Hiesh Sir,
Do u track astral poly? The company is doing well in the CPVC space as well as the adhesive business. The valuations of the company have always been expensive, currently as well trades at elevated levels.
Request if you could share your views.
Thanks.
Regards,
Jugal
I dont track astral poly anymore.
@HIMSHAH
Please dont put up paid reports on VP website as we dont want to get into copyright infringement. We have had these issues in the past so please comply.
ok. sorry i wasnt aware . just kept as u were tracking this company too.
do u track udaipur cement ?
Hi @hitesh2710 ji,
What is your opinion on Swaraj Engines at current price assuming 3-5 year holding period? It has good dividend yield, good ROCE, debt free and available at 16 PE.
Hi @hitesh2710 , believe you have invested/started a thread in Dishman way back, was wondering if you have any views about corporate governance /promoters of same. There has been IT raids and stock has lost substantially after that and even prior to these raids it has been on downhill since mid18. Annual reports had all IT dispute called out for and concall didnt hinted either.
On a separate note what are the signs of such upcoming events before they unfold to track and exit for retail investors, or how to we rationally react rather than freezing as numbers say story otherwise till event happens. Media adds to frenzy and mgmt silence doesnât help either - market punishes severely in short time frame and decision making goes for hold. Adding with mild conviction in such harsh downfall is another dilemma.
Appreciate your thoughts and learning. Quality at entry is imp but few do end up in basket as value traps.
@hitesh2710 any view on these new fintech companies like Ugro Capital or niyogin fintech or inditrade capital
Hiteshbhai, same old question haunts me time and again. How to value these pricey bluechips? How can a normal individual investor would know that there is still value in these stock?
| Company | 3 yrs sales growth | 3 yrs profit growth | PE |
|---|---|---|---|
| United Spirits | 3.21% | 66.81% | 62 |
| United Breweries | 10.24% | 27.06% | 74 |
| HUL | 6.89% | 14.11% | 62 |
| Whirlpool of India | 16.20% | 19.04% | 64 |
| Hitachi | 10.96% | 19.72% | 53 |
| P I Industries | 10.66% | 8.80% | 44 |
| Abbot | 12.00% | 20.00% | 53 |
| Havells | 9.77% | 11.63% | 53 |
Barring the United twins, the sales and profit growth of the other companies is just lower double digits. Still they trade at 50/60/70 times earnings. You have already mentioned somewhere that PE may not be the best way to value such businesses. Well, how to value them? Please share your thoughts. Rgds.
Somewhere in this thread you mentioned your liking for specialty chemical sector. I am keen into this sector and have been digging around. 2 names caught my attention. Balaji amines and Fine organics. Both are into expansion mode. which reminds me of Deepak nitrite which doubles in almost 2 yrs (post operational of Deepak phinolics).
Do you think Balaji amines or fine organics can see such run up?
Hi @hitesh2710 ji, If you track Action Construction Equipment , would like to know your view on this company.
@S_Banerjee
Action Construction has
63% market share in Mobile Cranes Segment
60% market share in Tower Cranes Segment
Even though it produces other equipment, 68% of its revenues come from Cranes Sales.
Their major customers are
RIL
TAMO
BHEL
NCC
JSW
Ambuja
DBL
Welspun
Vikas Ecotech and Elgi Equipments are known vendors for them.
They have a P/E of 14.38
Industry P/E is around 13.54
They have an EPS of 4.58
Their free cash flow is around 55 crore.
I cannot comment on valuation of the company for apparent reasons.
Sources used
Tijori Finance
Screener
Hello, What is your view on REPCO finance, currently it is available on low range of P/B valuations?
Hi Hitesh,
I was just going through concall and results of âAmber Enterprises india Ltdâ and "Dixon Technologies (India) Ltd. Both companies are growing and some cyclical behavior also in business i feel.
Not sure about the valuation side where it stands currently. Your input would be very helpful.
Thanks,
Milind
I did have a very small tracking position in Dishman pharma a long time back. But while listening to a concall the promoterâs son was answering the questions and I did not get good vibes listening to him. I felt he was too interested in stock price action rather than the actual business his father built up. Mr Janmejay Vyas is a technocrat who built up the business and took it to the heights witnessed in the past.
I was also not too comfortable about the acquisition of Carbogen amcis and the subsequent debt on the balance sheet.
The feedback I got about the plant was very good and their capabilities are also good but I think market trust regarding promoters is missing.
In these kind of small cap companies the most important things to look out for are debt levels and acquisitions and their fate. (capital allocation) The recent IT raids may not amount to much but these kind of things usually shake investor confidence and then it takes a long time to come back.
@parthsharma In the cement sector I track and own Birla corp and Shree Digvijay cement. Both are turnaround companies with different sets of triggers. For me these are not too long term in nature. I dont track heidelberg too closely.
The sense I get from talking to guys tracking the sector is that North and Central India based cement companies are well placed in terms of strength of cement prices. In rest of the regions, there seems to be some temporary pricing pressures.
@anirband87 I dont track Swaraj Engines. All the numbers are good but I think unless and until the auto sector makes a comeback, it may remain under pressure/sideways.
@parthsharma I have not idea about ugro capital or other names u mentioned.
@prashantrane2000 As of now I dont track repco home finance.
Thanks for your time and valuable inputs Hitesh2710. I was looking for the Investors con-call transcript, I could not find one yet.
Companies which have met market expectations over the years (or so the market participants think) tend to attract higher multiples. Another aspect to think about is the perception of longevity of profitable growth and competitive advantage.
In all the stocks you listed, consider how the individual company stacks up against competition and where is its standing. Whether it is a leader or a dominant player in the segment or sector it operates in. If the answer is yes, valuations fetched will always be higher.
On the financial front, some of these companies work on negative cash flow model and hence dont need working capital and in fact get negative working capital and this is useful if company wants to expand as it can do so at no extra cost. It can keep using this money to expand and growth.
These companies need little capital to expand and hence generate a lot of free cash flow. This can be used in a variety of ways namely dividend payout or buybacks.
These companies have a very high return on capital and hence business dynamics are very attractive.
And if one considers the concept of exit multiple i.e the multiple which is considered after x number of years, it is also usually high because even after x number of years the prospects of these companies will still be strong.
Hence even if these companies grow slowly or dont grow for a few quarters, their multiples do sustain.
And part of the equation also involves the state of markets we are in. In a highly polarised markets which we have seen since past 2 years, markets perceive safety in quality and in the list you have put up, market perception about quality is unquestionable.
Considering multiple viewpoints, these kind of valuations are assigned to these kind of companies inspite of lack of growth. Although if company doesnât show good growth for few more quarters, there might be compression of PE assigned to these companies till growth resumes.
@hitesh2710 ji, What about North East players like Star Cement? They seem to have many strategic advantages such as Fiscal Incentives, Easier Sourcing of Power & RM, Good Brand with ~25% market share etc. Also, it comes from a management with good repute. The Co. also have good OPM, ROE etc. You probably also were tracking this company earlier this year.
Also, please accept my greetings for the upcoming prosperous decade & year. 
Thanks Hitesh bhai!!
