Cement companies have reported decent nos mainly because of price hikes taken in previous quarter. As of now I hear that due to subdued demand due to monsoon, this price hike has largely been reversed, except for central.india.
As a,company i have been impressed by heidelberg cement nos over past few qtrs. Another good company seems to be star cement. Both based on recent results and consistency in numbers.
As of now i would prefer to wait and watch for q2 nos before taking a call.
The kind of companies you describe are compounders where consistency and predictability is a given barring maybe the odd one or two consecutive quarters. Here management has a long track record of delivering on their promises. Markets also repose their faith in these companies by giving them a long rope.
The smaller companies if you get your call right will give multibaggers within a short period of time as they are often misunderstood and as they deliver good numbers are re rated significantly. Key remains good stock picking and proper position sizing.
Perceived quality premium is a function of market perception of longevity and quality of growth. E.g companies like asian paints, pidilite etc often miss few quarters and then make up during subsequent periods as the tide turns in their favour.
Another example is p i inds. Even with optically poor nos, stock prices did not correct 3-4 qtrs back but now it has made a comeback with a bang and that goes to show that market was finally right.
Sometimes these compounders also are taken to extremes of valuations and run much shead of growth possibilities. And then if growth doesn’t match expectations, they undergo significant correction because they were overly expensive in the first place.
E.g page inds. It has nearly halved from peak of 36-38 k to below 20k because at more than 35k it was ridiculously expensive and merited a sell.
Thanks so much for the detailed revert Hitesh bhai.
1 How does one find these and also could you pls provide detail on position sizing and how to average higher ?
2 what parameters you look for in such stocks and till when should one remain invested ?
3 Any small cap multibaggers that you feel can be considered for investing at current market levels?
Request your guidance on the above
Thanks once again
Sir to find the sector which is going to outperform, if all stock in that sector will move in high tandem but how to found that these stock of particular sector are outperforming, do should do excel sheet of all stock than update bhavcopy of all stock or any other ways to find out…
@hitesh2710, when there are so many cement companies how did you zoom on to these two in first place. Do you follow all cement companies? I guess not. When I see 20+ listed cement companies, I feel tiresome to go through each to find/filter the best. Please share me the approach on how you filtered to 2 among so many. I am sure there would be better approach than mine. Thanks.
Can you please explain on different business model of MAS?
Dear Hitesh Ji
Latest results of ITC have been reasonably good. And it is the FMCG ( if we consider it so) stock with lowest PE. But it is continuously drifting lower. There is no news which can adversely affect the price. Though price can fluctuate because of variety of reasons or no reason at all but there is a significant price erosion in this large cap. Does market knows something which we are not aware.
I will request your opinion.
On a relevant note…Godfrey Phillips; which is in cigarette business as ITC hit upper circuit today.
Disc. Long on ITC
Hi,
But ITC only going down day by day.today it is around 245.Are we missing something which market knows earlier??Why big investors are not buying this share considering its future earnings can only go up from here…
Thanks,
Deb
Hitesbhai
Please share ur thoughts on SUN PHARMA after this qtr results ?
8200cr qtrly sales and 1400cr profit
Thanks
If we see the above chart, ITC has always bounced from 25 PE levels where we are now. Hopefully this time around also it will recover from these levels.
Hitesh Bhai ,Whats your view on Shivalik Bimetal results and prospects?
MAS business model is very well explained in the company’s annual report or even to questions in the quarterly concalls. You can also read up on VP thread on the MAS. I think I have also put up a stock idea on MAS at last year’s (2018) VP meet whose presentation I had loaded on the thread.
ITC has been suffering due to fears about govt increasing taxes on tobacco. And the FMCG business has been slow to show traction. Valuationwise it appears attractive but that has been the case since past 6-12 months. As long as the other businesses dont show the kind of growth to move the needle significantly, it probably would trade at a discount to other FMCG companies.
Conglomerates tend to attract lower valuations as compared to standalone businesses. While there are cigarette and FMCG businesses, there are also other lower quality businesses like hotels, paper, agro and so on in ITC which probably might drag the valuations. Best case scenario for ITC would be a spin off where all poor quality businesses are hived off and listed seperately but looking at the management conduct till now, it seems highly unlikely.
I dont track or am interested (at this juncture) in Sun Pharma. Its a sector which seems out of favour with the markets and I dont want to waste my time and efforts looking at such sectors.
@Vivek_6954 Regarding shivalik bimetal, I think you would be a better judge to comment on the results. I dont want to elaborate.
I had been looking at cement companies some time back and found the growth of these companies much better than others especially during the down cycle. While looking at cement companies or any other cyclical segment it makes sense to atleast go through a quick check on the numbers and the price pattern of the companies. Most often the best companies among the sector stand out in terms of price performance or atleast in terms of numbers reported.
Sir can you comment on CRISIL? Monopolistic business, most sought after rating agency, with growing economy their revenues are only going to increase, 2nd and 3rd player are minuscule and not a threat to CRISIL. Is it not a classic compounder? Price have corrected significantly from all time high taking away froth. If we take away short term revenue blip, is it a good stock to hold. Rarely discussed.
Hitesh ji, is the same true to CRAMS (Divi’s Lab, Syngene) or Medical Devices (Poly Medicure)?
Hi Hitesh Sir Good Evening I am invested in the company named Johnson Controls-Hitachi Air Condition. India Ltd and it is at 52 week low and i was invested around these level but my worry is different :
This is the net cash flow from operating income
14-15 - 54 cr
15-16 - 61 cr
16-17 -170 cr
17-18 91 cr
18-19 -88 cr
which we can see from past 3 year it is in downtrend is it a reason to worry about . I understood that last year sales of AC was not that good and inventory piled up i am new in investing community asked several people but didn’t got answer 
and one more thing if you track this stock is it good to accumulate at this level
@hitesh2710 sir whats your view on Glenmark after sharp correction recently. The stock is trading very cheap @ 12PE TTM. I know there are concerns with high debt and falling US revenues but their India business is doing really well and they have plans to hive off non-core assets and list one of their subsidiary. That should help to pare debts to some extent.
