Hello Dr.Hitesh , hope you will be back soon and give yous valuable thoughts and sugg.
Have you expected the multi bagger returnsfrom the Infra pack in just very few months of time. Do you have any holdings in infra stocks.
The article provided in the link below contains valid points as to why one should be buying fundamentally strong pharma/it counters
@sunil, I dont have much idea about guj ambuja exports.
@niranjan, kaveri might have some concerns about the state of monsoon due to the possibility of el nino.
@RK, Pharma will remain a good growth sector. Only thing is that post the new govt the focus obviously will shift temporarily to the beaten down sectors. Regarding rupee levels after a certain point it will all depend on how economy plays out.
I tend to support Rajarshi’s views that if u select the pharma companies carefully they might still provide good returns.
A recent addition to my portfolio is Vardhman Textiles Ltd as an opportunistic bet.
Reasons:
Inspite of good results (q4 results out today and company has report eps of 102 on standalone basis and 112 on consolidated basis) it still is languishing at 340-350 levels whereas comparable smaller companies like Sutlej and RSWM have gone up almost 40-50% from a couple of months back. And Vardhman is a leader by far.
Technically on weekly charts stock has formed flag like pattern with pattern targets of 500 plus. comments on charts.
hi Hitesh,
can you tell me which website or software you use for charting?
Hitesh,
How do you see Banco Q4 results? Do you still hold it?
Dear Hitesh
Do you hold or atleast have any views on Inox or Techno Electric Engg
Regards
@kalyan … software is metastock.
@ramesh kumar, banco results are okay. q4 profits have been affected by higher tax rates. I have been booking profits last week but still hold some quantity.
@ashwin patel, I dont hold inox or techno. But techno should do well if Modi govt delivers on power front.
What kind of targets do you have for Can Fin Homes?
Mr. Illango is going to stay till FY16 which is a very good news for the growth prospects of the company. Apart from that the loan book I guess should grow at 40% p.a. So what kind of PE Levels can it reach according to you keeping the market condition in mind. I expect it to range between 14-15 in next 18 months with search of high quality growth stocks.
Apart from this are you planning to have some exposure in PSUs or Capital Goods with the revival of economy that might take place?
Hi Hitesh,
Is there a cup and handle pattern in Kaveri seeds?
Hi Hitesh,
Is there a cup and handle pattern in Kaveri seeds?
Hi Hitesh,
Is there a cup and handle pattern in Kaveri seeds?
Hitesh Bhai,
Re Vardhman Textiles, it certainly looks interesting on a low PE multiple of 3.3x. However, if you consider the debt of ~INR 3,000 crore, the valuation on an EV/ EBITDA is 5 - 5.5x, which for a textile export company seems pretty fairly valued.
Do you anticipate debt coming down significantly over the next 2 years, since the Company does not have any capex planned, as it had undertaken the growth capex in FY13 & FY14. If that is the case, the EPS could improve significantly going forward with interest costs coming down,resulting in a good upside.
Would love to know your views.
Incidentally, have you looked at Vardhman Holdings, which is the holding company of Vardhman Textiles. The current value of investments seems to be 3-4x higher than the current market value. However, as with other holding companies such as Bajaj Investment where market does not anticipate the promoters to liquidate their holdings, so does not value them anywhere close to their assets.
Hi hitesh,
Do you still hold jb chemicals?The figures have been flattish in this quarter result
@equity, I dont have any specific targets for canfin. I dont want to pursue any cap goods or PSU stocks.
@ramesh, I cant make out any cup and handle in kaveri though the chart does look promising.
@naman, Enterprise value of vtl is higher as compared to other players like ambika cotton. It would be interesting to see how vtl fares on ev/ebidta front as compared to rswm or sutlej textiles. regarding holding companies I am not interested in those as it often entails opportunity cost.
@sourabh, JB chem results on sales front are good but margin front is disappointing. I have cut my stake recently in view of reduced fancy for pharma pack. I think post these results jb might remain range bound.
Hi Sir, Wanted to know your views on PRICOL and KOPRAN ?
Re Vardhman, based on the calculations of the EV/EBITDA multiple and PE multiples for peers, it seems these companies trade in the range of 2.5x - 3.8x EBITDA (with the exception of Welspun India which trades at 4.6x, Vardhman at higher end of EBITDA) and PE multiple 3.7x - 4.3x (with Vardhman trading at the lower end of the PE range).
Vardhman has the best EBITDA, PAT margin as well as return ratios, and a balanced debt equity ratio. Welspun and RSWM have very high debt (3x and 2x debt equity ratio), and trade at the higher end of the EBITDA multiples.
| INR crore | FY14 Sales | EBITDA margin % |
PAT margin |
Enterprise Value (EV) |
EV/ Sales | EV/ EBITDA | PE | 5 Year Sales CAGR |
|---|---|---|---|---|---|---|---|---|
| Vardhman Textiles | 5,225 | 25% | 12.5% | 4,935 | 0.9x | 3.8x | 3.7x | 16% |
| Sutlej | 1,881 | 16% | 7% | 1,013 | 0.5x | 3.3x | 3.9x | 17% |
| RSWM | 3,146 | 13% | 3% | 1,517 | 0.5x | 3.8x | 4.0x | 18% |
| KPR Mills | 2,370 | 18% | 6% | 1,286 | 0.5x | 3.1x | 4.3x | 25% |
| Ambika Cotton | 478 | 22% | 10% | 261 | 0.5x | 2.5x | 4.0x | 21% |
| Welspun India | 3,530 | 20% | 1% | 3,242 | 0.9x | 4.6x | 44.3x (NM) | 17% |
Could there be upside based on the above? Either the entire sector could be re-rated, but given the direction of the currency, and some issues with Chinese exports, it may not be imminent.
Does any fundamentals about the Company warrant a higher rating itself? Going forward, does the Company plan to pay down its debt significantly and increase EPS in the next 2 years?
Welspun, Ambika Cotton and the other peers have risen significantly in this market rally.
@ Naman : Its a good analysis. can v include Arvind Mills in this list as well and compare it with Vardhman??
Hitshbhai,
Do you have an views on Precision Wires. It is a market leader in its segment and a consistent performer. Very good Dividend yield also,
@ramudu, I dont track either pricol or kopran.
@aditi. I had looked at precision wires earlier but was worried about impact of copper prices on its profitability. Not had a look at it recently.
BOUGHT VST INDS AS A TRADING BET RECENTLY. This is a company with around 3.75% div yield and available at reasonable valuations for a company of its kind.
attached two interesting charts one a long term monthly chart and another daily chart both of which show flag patterns. Lets see how it plays out.
daily chart will be attached in next post as I cant attach multiple charts on same post.
attached charts with comments about targets.
attached daily bar chart of vst inds.
