@hitesh2710 Sir kindly tell us your views on Intellect Design Arena considering the facts that-
The company has a healthy sales growth
Profit margins have improved (except the company posted a loss last quarter which resulted in a huge fall in the stock prices)
The company is regularly announcing new deal wins and has a healthy order pipeline
The management has a very positive outlook and the company is consistently investing in R&D and innovation
Can this company be considered a Structural growth story?
@hitesh2710 Sir, could you please tell if you are still holding Muthoot capital services, I saw in earlier blog you used to hold. Now I have averaged down at 500 levels now I am in green, but wanted to understand from you that the company growth concerns due to liquidity and auto slowdown, all these events making me feel better to exit and invest in secular growth story in Chola finance or HDFC bank.
I also hold Bandhan Bank.
Disclosure : Invested in Muthoot capital and Bandhan bank
Digvijay cement q3 numbers have been good and in line with investment thesis of cost savings leading to improving margins. In a difficult macro environment, sales growth of 8-10 % in revenue terms is quite good though in volume terms it has shown slight de growth. The company had also suffered due to some issues due to floods in the region and hence production for a few days during the quarter had been affected.
Protitability has shown marked improvement because of cost control measures and efficiencies brought about by Mr Singhvi and his team. Even here, the full impact of waste heat recovery plant (which was started midway or at end of quarter) was not there during q3 fy 20 and is likely to play out in q4 fy 20. As it is, q4 is usually a good quarter for most cement companies and I expect company to report quite decent numbers going forward.
Price has run up as most investors knew the results were going to be reasonably good. Even after the run up, the EV/EBIDTA valuation remains attractive. Technically when I posted the chart of Digvijay in a technical analysis thread, stock price ruling at that time was 23-24 and target was close to 33-34 based on cup and handle. Usually these are minimum targets and I expect this target to atleast be tested in coming weeks and months. Lets see how it plays out.
@srikanthg I dont track muthoot capital service anymore. Key risk remains of high exposure to kerala geography. Chola is a more diversified player in similar space. HDFC bank is an evergreen stock and doesnt need too much research.
@d.investor I dont track intellect design arena anymore. In software space, results from sonata software have been impressive and stock price has moved up by around 15% recently but looks good based on high dividend payout and balance sheet strength. Not invested as of now but on watchlist.
Corona virus is a respiratory virus infection which has caused quite a scare globally. Main problem with this virus is that its incubation period (time taken for a person to exhibit symptoms after getting infected by the virus) is 10-14 days and during this incubation period a person is infectious and can infect others. This presents a problem in prevention because an undiagnosed patient also keeps spreading the virus in others.
China seems to have mounted a quick solid response and even other countries have stepped up efforts to prevent spread the disease in their particular coutry. Inspite of this, sporadic cases have been reported in different countries.
The scare has hit markets globally and particularly more severely on metals and some cyclicals.
My view is that initially there is a knee jerk reaction to these outbreaks and then its business as usual. We have had previous scares in bird flu, swine flu etc and the world and markets have survived so this time things should be no different. Approach remains same as before, to focus on stock selection and allocation.
Hi Hiteshji - On Corona virus topic, there are lockdown type restrictions in China which are expected to continue for some time. Would some Indian companies which provide substitute to Chinese products such as Aarti Industries etc. benefit from the situation? Can this be considered structural given companies were already looking for alternatives for China and with Corona virus situation, they would have been forced to make a switch, at least in part.
@hitesh2710 Hi Hitesh, thanks for your efforts. I have recently invested in Meghmani Organics and Fin Org. I invested in these stocks because. Both have healthy ROC and ROCE. Continuous performance in sales growth and consistent 18+ OPM.
please share your view on these stocks.
Sir what is your opinion on Gujarat Ambuja Exports limited? Market leader in a bad cycle, might be the best time to buy considering a 3-4 year view. What is your opinion on others cos like Rites and Hle Glascoat? Especially the latter name which seems to be in a very strong uptrend.
@hitesh2710 ji,
What is your opinion on IndusInd Bank as a long term story?
It had shown good execution and used to trade at premium valuations but due to some valid reasons valuation has cooled off quite a lot. On crude matrices PE is 19.2 vs 3yr average of 31.65, PB is 2.56 vs 3yr average of 4.51.
Reasons include:
ILF&S burnt & delay in admitting that.
Elevated provisioning in this debt downcycle since strategically they maintain a riskier loan book.
Larger Auto Sector exposure and Auto sector downturn.
Succession of Mr. Ramesh Sobti who helped the bank to scale these greats.
Merger synergies with Bharat Financial Inclusion.
Pledging.
Now my point is without the concerns we wouldnât be getting it cheaper. Do you fathom benefits of accumulating it incrementally?
Request your views on DFM Foods.I have done some research of late.Here it is:
There has been a complete turnaround in the ownershipâŚadvent bought the entire stake of promoters and i think westbridge also at approx 250-260/share in Sept/Oct 2019.
