Sir r u tracking Infoedge (Naukri.com)… How to value this business…Naukri is Cash cow and with this cash they r buying new companies like zomato etc…zomato is still loss making and cash burning company facing lot of competition…
Your view sir.
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Hi Hitesh bhai,
1 What’s your view on how much growth can one expect from Nestle since it has aggressively expanded its market with continuous introduction of new products and also focus of exports from India, and after the Maggi issue, the new MD has pursued the strategy of product diversification with less reliance on Maggi and focus on volume-led growth instead of earlier pricing/margin led growth ? Can one expect 17-18% growth from Nestle ?
2 Godrej consumer pat cagr over last 10 years is impressive and so is the management quality and execution track record although there might be temporary tailwinds in terms of currency fluctuation, tepid growth in international markets(all these factors seem temporary currently)etc But why is its pe just 27 ?
I know its wrong to compare with vguard as both are from different industries , however just for the sake of understanding pe , I would take the liberty . While I understand PE is a function of various things like growth expectations, management pedigree , market share leadership , high ROCE, low debt , secular nature of industry etc . Despite both growing profits similarly and having lot of factors common like managementquality , execution track record ,long runway their pe ratio is quite different . Is it due to debt on gcpl books ? But GCPL has moat in insecticide segment and also it’s from FMCG sector while vguard is not as secular as godrej consumer and faces competition from the likes of stronger companies like Havells etc . Still VGuard has almost double the pe of gcpl .This PE conundrum is really puzzling sometimes to a novice like me . Markets are generally right , so what am I missing here ? Request your guidance
Edit - I have removed the vguard query (and replaced the same with Nestle query )as i just saw the link that the last quarter performance as per management was a one off due to low base
Many thanks
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Hello Hiteshji,
Does the current slowdown in consumption have any impact on you assessment of Indian Hotel Company. Or would you like to take a more company specific approach to IHC.
Thanks
I dont follow any of the staffing companies. I think working capital needs to be monitored in these kind of businesses. And write offs if any.
@sanu1802 I dont track Naukri.
I think the right question to ask would he for how long Nestle would be able to grow. And the answer would be for a very long time. It can grow at 10-15% CAGR for a long period of time though there will be variations in individual year to year growth rates.
Godrej Consumer has had a very good track record for the past 10 years and it also has compounded wealth at a good rate. Since past few quarters it has been suffering from growth challenges since past 2-3 quarters which is reflected in the stock price underperformance. The insecticide segment has been struggling.
Regarding the question of what kind of PE to assign different businesses, besides the well ennumerated points put up by you, it also depends upon the market fancy at that point of time. And regarding GCPL, there is a tax write back in March 2019 as far as I can make out from a look at screener data of quarterly nos. For proper computation of normalised earnings and hence normalised PE you need to take it out and then calculate things. After that adjustment I think the PE for GCPL too would come around to 40 or something similar.
@sarthakkumar19_ Indian hotels is a case of low growth but improving margins and balance sheet and disposal of non core assets. Plus it also has properties outside India and has some geographical diversification to counter slowdown in a particular geography.
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Sir, after Yesterdays announcement what is your view, on long term perspective. As last time you mentioned that you are not comfortable currently and waiting to invest. Is it correct time or shall we wait
Savings is a big theme with a long term runway in India. The businesses are great as models and throw out good amounts of cash.
Would love to know your updated views on Reliance nippon now that it is certain that nippon will be taking over.
Thank you!
sir, would you share your opinion on axis bank, if you are tracking it…
was going through some charts and saw axis nicely retesting the multiyear breakout level at 650 since 2015, which is also 62% retracement of the last breakout impulse …
a glance at the quarterly financials seems to be okayish, with consistently better gross NPA inspite of higher corporate slippage last quarter, but virtually nonexistent growth in interest income…
thank you!!
I think you must have seen that the big bang announcement has changed the market mood ever since it was announced on Friday morning. It probably also marks the reversal of the bear market we have been witnessing since a long time with no respite in sight. Even the screen in the past 3 trading sessions is telling a story.
I feel it might be the right time to loosen the purse strings and start buying whereever one is confident and comfortable. Confident about buying and comfortable about paying the valuations.
A lot of large caps have gone up anywhere from 10-30% in 2 days and will probably send some time sideways or might correct marginally. And during this time, we might see some fancied small and midcaps making a sort of comeback.
All in all I think it might be a buy on declines market now as compared to the sell on rallies market we had earlier.
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With change in ownership, Rel Nippon remains one of the attractive companies in the segment. Of course after HDFC AMC. What kind of valuations to pay for such businesses is an individual call.
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Axis bank is a chart that is a classical example of change of polarity principle. It went up sharply during Jan 2019 and cleared the resistance zone of 630-650 to post a high of 827. Since then it started falling and went down to test the previous breakout/resistance zone if 630-650 and took support at the earlier resistance. Since then it has bounced back along with general market. On the way down it had left behind a falling gap between 695-701 and while going up it left a rising gap between 690-696 levels. This is something similar to the island reversal pattern and should offer good support during declines now onwards.
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Hitesh ji
I am highly thankful to you to increase the my understanding of the behavioural technical and fundamental aspect of investing as well to the Forum . Could you spare some time to write a few lines on BSE Ltd The valuation are good and currently trading P/e 15 - 16 thereby yield is comparable to traditional Bank FD . The INX which will be fruiting bearing in next couple of quarters and the cost high volume trading is Low in BSE as compare to NSE . But being it is listed in NSE .It will indirectly benefiting the NSE . on the same way If NSE MCX merger which may happen it leads to good volume in BSE and thereby increasing the annual fee and transection fees to BSE .It is very interesting stock . Could you please share your views .
