Cash equivalents is higher than market cap for NBCC with NIL debt. Any idea on how this investment looks like
NBCC is a construction company - that too a Public sector. it isnât a NBFC company.
so net net one can get NBCC free of cost at current valuation.
company has grown too in past.
another one available at similar valuation is BSE, its market cap also is lesser then cash on its books.
2 Likes
While calculating cash on books it is necessary to make sure that the cash is not in form of advances from customers. Or some kind of guarantee money from those who apply for contracts etc.
I havenât seen what the status is with NBCC but I think part of cash being talked about would be advances from customers or something similar. One needs to go through annual report and listen to concall where details could have been provided.
Another thing to see is the trend in cash on balance sheet over the years.
6 Likes
@hitesh2710
Sir please give ur views on BHEL at CMP 21 with 9% div yield. Recently govt.buyback at 60.
2 Likes
Dont know why BHEL is so punished.According to the March 2019 balance sheet the company has a current assets + deferred debts considered goods worth 19k crore whereas the market cap+debt comes to 12k crore.
The present cash situation is unknown as the company has made a buyback.
1 Like
BHEL posted a high of 390 in 2007 and has been in a continuous downtrend all throughout the bull market that followed till 2020. And it has kept posting consistently lower lows till date.
I dont know what reason is there that should excite me to look at such companies especially in current markets where there will be clear cut bargains available by the dozens.
All the information regarding the company is available freely in the public domain and still if the stock price continues to go down as it has done, the question we need to ask ourselves is âWhat is it that the markets donât know and I know that should induce me to even look at it let alone buy it?â
Regarding Aster too, I dont know what would be so exciting about a gulf based (as you say it is) hospital operator when the whole region is going to be affected by oil crash and Covid 19. I dont have much idea about it but if you have something interesting about it you can post it at a suitable place.
Dividend yield is something which should be looked at closely in current scenario. Because of higher govt taxation on dividends beginning next financial year, a lot of companies have given out hefty dividends during Feb and March 2020 to avail benefits atleast for this year of lower tax rates. So while looking at dividend yield one has to be sure that the dividend yield we are talking about currently is likely to remain so going forward also.
Case in point is a company like Hawkins where dividend payout is consistent and likely to remain so provided earnings keep pace.
Against that there are lots of examples of PSU Banks where dividend yield over past couple of years or even earlier induced people to buy these stocks and look where they are today.
My advice to you would be to first try and understand what a good business is and then try to find out where good bargains among these lie. Valuepickr has enough resources to unlock these answers.
The current market meltdown will bring the garbage type companies to absolutely unbelievably low levels and will lure us to get into them in the hope of either a quick buck or a potential multibagger. But this is precisely the time to prepare a watchlist of superb businesses which are likely to suffer temporary hiccups due to Covid 19 but will emerge stronger or unscathed in the longer run.
44 Likes
- If any one can comment on possibility of disinvestment ? any conglomerate can takeover it ?
- How BHEL changing itself ? EV charging stations market , LiOn bettery technology, defence equipments, and its old business of critical turbines , rail engines, motors, EPC pack, does all this justify valuations of 70bn.
3)Govt. PSUs giving at all times high dividend. - I dont see any prominent effect on BHEL due to covid19.
- safety of money
Please corect me if i am wrong.
Disc . Invested
1 Like
You mention that you are invested in the company
So there has to be a thesis, right? So maybe you should come out with most of the relevant answers. Or have a stock story type template or some form of write up explaining the investment thesis.
The other aspect of investing in these kind of companies is about how much you can allocate to these kind of companies and say by luck or by some remote skill you make some money, how much would it make a difference to overall portfolio returns.
If its bought as a lottery ticket with 1-2% allocation, its no use even researching the company and wasting our own and othersâ time, raising questions.
The only benefit with these kind of investments is it provides bragging rights if the stock price goes up meaningfully.
22 Likes
@hitesh2710
Could you please tell us Your view on GAIL . It is an indias only pipeline gas and chemical supplier through out country. Monopoly operation, huge market potential supplying gas to CGD and industries. I feel reasonable growth in this sector. GAIL is in my active watch-list.
1 Like
@hitesh2710
Hitesh Sir, what is your view on Bajaj finance after the 50% correction? I remember you invested in it in the past. Currently it is trading 1/2 of itâs average PE. Considering itâs strong brand when economy would pick up, it could easily grow 30% a year for next few years. This makes it quite interesting ( in my view).
From a technical perspective it is already below 50% fib retrace of long term trend. At 61.8 and 78.4% retrace which is 1600 to 1800 levels could be extremely strong entry ( if price reaches there though ⌠) I have always observed that strong brands rise very well from 61.8 levels, I always use this for my entries and have worked quite well.
Appreciate your thought process on future prospects and price action on this one.
Thank you !
1 Like
My Questions.
Were you applying same principles of fundamental and technical valuation when it was making new highs everyday?
Falling knife, safe to catch at 1000 - 1500
Chinese chemical companies shut down because of polution generation
indian companies quickly took that space
does anyone monitor the companies generating polution ?