Old management/promoters: Mohit jain/Rohan jain are out fully(They started the company in 1984).There is a new CEO Lagan shastri who joined few days back: he is an Ex Coca Cola guy and spent 21 years there in various roles( IIM Pass out).So now that Advent has the full control, it is a clean slate as to how the new management wants to run the ship.
Looks like a turnaround play, but a lot depends on how new management behaves- It can go anyways; but looking at the PE guy(Advent) and the new CEO, chances of a good fortune seem more likely for me, thats my intuition.
@bargainHunter It seems chemical sector stands to gain most if Chinese production facilities remain closed for long. But even without that the speciality chemical segment has been running on steroids since past few months and this should provide some additional dose. Overall manufacturing speciality chemicals seems a more structural story than what people think and thats why these chemical stocks are running hard. Most MNC companies which had vendors only in China now want an additional vendor or two in India to mitigate their geographical risk and maintain continuous supply of raw materials.
@aliveoceans Meghmani had some corp governance issues some time back because of which stock price took a beating. And even numbers are not consistent enough to inspire too much confidence.
@Worldlywiseinvestors GAEL is one of the better companies in a commodity space and has done quite well. But since past few quarters it has been affected by higher raw material costs which has dented its performance. I think Dec quarter should also be affected looking at numbers reported by a similar company Sukhjit starch. Both Rites and HLE seem on a strong uptrend. One will have to factor in valuations to take a call there.
@Ramesh_Patel Wonderla has for long been touted as a great business with an impenetrable moat. Problem is that moat without growth is of no use. Same thing afflicts wonderla. As long as strong top and bottomline growth doesnât come about, its difficult to expect too much outperformance from the stock.
@hitesh2710 Thanks for your views on Digvijay Q3 results
You have mentioned in earlier post that you are invested in Lauren Labs. Would be very helpful if you can please provide some overview on your thesis. Is it because of the turnaround in the new businesses? Is it a long term structural bet or mid term turnaround bet?
ITC seems to be out of favour currently. All the while the markets have been going up, it has hardly shown any strength. Earlier it used to range between 235-265 but in past few days there seemed to have been a whipsaw move which went down to 230 levels. Bottom formation is a slow painful process especially if it is to be a long term sustainable bottom. First it needs to cross its 200 day moving avg of 255 and consolidate above that for a few trading sessions. Pivot for medium term trend change is 265 above which it might show strength.
Problem with these kind of positions is the opportunity costs associated. For someone with low returns expectations and low risk, this seems ideal. I have a position but would reconsider it if any other better opportunity crops up.
@Laurus was a classical double bottom formation between 315-320 and 400-410. (broad range considered because in these bottom formations there can be the odd whipsaw. Technical target looked to be in range of 480-490. Post q2results stock price went down from 400 levels to retest the consolidatioin zone of 340-360 which seemed an ideal range to take position.
q2 and q3 fy 20 results have been good and the initial promise the company seemed to have shown now seems to be materialising. Topline growth is encouraging and net profit margin have reached near the 10% levels. How high it can go and what is the sustainable net profit margin needs to be seen.
As of now things seem to have turned around for the company and the investor presentation talks about good orders in hand for the FDF facility which is a higher margin business for the company.
I had invested in it as a techno funda bet with limited downside post q2 results and till now the thesis seems to be playing out. There is a concall today at 11 am post which we will get more idea about the prospects.
Hitesh Bhai, what are your views on Tata Motors. Stock was volatile in the past. As regards Q3 results, JLR helped in beating market estimate but domestic entity had a major drag in profitability. Truck sales continue to plummet.
Tata Motors seems to be in a tough spot. Domestically it has never had good success in its passenger vehicles segment. Trucks used to do well earlier but as of now the CV segment is reeling. JLR which was the main profit generating engine for the company also was showing some slowdown some time back. And with corona virus induced slowdown in China, how JLR navigates its sales in China needs to be seen. Another variable is the kind of response the recently launched Nexon EV gets from domestic car buyers.
But having said that, usually things look the gloomiest at the bottom in case of these cycicals and automobiles. So one has to keep clued on to the developments and monitor monthly sales numbers and take a call at an appropriate time if one wants to invest.
Hitesh bhai - whatâs your view on the budget ? Any themes you think are good post budget ?
Also, given there was not much announcement for real estate sector in the budget⌠do you think companies related to real estate like APL Apollo, Polycab will be still good hold or better to move horses towards more exported oriented companies given economy not doing well & not much steps from govt to revive the same in the budgetâŚ
Thanks for all your help and insightful details on all the questions that are thrown at you. Just reading your posts has been a great source of knowledge for everyone here.
I wanted to know your views on Banco Products in the Auto Ancillaries space. I guess you were invested in it. If you are still invested in it then can you please throw some light on the current scenario. Whether it is a good time to look at it from 3 yrs perspective and whether Brexit will have any major impact on its Business as a lot of its revenue is generated from Europe. Results of last few quarters have not been encouraging because of the auto slowdown and the base for Dec quarter is very low as it had reported a loss last year.
Please let us know your thoughts on thisâŚ
