Whats your view on Finolex considering the above?
Whats your view on Finolex considering the above?
Most of the concerns seem priced in at price of around 46.
Need to see the march quarter results to take a further call.
results are out, whats your take at current valuation?
Franklin Templeton has increased its stake in the company through its funds Franklin India Prima Fund, Franklin India Taxshield, Franklin India Opportunities Fund, Franklin India Smaller Companies Fund. Total number of shares aquired - 559,222.
Stock is doing well and has moved up pretty well from the 50 odd levels to cross 70 today. Still relatively cheap.
I am holding this stock last 5 years. My average purchasing price is 95.00 can this stock touch this price.
Q4 and FY14 results have been very good. The company had very good margin expansion (the OPM expanded by2.31% yoy to 11.6%). The company has also commenced a solar power plant for which it has got a tax benefit. This has aided in Net Profit growth (79% yoy) for Q4.
Operating cash flow was aboveRs 200 crore (about 85% of the operating profit). It repaid 54 cr worth of debt.
I am expecting an FY15 EPS range between 16-18. At a PE range of 15-20, the possible price ranges are 240-360. There is a lot of potential that still remains in the stock, even after its sharp run-up. In my opinion, the stock continues to remain attractive for investors for the medium term.
FCL has been one of my high conviction bets over the past 7-8 months.The stock correctly sharply after their Q3 numbers & I added again at those levels.The management had assured that things will start looking up from next quarter,and low & behold,that HAS happened.The derivative contracts had hit their profitability over the past few years,now that they have matured,re-rating is very much possible.Couple that with a foray into switchgears/CFL lamps,etc. kind of higher margin biz. & the laying up of a National Fiber Optic Cable Network,the revenue visibility too,will start improving.I just couldn’t comprehend the stock at sub 6 multiples,a few months back.Even as they sat on around 79cr. of cash! MF interest has been high in the past 2-3 months.
Looks like a good 2-3 year story.Since expectations on earnings are low, the upside can be swifter.The P/E is still just about 11+.Better still,an earnings surprise can lead to re-rating to 15X kind of levels.Havells trades at a good 24-25X forward earnings.FCL is at less than half of that.I think we have reason to be excited.
Disc.: Invested.Sitting tight.
Think this deserves a bump.
Any of the folks tracking this one able to throw light on how the market has been accepting their newer product lines?
Also production for the new products is all in house or they are going with an asset light model?
Going by the numbers so far all the new products put together are yet to contribute any meaningful numbers to the P&L, but the addressable market size for the company goes up by almost 60-70% if the market shows decent acceptance of their new products.
Current price looks fair but is not yet discounting the possibilities from the newer businesses
Adding this steadily, even after the steep run up over the past 12M I still see a long enough runway for this business to compound from here.
I don’t think the price is discounting any of the positives from their subsidiaries, new launches or their holding in Finolex Industries. I also see some element of downside protection since this is a cash rich business that will continue to generate strong free cash flow year after year from here.
Will post my detailed logic for buying this later in the week.
Hello zygo sir, would love to hear more details from you on FC. Thanks
what are the prospects /valuation to buy at current levels?Please throw some light
After this correction, here’s what the numbers look like -
Market Cap of 8500 Cr, adjusting for the 32% holding in Finolex Industries at CMP, the core business valuation works out to approx 6000-6200 Cr. For FY18 the business did 350+ Cr PAT and has cash of 900+ Cr on balance sheet. Enterprise value actually works out to less than 5500 Cr even after buffering for some more downside in the Finolex Industries share price
Interesting thing is that the CMP appears to be discounting an earnings growth of hardly 8-9% over the next 7-8 years assuming all other parameters stay within the usual hygienic historical range. I believe that this earnings growth is possible from their cables business alone and does not take into account the improving numbers of new product launches like switches, fans etc. Their core cables business is a fantastic 35%+ ROCE business even after adjusting for the other income part. 900+ Cr of cash on balance sheet as of now and this will only get better since it is a free cash flow business, one could expect 200+ Cr of free cash flow generation every year even on a conservative note.
Finolex Cables has always been given a discount to peers because of lack of hunger by management and their derivative losses overhang till 2014. While I am not betting on this management discount going away soon, numbers dictate to me that the actual scenario may be far better than what is being priced in right now.
Disclosure: Invested since 2016 and adding more at current levels. Do your own due diligence
Hi All i am waiting for there annual report for quite a long time do any one of you have the link of it ? TIA
Their latest Annual report is available on their website now. It is reasonably detailed and well written.
Any views on Finolex Cables? The Stock has been correcting since last couple of months.
There seems to be some dispute or issues among the management. The brothers seem to be looking to part ways in Finolex Cables & Finolex Industries. IMO that seems to be the reason for the continuous slide in the price. Seems like a decent investment at current price.
Would request @hitesh2710 to advise.
Disclosure: Holding since about 10 years. Invested @ 40 levels.
Thanks Harshad. Waiting to see how the quarterly results fare today.
Wanted to know view about the same from fellow investor isn’t this harmful for the progress of a company when promoter fights and reaches to court …
This is my first blog related to analysis about a company. I tried putting my knowledge about company in blog. Forgive me if i have done some mistake as i am not from financial background and this is my first blog