Hitesh Bhai,
Proper interpretation of P & L statement, Balance sheet and cashflow statement are of utmost importance for evaluating the businesses for investment purpose. This demands knowledge of accounts.
Can you,suggest a good book on business accounting which is “must read” for every new investor ??
I think your suggestion will be very useful to all fellow group members !!
Thanks & regards,
Ramesh Patel
I found Pat Dorsey’s Five rules for successful stock investing a reasonably good book for basic knowledge of interpreting financial numbers. It covers different businesses seperately and tells us what to specifically look in these businesses. i.e which financial numbers are more important for specific businesses.
@hitesh2710 Sir, apologies for the multiple questions. Recent results of Hester have been lackluster. African operations are yet to take off in a meaningful way.would you consider it a hold from a 5 year perspective. Thanks
@hitesh2710 Hi Hitesh bhai, What’s your view on Titan ? The eye plus stores and taneira stores too seem to be expanding plus the Tanishq plan of market share gaining from unorganized. Can it be treated as a growth stock ? Many thanks
Hi Hitesh,
I was just going through “Mishra Dhatu Nigam Limited” and it seems it is growing but it is PSU. how do you see PSU companies in current environment.
Regards,
Milind
Hester has been delivering consistent numbers over the past few quarters, inspite of lacklustre growth in Nepal business. Africa business is in a nascent stage and hence might take some time to find its feet.
I think the poultry vaccine business growth is likely to be tepid and any new growth that comes about would be mainly from large animal business.
One or two weak quarters after such a good run seems par for the course for Hester. I would still like to observe it for a couple of quarters more before deciding either way on the company. It remains on my watchlist.
@A_shah Titan remains one of the better options of playing the retail sales segment. There will be the one off or a couple of quarters which may not meet market expectations, but overall trajectory should be strong.
Ideal thing would be to buy after some disappointment for a couple of quarters so that the exectations are tempered and valuations also have corrected somewhat.
I had a look at Mishra Dhatu recently. It remains an interesting play on the space and defence segments. They make speciality metals and alloys catering mainly to space segment and most of these products are import substitutes and hence have a good market for the company. In the concall management seems confident about the growth prospects.
Regarding PSU, I would take these companies on a case to case basis rather than generalising.
Hi Hiteshji
How do you see APL Tricoat vs APL Apollo?
Some of the products of APL Tricoat seem to be cannibalizing APL Apollo products. Also, APL Tricoat seems to be able to ride on the group strength be it in terms of distribution network or brand ambassador as Amitabh Bacchan. Since APL Tricoat uses the cutting edge technology bought from US which is exclusively with them in India, wouldn’t APL Tricoat be the favoured baby of management over APL Apollo?
If you have evaluated APL Tricoat, any comments on the margin of safety given the market has priced in much of the business basis first quarter performance itself? Not even sure if all overhead costs are passed through the quarter’s published P&L…
I dont track Apollo Tricoat but am invested in APL Apollo. Apollo tricoat in my view has too short a history to take a very long view although because it comes from the stable of APL group which is by far the leader in the segment, it is likely to do well.
Regarding taking Mr Bachchan as the brand ambassador, there were a lot of questions besides the usual questions of inventory loss during the q2 concall and the answers were satisfactory.
Regarding one company being favoured over the other, I think the management would continue to maintain focus on APL Apollo as it is almost five times the market cap of Apollo tricoat and no one would be foolish enough to neglect such a big company at the cost of a smaller company.
Hiteshji , what is your view on Sonata software ? good roe, negligible debt available at pe of 12.
good dividend as well.
Hi Hitesh Sir, Could you please share your views about NBCC and Strides Pharma? would you see any hope for their come back?
@hitesh2710 ji,
What is your opinion on Bajaj Finance’s reputation of tenacious spamming.
The reports being described on Bajaj Finance’s thread are not exceptions. There are many such reports all over the web. Without ever showing interest in any of their products, I too receive few calls, emails & SMSes every week. And they circumvent DND too.
I understand that spamming is a popular way to gain business, but the annoyed existing or potential customers will certainly won’t stick with such companies unless they are desperate.
Do you feel that such practise, if not rectified, will make their task of growing difficult, on a high base?
@hitesh2710 sir, Just curious to know how will you analyse life insurance companies in present market provided that there are only few players and no historical data to compare. HDFC life SBI life icici are few names. Should we invest purely thinking about the huge untapped space in india for insurance and forget valuations?
Shishir,
I have some investments in insurance.
I use a few ratios to analyse the players in the sector.
Premium Growth - Indicates business growth
Formula
((Gross Premium Written (Y1) - Gross Premium Written (Y0)) *100) /Gross Premium Written (Y0)
Risk Retention - Indicates the level of risk retained
Formula
Net Premium Written / Gross Premium Written
Loss Ratio - This is the golden ratio. It measures the company’s loss experience as a proportion of the premium income earned during the year
Formula
(Net Claims Incurred * 100) / Net Premium Earned
Expense Ratio - This is the ratio I use to check the efficiency of the insurance operations
Formula
(Management Expenses +/- Net Commision Paid/Earned) *100 /Net Premium Earned
Combined Ratio - Combined Ratio is the addition of the loss ratio and the expense ratio. It is the underwriting expense and the operating expense clubbed into one ratio.
Formula
Loss Ratio + Expense Ratio
Investment Yield - Good for calculating ROA for insurance business
Formula
(Addition of Interest Income, rent and other investment income) / average total investment
Return on Networth - Good for Calculation of Networth
Formula
Profit After Tax / Average Net Worth
You can find more on this here: http://www.careratings.com/pdf/resources/Financial%20Ratios%20-%20Insurance%20Sector.pdf
Thanks a lot ayush and hack2abi for the response. I will go through it now…
Based on these formulas, have you compared the life insurances companies within India and also with other companies in financial field?if yes,can u post your study on the forum?
Sonata software has been giving steady numbers since past 2-3 quarters and still stock price seems stuck in a sideways range. It seems to be undergoing time correction, where valuations tend to catch up with stock price. Dividend yield (if going forward dividend payout ratio is maintained) remains attractive. I dont know about the management commentary as I have not listened to concalls, but the topline growth is impressive. Definitely seems worth looking into.
@gkg I dont track either nbcc or strides.
From the look of things, it seems Bajaj Finance seems desperate to grow and spamming to the extent of irritation. I myself receive sms and the ocassional phone call, but I guess I am spared repeated calls from them because I have never before taken any kind of loans from them. But I feel a large part of what is written on the web and on sites needs to be taken in the context of the overall size of Bajaj Finance. Just consider the sample size of people writing these reviews versus the sheer number of loans it has given out.
On the competition front, some weaker players who caused unhealthy competition scenario have now gone out and that leaves the field open for Bajaj finanace. But since consumption itself has reduced, some part of the earlier mentioned positives have been balanced.
But in a country like India, with a whole class of people having aspirational dreams of owning fancy stuff be it mobiles or gadgets or clothing, or vehicles etc, demand for credit will remain strong with brief periods of lull. So I guess even if there is a temporary ebb in growth (which till q2 numbers in case of BF looks unlikely) overall growth story would remain intact.
Because of the strong run up in past few months (as compared to overall markets), stock may remain sideways as it undergoes time correction.
