8(Sat) or Oct 9(Sun)-same venue=>max 50 people. Format would around 4hrs with 1 sector PPT/discussion, 2-3 company presentations of 40min-1hr each, and 1 PPT on value investing techniques/'How to'. We will open registrations some time next week once the agenda is finalized. The person moderating the meet will decide on fee(and refund policy if any), agenda, curation of content and presentation timelines, and selection of participants if response exceeds venue size.
Sharda Cropchem.pdf (43.9 KB)
Cupid_Valupickr_Mumbai 10092016.pdf (565.4 KB)
Paints - VP meet.pptx (1.0 MB)
Two Promising PSUs.pdf (292.4 KB)
ShardaCropchem-Presentation.pdf (305.2 KB)
Suven.pptx (594.4 KB)