I have no clue
1 Like
No I wasnât. My investing style ( and it might be totally wrong ) , is not to touch the things on new highs , it doesnât provide sufficient margin of safety on long term basis. In my opinion it will come to 1000 only if the broader market and indices correct itself by another 50% from this level. 1500 can be good probability and also a strong support.
Bajaj Finance is a very interesting case of a market favourite completely losing its market fancy within only a few weeks.
The big change as we all know is caused by uncertainties induced by Covid19 and its impact in economy and businesses.
I think as a business, BF will have a rough couple of quarters. But after a few months when things gradually limp back to normal, it could in all likelihood make some sort of a comeback though regaining its past glory might be a tough ask. The damage suffered to unsecured portfolio needs to be monitored.
At a price a lot of negatives will be priced in and i think around 1500-2000 there could be a case to look at it closely. The key event would be commentary in q4 fy 20 concall regarding future roadmap.
All in all, I think going ahead, if price corrects further risk reward could turn favourable. As of now, I have no position but it remains under my watchlist.
31 Likes
Hello Hitesh sir @hitesh2710, trust all is well with you in this challenging time due to Covid-19.
what is your view on NOCIL?
It has corrected significantly. There will be a challenge for NOICL in the domestic market due to the slow down in the auto market but at the same time, it will have good news due to tougher environment norms in China and overall sentiment about the Chinese companies.
GAIL is one of the better PSUs with as you say good potential going ahead due to CGD and other tailwinds. Problem with it is there are too many variables to analyse this company in details besides govt regulations as well.
So to take a short cut, I looked up screener and found that the stock returns on all time frames given there viz. 1 yr, 3yr, 5 yr and 10 yr time frames is negative. (need to check with actual returns from historical charts) Compounded sales and profit growth over the years are not too exciting either. The interesting figure is 3 year cagr in net profits which is at 40% though I would tend to take that data also with a pinch of salt, and see if there is any extraordinary figure therein.
The sense I get by looking at GAIL is that it is a typical govt utility company and one needs to get in and out at the right time to make meaningful returns. Or else for someone holding it since 10 years has hardly made any returns. (but that doesnât mean it wont make outsized returns over next few years but we need to have a thesis for that and actual things happening according to our thesis).
The saving grace has been high dividend yield and as I can see since past atleast 3 years dividend has been good and at current price dividend yield is good. Maybe if it were to form a durable bottom it might make sense to get in as a trading bet with clear cut entry exit levels in mind.
I tried looking at it earlier but after reading a couple of reports I got the sense that all the business variables and govt regulatory stuff was beyond me and hence gave it up. Hence I cannot claim to have looked into it in details. Maybe if someone has a clear cut investment argument for it, it can be shared in the relevant thread.
9 Likes
I think NOCIL will take a long time to make any sorts of a comeback. It is a play on the growth in the tyre segment and with auto slowing down and likely to remain in a slowdown mode, companies dependent on the sector will be slow to rise.
If one were lucky enough to catch the bottom and time an appropriate exit, there can be a case for looking at it.
I think a lot of investors are jumping the gun too early in terms of buying dips. One has to understand the magnitude of the problem. First of all we need to take care of the virus spread. That as of now seems to be proving difficult if one were to go by the numbers. And we cannot wish away the virus. There were a lot of theories that India might escape lightly because of onset of summer, higher immunity in Indians, protective effect of BCG vaccination in Indians etc. None of these theories seem to have been based on precise scientific research but are only theories and need to be validated.
Even if we are to cross the curve of flattening of virus numbers, there will always be fear in minds of people and the ocassional outbreaks or cluster uprisings which will keep people worried. Because of this, economic activity is not likely to pick up in a hurry. And with a lot of businesses facing tough times there can be a lot of bankruptcies and such other negative events. All this can drag on for a long period of time.
During such times, one has to try to be in businesses which are least likely to be affected by the viral outbreak or atleast will be the first to be on their feet.
Businesses like autos , cyclicals, metals, multiplexes, hotels, airlines etc will be the last to recover and hence I feel one has to be extremely patient if these are the target segments to invest in. Something that looks cheap currently might look expensive after a couple of horrid quarters.
53 Likes
Hi Hitesh ji,
Your notes are always very interesting and informative.could you also give your views on the businesses which are likely to pick up early in order of priority. It may help us to validate our views
Spot on sir. I think as investors we have been programmed to buy the dip since it has worked fine all the last few years and the recency bias encourages us to keep doing. I was also bullish initially but reading more and more about this scenario, I think it will take years before we return to any sort of normalcy.
Trump can arm-twist the FDA to accelerate the process but still it is at least a year for it to be available for general population. US election is coming up, so chances of Trump trying to be aggressive against China. Geo-politics risk is given. In the meantime, I think Govt in developed countries will start segregating people based on whether they have antibodies to the virus, whether they are vaccinated - then they can step in public. Rest all have to be in some sort of lockdown mode.
They had called the crash from some time:
https://www.ozy.com/the-new-and-the-next/the-big-short-of-the-coronavirus-crash-says-were-far-from-the-bottom/291920/
Recent letter is still bearish and calls for long gold / short stock strategy:
4 Likes