Hope you all are doing great.
I am planning to enter markets with my partnership firm. In this regard, I have identified few investment opportunities. I would like if you all could provide your views on the same.
Below is the list of identified businesses which according to me are good for 5-6 years time frame.
- Piramal Enterprises
- Vaibhav Global
- Mayur Uniquoters
- Atul Auto
- Accelya Kale Solutions
- Ambika Cotton
- Ashiana Housing
- Oriental Carbon
- PTC India Financials
- Shriram Transport Finance
- Thomas Cook
- Relaxo Footwears
- Cupid Ltd.
However, according to me, most of them currently trade at fair / expensive valuations. I am briefing my current views on each of them.
I plan to invest a total of 80% of my investible money. Of this 80%, I am looking at investing in 8-10 companies. 20% to stay in cash for any opportunities, which may arise.
Piramal Enterprises - Betting on Mr. Ajay Piramal. Looks like a steady 18-22% investment for 5-6 years. Plan to invest now with 8-10% allocation.
Vaibhav Global - Good economics - Cash generative business - Nice ROCE - Growth visibility - Looks cheap (if growth picks in the H2 of FY 2015-16). Plan to invest now with 8-10% allocation.
Mayur Uniquoters - Proven business - Steady earnings outlook with revenue visibility (auto, footwear, furnishing) - However, looks appropriately valued. Plan to invest 50% of planned allocation of 8-10%
Atul Auto - Proven record - Steady earnings outlook with revenue visibility (export of petrol vehicle) - However, looks appropriately valued/ overvalued.
Accelya Kale Solutions - Good business - ROCE - Cash generative - Dividend Yield - Dividend payment history - Operating leverage play. However, I am not able to foresee any major growth in revenues. Until then, no planned allocation. Wait n watch.
Ambika Cotton - Decent business history - Cash generative. However, looks appropriately valued. No plans to put in money until it is available at deep discount as I am a bit skeptical regarding the ‘textile’ industry’s economics.
Ashiana Housing - Great business model - Cash generative - Great past record. Real estate slow down may hurt the company and the stock bad. I find no MOS at the current price. Hence, no allocation as of now.
Oriental Carbon & Chemicals - Good business economics - good past record - Revenue visibility. However, currently operating at 95-98% capacity. Next capacity expansion to kick in from 2017. Hence, I think this will be available cheap in the near future (1-1.5 years) as revenues / profits gets flat / negligible growth. No allocation as of now, but keeping a close watch.
PTC India Financials - Good past track record (though on low base) - good ratios - Seems to be a little less than appropriately valued - Plan to invest 50-70% of planned investment of 10% allocation.
Shriram Transport Finance - Great business economics - Management - currently hit with slowdown due to auto slowdown, coal mining stoppage - NPA issue. Keeping a close watch on NPAs in coming quarters. Will invest if available at 1.5 P/BV or less. 10% allocation.
Thomas Cook - Decent cash generative travel business - Management - Quess Corp to bring in growth in revenues and profits. However, finding it difficult to make projections and hence valuation. No planned allocation.
Symphony - Great business model - Great Ratios - Revenue visibility for 5-6 years at least. However, very very pricey!! Keeping a watch on quarter earnings. Might be available cheap due to bad quarter. No planned allocation.
Relaxo Footwears - Great business - Great Ratios - Products will never go obsolete - Revenue visibility for xx years. However, very very pricey!! No planned allocation.
Cupid - Revenue visibility - good numbers - However, looks appropriately valued. No planned allocation.
Hence, as of now, I plan to invest in Piramal Enterprises, Vaibhav Global & PTC India Financials as mentioned above.
Would be great if you all share your views on the companies and investment plan as mentioned above. I am also open to look into other companies.
What I generally look for in a business -
a. Past track record
b. Growing revenues and profits
c. Growing / steady margins and improving ratios
d. Cash generative
e. Some uniqueness towards its products/services or business model (finding moats).
f. Management (Have shunned Amar Raja, Kitex, Pokarna, etc due to this)
g. Less / Nil Regulated businesses.
Apologies for the long post. Thanks in advance for the contribution.