Before doing all the intellectual data analysis on Eldeco, I hope you guys have read this before investing in this stock: https://prudentequity.com/index/proudentdetail/id/11
Both companyās CEO and chairman were arrested for siphoning funds by CBI in the early part of this decade. More importantly, they even didnt disclose the same to the exchanges. If anyone is from north, its a common phenomenon to deal majorly with cash - which means can any of the reported numbers be relied upon to understand the business economics or real profitability?
First question to ask before even doing one bit of number analysis here is : what has changed in the company that such incidents wont repeat in future. Do you really believe that this is a promoter group and management which cares about the interests of minority shareholders. What will happen to the future of the company if they get arrested again on account of some fraud?
In short, this is a UP based company with real estate interests across multiple companies - many of which are private and have conducted known frauds/siphoning/cash based transactions in the past - need I say anything more - be careful with your hard earned money as you deal with this.
Has anyone received dividend in Sep 2019 (17.5 Rs per share)? The stock went ex-dividend on 19th September, but I still not not see a credit in my bank account.
What are the next steps I should take to ensure that I receive the dividend? Thanks.
Received it today. I guess they have started clearing the dividends from today.
Sougata, Thank you for your response. I havenāt received the dividend yet, but your post gives me the assurance that I will receive it soon. Thanks.
Eldeco Investor Presentation. https://www.bseindia.com/xml-data/corpfiling/AttachLive/435eb408-5bf0-4f06-a4c8-5d8933e938b6.pdf
From being a company with zero transparency to one providing detailed presentations and meeting funds - https://www.bseindia.com/xml-data/corpfiling/AttachLive/435eb408-5bf0-4f06-a4c8-5d8933e938b6.pdf
Yes was pleasantly surprised. Havenāt seen them giving detailed presentation earlier.
Corporate governance standards improvingā¦
Promotor mindset was also changingā¦
Good sign for small investors
Hi, is anyone still tracking this stock? If so, why is the stock price down from above 2000 to around 900? I havenāt been able to see any issues, does anyone have information otherwise? Thanks in advance!
@wisecraft Seems to be in line with the general risk-off sentiment against small caps, and especially sectors like RE. Plus the volumes on this counter are so low that a few sellers can always push the price down.
Eldecoās āreportedā numbers have always been excellent, and in fact it seems to be trading at a ridiculouos discount to fair value at the moment. But it is in a sector that is not fancied, and who knows how badly the demand for RE in Lucknow will be hit by Covid
@Vineetjain111 These are some very valid points. The free float is small indeed. The next 2-3 quarters should tell us more and maybe give a more definite sense of the real impact on their business. However, looking at their June 2020 presentation it appears their business may not be as heavily impacted. But I donāt take these presentations at their face value and it would have greatly helped if they had included a COVID impact section in the presentation.
@wisecraft True. Frankly the only real risk is whether the declared numbers are genuine. It is a UP based realtor after all!
But at these valuations, from a pure risk-reward point of view, Eldeco seems to be a steal with very little downside risk. I mean they have 50% of their market cap in cash and bank balances and are generating positive cash flows and awesome return ratios - lots and lots of margin of safety.
I have picked up a small tracking position and may add some more soon with a 3-4 year horizon, looking for a 3-4 bagger. But will not allocate more than 3-4% of the PF to it at best.
Indeed! From a margin of safety point of view, there is heaps of it available, especially with all the cash on the balance sheet. I might initiate a tracking position but will wait a while to build a proper position in it.
The earnings presentation. Great to see that the company is becoming much better with information sharing and is trying to lay out the investment thesis clearly (there are slides on it). I believe they also scheduled some investor meetings.
The results are interesting as the sales are down as expected, but the margins have shot through the roof. The income statement shows that the cost ofconsumption of raw materials is very low, I am curious how it is so low given the fact that the inventory has increased from the last quarter.
Another thing I find interesting is that the sales are not increasing over the past few years but margins, and hence earnings are improving consistently. And these are reflected in the cash flows as well. Anyone has any thoughts on this?
Hi Vineet, The way I see it raw material consumption is low because of a complete halt in activity during lockdown which would also result in an increase in inventory not in the form of raw materials but as finished or work-in-progress projects. I believe they give a break up of the inventory in the footnotes in the annual report. Not sure if the same is available for quarterly results.
As for the margins and cash flow part I will do more investigation and convey my findings, if any.
@wisecraft they havenāt given a break-up of the inventory but your logic seems sound.
I wonder if the company will put out any disclosures with respect to the analyst meetings. That would be another big step towards making dosclosures more transparent
This is from the 2019 annual report. I guess we will have to wait for the full annual report to come out.
After latest Annual Report, Two worrying factors to me.
- they increased the royalty payout to ELDECo Infra (Privately owned) from 2- to 3%.
- The loan of 30 Cr given to Eldeco Infra. My doubts are, instead of the co buying the land, did Eldeco Infra is buying and having the development agreement with ELDECo Housing? If this is the case, ELDECo housing is loosing the edge of having the cash.
Watching it closely. Holding this stock (2% of the PF)
Real Estate in large metros has definitely seen an uptick over the past few months. But I have not been able to find any information on trends in lower tier cities like Lucknow. Anyone has any information?