HDFC Bank Update: All gains over past few weeks wiped out by 4 percent fall. (6 perc down in last 2 sessions)
Update on HDFC Ltd book after merger. Gross non-individual NPAs spiked from 2.9 to 6+ percent due to banking standards. A 20k cr+ hit to the bottom line for HDFC Bank. Came as a surprise to me. I thought HDFC Ltd wont be having any hidden NPAs, it seems like I was wrong.
Still continuing with HDFC Bank. PS: HDFC Bank is not actually under deep value category, but the truth of current market is, there is no deep value stock available in the market, so we need to make the most of whatever is available. We cant say when the market will eventually cool off.
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Even with this near term negatives, HDFC Ltd would a Co that respects 17-17-17 i.e growth, ROE and P/E. In fact the Roe and Growth rates could be little higher . Long track record is an added benefit
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Hdfc bank continues to crack but holding tight, added some more positions, roughly 13 percent of my portfolio now.
Vedanta cracks 6.5 percent to 208.5. Initiated position in it. Hold around 3 percent.
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Also pfc continues to do well. Still the cheapest stock by valuation among big players
The last couple of weeks has been all about … Pfc.
Finally I would say it is out of cheap valuation category.
From 26th Oct to 13th nov (roughly 2.5 weeks). Pfc is now 320 from 230!!
It’s now 1.1x book value, pe of 5.5, it’s tarting to lend in infra projects which I am not sure about. We have riden the wave on pfc from 110 (before bonus, bonus adjusted it would be 88) to 320 now with some profit booking 
(/diversification, in this case it worked as deworsification 
)!!
But now I feel, the time is ripe for not being overweight on pfc. No one knows where the momentum will take pfc, but atleast it is not extremely undervalued now.
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Both Wockhardt and Spicejet up.30 percent since i posted in end aug…but i thik they could have long way to go for those who can bear full on risk…
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Spicejet zoomed up to 52 rupees today…I wonder who is buying ?
I read reports in newspapers that plane was possessed by lessor Carlyle in Dubai recently which i rhouggt was strange because Carlyle had taken 7.5percent stake in airline earlier on this year…
The press seems to be saying that they they may get funding from 2 sources…of 1500cr…Will this be enough to keep.them going ?
Spicejet: Hard to say about future, the share has spiked a lot, but I don’t have much visibility on its earnings trajectory. Net worth is -ve.
But considering the consolidation in the industry, I hope it would easier to make money now than a decade earlier?
Disc: Not invested
Thanks for your opinion…I feel that the indian aviation space is very exciting now and fares will stay high…There is an issue with airbus neo engines that are being forced to go through new checks so this has and will keep a lot of planes out of action…Luckily for Spicejet it doesnt seem to have Airbus only Boeing and Dash etc.
Also I think Spicejet comcentrates a lot on the more secondary and tertiary cities so will tap nicely the lower middle class travel…
Its a risk at this price but I think the shares have chance to go much higher especially with the oil price weakness .
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Depending on how you look at things in life, we could basically describe everything as a risk of some sort. If you sense value in it, you should probably go for it and give it a bit more trust 
Just my thoughts.
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Where did you find this data? Request you to share the source.
It’s old data. In one of the updates on merger, they shared this information.
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What are your thoughts on Rain Industries and HIL ltd? for the deep value investment opportunities.
I see that the current market conditions are not good for either stocks. I am not following them closely as of now.
Regarding rain, I was invested in it earlier but once they raised debt at 10 percent interest rate in us dollar terms (and market conditions weren’t good), I exited it. It’s a very high interest rate to pay and it’s interest expenses are about 1000 cr per year.
Both should do good once the market cycle reverts for them but I have no visibility regarding it. (Market cap to sales is quite cheap for rain(but high debt) and decent for hil, considering its debt free)
As of now, I am mostly invested in banking sector. Paper industry seems good, but cycle is on downside so again very risky, not invested in it.
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My two cents on Rain Industries:
Positives and Key Considerations for Rain Industries:
- Raw Material Availability: Rain Carbon recently received approval for a higher allocation of Graphitized Petroleum Coke (GPC), a critical raw material for their Vizag and SEZ plants. This development comes after a long period of restriction and should enable the SEZ plant to operate at full capacity within 6 to 12 months. This increased capacity could significantly boost revenue and profitability, thanks to enhanced operating leverage.
- Debt Management: Although Rain Carbon’s debt is high and interest rates are elevated, the company historically took on loans at low interest rates for expansion projects. Their Return on Equity (ROE) was previously higher than the interest rates on the debt, making this a reasonable strategy. With most of the capital expenditure completed and plants coming online soon, the company is positioned to start reducing debt more aggressively as no major capex has been planned in near term. Also interest savings flow through to the bottom line, this could lead to a re-rating of the company’s stock. This can change the perception of investors looking towards this business.
- Aluminum Market Outlook: The demand for aluminum is expected to rise due to trends such as the shift toward electric vehicles, automotive and aerospace light-weighting, and the expansion of renewable energy infrastructure. Global aluminum production is projected to grow, surpassing previous highs over the next few years.
- Cost Efficiency: Rain Carbon is among the world’s lowest-cost producers of GPC and CPC Though they don’t beat their chest and say, their cost advantage is reflected in their operating margins, even during downturns, positioning them favorably compared to competitors.
Optionality and Strategic Moves:
- Anhydrous Carbon Pellets (ACP): Since 2011, Rain Carbon has been developing ACP to mitigate risks associated with the availability and quality of GPC. This patented product could provide a significant competitive moat by safeguarding margins against raw material price fluctuations.
- Shift to Value-Added Products: The company is transitioning towards value-added products in advanced carbon materials, which should stabilize margins and reduce cyclicality compared to their traditional products.
- Focus on Energy Storage Materials: Rain Carbon is making strides in the energy storage sector with the establishment of a new R&D facility in Hamilton, Ontario. This center will support the development of energy storage materials for lithium-ion batteries, solid-state batteries, sodium-ion batteries, and hydrogen fuel cells. The R&D efforts are expected to drive innovation and strengthen their position in the energy storage market.
Given Rain Carbon’s strong cash flow, low valuations, potential for debt repayment, Operating Leverage, recovering carbon product demand, and other strategic initiatives (Optionality Playing out), it appears that many of the negative factors have been addressed. Any positive developments could lead to a significant re-rating of the company’s stock, which is currently undervalued and overlooked.
DISC: Invested (Can be Biased)
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