Invite reader views on following stocks which are looking very good from both fundamental and otherwise point of view but somehow dazzled by low interest in market in some cases - am I missing something - plz advise
LMW - at 3200 its at 16 PE - ROE of above 18% , long term wealth creator, business prospects looking good, cash levels at 950 odd crores means 1/3rd of share price is in cash, limited competition, market leader, exports and after sales service component is increasing day by day, excellent moat around business - following the stock for now 2 yrs but somehow not buying it - the reason is very low promoter holding at 26% odd and also in spite of such high cash levels they are not buying back or paying dividends - the question is why??
Kansai Nerolac - everything good about the company except the valuations part which is at almost 41 PE at current market price of 266. One has to be really brave enough to buy a stock at such a high valuation - if my thinking is right then why parent kansai paints company is buying heavily into the stock almost on daily basis - any rise in crude prices in long term or even near term wld start denting margins and profits - am I missing again something?
Due to shortage of time more stocks in next post - Request everyone to share their wisdom on above please
Lemme share wonderful article on process vs outcome by @anil1820. He has used example of LMW for putting his case, which also gives insights into what might be in store for LMW .
if you see my portfolio thread even i have mentioned interest in kansai Nerolac there about 1 month back
only PE has hold me back from investing into this.
Asian Paints market Cap is almost 7 times o Nerolac.
Also as per the readings I have done Nerolac has more penetration in the paints for Auto.
All the paint stocks are at high PE what do you think how much the rise in Crude Prices can be passed on to the customers to keep the margin intact
Wonderful blog - and an in depth study. Basically a different approach altogether - in hindsight may be I was knowing it but was not recognizing it. Now going through other articles of the blog
Well what I do is og into company’s website, check their quarterly results / annual reports , understand them - and whatever the EPS is reported I divide by stock price to get the PE ratio. I don’t go by what screener or moneycontrol website is showing. I generally do my own calculations before taking a call.
Hey Varun…since u were discussing paint companies…I cant hold back but suggest Castrol and Pidilite Industries.( Not paint but oil derivatives that are doing very well)
Hi Ranvir - Not sure about Castrol but am very bullish on pidilite - however I have two concerns regarding the same. The valuations and market cap. I can never buy a business at such a valuations, its just not in my habit and secondly I can’t see that business over time quoting over a lac crore market cap as the addressable size is not that large. Also MDF is fast replacing wood and fevicol does not work there. In waterproofing there are lots of companies and players. Its a buy but may be 25-30% down from where its quoting right now.
You have any good research reports on shilpa medicare?
The valuations of pidilite are prohibitive…there is no question. I can only be considered on significant dips.
What is the new driver in pidilite is its fast growing international business( albeit on a small base).
Don’t track Shilpa. Currently bullish on Cipla in pharma space ( because of change in company’s strategy in export markets and its super good inorganic push) .
Ok Ranvir - I don’t track Cipla, was studying Cadila and it seems to have one of the larget nos of pending ANDA approvals and an excellent biosimilar and NCE pipeline. The recent USFDA issue has created a good opportunity to load into once enough conviction is there.
Not really… but just throwing some light on Cipla’s Acquisition… ACQUISITION LINK
Its gonna be earnings accretive from Day 1.( Rs1400 cr odd sales in US).
Plus better margins.
Plus Cipla would not even require to rasise any significant debt against it.
@ Ranvir thanks for the details on Cipla - will come back on this
Coming to JLL I am keenly interested on how in future the Henkel buyout of 26% stake in JLL wld shape up. If it happens then it can really change the game for JLL and its the combine product portfolio could multiply many times if Henkel decides to introduce the basket of products via JLL distribution strength especially in adhesives and personal care. A close look at henkel global website spells out the strength of various brands across various verticals. It could also be a double edge sword in case it decided not to.
But one of the biggest positives for me ( beyond pril,exo,maxo,ujala and margo) is the Henko Matic’s market share of 8% in qtr ending dec15.
This to me is a huge achievement. The reason in my mind for this achievement is new Henko’s super good formulation( pink wali ) and attractive and catchy packaging.
The management wants to increase the market share beyond 10%.
Also, the management wants to take Henko (bucket wash) market share to 10%.(A stiff task).
Given the management’s track record, they should be able to do it.( In next 2-3 yrs ).
This alone would propel the stock to great heights.( Since detergents are a huge but fragmented market and 10% share in such market is a great achievement )
I have one question and this is from my perspective since I also have to prioritize my professional work, manage family and my own personal interests/hobbies to say the least.
Do you get enough time to go through the quarterly, Annual Reports, Industry related news and any other relevant news for all the companies in your portfolio. I was looking from time management perspective and my thought process was if I can’t dedicate enough time to track all this I had keep it simple with few companies and manage accordingly.
Like to hear your perspective and improve upon my time management.
Its a fair question considering I have close to 24 stocks in my portfolio and most of the investors in this forum believe in very tight portfolios.
Let me begin by saying that one I don’t have family at all, I live alone so I do get some time after coming home though I generally came late. Secondly since I am still in my early stages and learning the art to pick up stocks I do need to spend more time as I do consider this as my alternative source of income and have very high ambitions from life which can be achieved only if I am serious. It just comes from within. Thirdly more than the final outcome its the process of finding stocks/themes, reading about various business models/companies and spending time with the stocks which I enjoy the most. It gives me happiness and whatever gives me happiness I do that often.
Now coming to 24 stocks - I have spent now close to 4 yrs in stock markets and have always been invested to my full capacity even in declines and have generated close to 150% returns to this date so I must be doing something right in my portfolio allocation. I generally believe more in % allocation to each stock in the portfolio versus no of stocks however I do cap the no of stocks to max 25 and have never exceeded the no. The top 10 stocks are generally 75% to 80% of my entire portfolio with bottom 5 just 7.5%. Sometimes even a 1 % point allocated to a stock can be worthwhile and many times it has been in my case. Alembic pharma is a 14 bagger to me and sadly I didn’t have high conviction in 2012 when I allocated a single % point to it and started tracking. From then on it never gave me another chance to buy itself and now its close to 10% of my portfolio (without any further buying) and a high conviction stock not coz it has performed well but now I do understand pharma companies well.
I do track all my stocks very closely but do not spend much time in most of the them as they are fairly simple to understand and to track. What is there to spend much time in Glaxo smithline consumer healthcare. Just an annual report and 4 quarterly results presentation along with concall transcripts are enough for me. The business like this has very less moving parts. Same is the case with Marico, Yes bank, DHFL, Atul Auto, Crisil, Bayercrop, vguard, havells etc. I have realized that my max time is spent in tech and pharma companies along side new entrants.
I would advise you to read the well researched and debated threads on the stocks on this forum on most of the stocks as mentioned by you. Once you go through them you will in a much better position to take your own decision which will be well informed and the decisions will be owned by you. I would also suggest you to go through company’s website and read presentations and annual reports.