There is locking of capital due to regulatory provision how it will help investors ?
There are some advantage of BSE that it has is many stocks are still listed only in BSE and not on NSE. But eventually the gap will close soon How this affect the business ?
BSE is a professionally managed company with no promoters How we can see this in the eye of the inventors ?
What can be the potential risks in the company ?
in the DNA it was a “broker’s club” Will the value may be created to inventors ?
regards
I dont track BSE so not much idea on that front. Had bought it as a parking space some time back but had exited since then.
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@hitesh2710 ji,
Should one always be dismissive of a company with any history of minority sharehoder unfriendliness? If not, how much is tolerable, and what are the pointers to look forward?
Case in Point: Whirlpool & Aditya Birla Group.
Thanks in advance 
I think one cannot be absolutely dismissive of minority unfriendliness on the part of management. Sometimes major decisions as in case of Birla group are taken after a lot of considerations which are important for the company. What we see are the views of newspaper reporters or other investors which is only one point of view. Sometimes some decisions which in short term appear unfavorable in the longer term are beneficial to the company. So one cannot generalise these things.
We have to take each case seperately and decide the level of unfriendliness. Its difficult to answer such queries as the answer might differ in different situations.
If there is outright cheating or fraud then its to be avoided at all costs.
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@hitesh2710 Sir,
For some time now, I have been a bit confused regarding which one to choose considering long term time horizon. I feel amc and insurance business is few of those business which rarely fails, they tend to generate high free cash flows and is sticky business. Also, these two businesses are highly under penetrated in India. My picks are Reliance life and asset management company, CDSL, ICICI Lombard General and one exception from tyre sector, Balakrishnan Industries & PI industries. Your advice is highly solicited and if you please order them as per your preference, it will really be icing on the cake. Thanks once again!
Hi @hitesh2710 sir,
Do you happen to track PSP Projects? The company has been showing significant growth (30%+) over multiple quarters consistently. And the SDB project looks to be on time for completion opening up the pre-qualification credentials for the company to projects greater than 1500 cr. in addition to their strong current order book (with a lot of repeat clients indicating strong customer loyalty) with strong revenue visibility for at least 2 years.
ROCE looks good at 40%+ and the company has been adding on-contract and direct employees at 30-40% increase every year. They’ve also recruited middle management folks from premier construction institutes like NICMAR, which is a plus for a company of its size.
One of the companies in the sector with negligible debt and the company has handled WC well (although in the concall, there was warning that there could be a manageable increase in WC in coming quarters due to bulk of SDB getting completed). Most clients are institutional or industrial which give advances and allows the company to manage without expanding WC. The company takes up government projects only when there is significant prestige or complexity attached to it, like Gujarat Assembly building or the AHP building in Maharashtra.
Most of the capex has gone into adding a captive equipment bank instead of having to lease construction equipments. Company has also added integration with MEP (Mechanical, Engineering and Plumbing) and Interiors recently becoming a one stop solution for its customers.
Few other positives are the reduction in the corporate tax rate from 35% to 25% - which due to the company’s not insignificant pricing power could possibly retain. Also, the promoters have been buying significant sums from the open market over the past couple of months.
Possible risks include geographical concentration risk, which the company is looking to de-risk by venturing into projects outside Gujarat. And the middle management bandwidth to handle multiple large orders concurrently as the company grows in size.
Requesting you and other forum members to share your thoughts on the investment thesis, or if anything is wrong with this story. Thank you.
Disc: Invested.
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well explained sir, thank you…!!
i somehow like the technical build up that is going on in voltas last 2 years,there are some evidences of wyckoff reaccumulation …
tested the 200dma/ 52 weekly ma 2 times this year and on a uptrend channel presently…
do you track this scrip sir, if so, please share your opinion !!
thank you
Hitesh Sir, do you track IOL Chemicals and Pharmaceuticals? I came across this company recently. Financials looks good and company has d/e of 0.6 with free cash flow. So want to know your thoughts on the company?
Both insurance and AMC are long term businesses and usually stick businesses. The options on the insurance business side in the listed space are much more as compared to pure play listed AMC businesses which consist only of HDFC AMC and Rel Nippon. HDFC AMC has rich premium built into its price because of the HDFC tag.
One way of justifying very high valuations is the argument of under penetration of the segment in India. 
As of now atleast HDFC AMC which I follow seems to be richly valued. It might become interesting if it were to correct due to whatever reason in the future.
Among other companies you mentioned, CDSL has not done much in terms of investor returns. And the situation might remain so going forward. These start moving only when small midcap bull markets are strong.
PI Inds remains in a strong growth environment looking at the numbers it is posting and the order book it has. It might be a candidate for gradual accumulation if one is convinced about the story.
Balkrishna had a good track record of wealth creation. I dont follow it too closely but as a company it is a good company to track. Only caveat remains to time the cycle right.
In terms of ranking, business quality wise (valuations is a different matter and I dont track valuations of these cos too closely) I would rank in following order… ICICI Lombard, PI Inds, Rel nippon, CDSL and Balkrishna.
But I feel in the small mid cap space now there are a lot of options to pick up good companies. One needs to look harder to find good companies.
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Voltas is a good chart. The stock price has taken out its previous all time high of 675 and now consolidating around that region. Seems good to track.