By comparing past annual reports and comparing data
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As this question has remained unanswered, let us put my thoughts on it.
I have faced similar issue in HCG, where it was in loss and still the tax rate on the profit was huge.
I could not understand completely but when a company has many subsidiaries and operate in many jurisdiction(or countries), then it becomes complex to get the view of tax rate from the screener.
Hence we should refer to the notes to the Consolidated Financial Statements in annual report.
For reference, in case of tata motors(From page 392/529),
Please go through the notes to tax rate completely by yourself to understand fully(I have just attached some part of that note) and also summarise it for us if possible, your learnings.
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Reading expectations investing book and I am confused on how to calculate the capital investment and working capital increase needed for the projected growth. Any guidance is appreciated
How one can analyze a company who is not doing concall especially ones whose market cap is below 500cr? What are the other ways?
Do mutual fund units you own increase in a growth fund if the underlying companies pay out dividend?
Try contacting investor relations for information, if there’s any.
Read about related companies operating in the same industry or potential peers/competitors.
Talk to company employees / follow the ones who are vocal on social media like Lindekin, slide into their DMs.
Step out, visit the company.
While studying a paper company, I observed that paper industry is one of the cheapest sector currently (P/E of 5 to 6). In past too, sector usually traded cheap at average P/E of 7 to 8. While I understand this is cyclical industry but so is steel or cement (& in my view cyclicality in steel is much more than paper) but still they trade at relatively higher multiple. Could someone please guide how to interpret this?
In typical cyclical industry P/E
When the EPS is high, then the P/E becomes less but the high EPS is not sustainable hence the PE rerating does not happen in case of cyclical industry. Eg - J K paper
When the EPS is low(earning destroys), then the P/E becomes high(It is not due to rerating of PE).
Eg - Tata Steel
Everything is cyclical but paper and steel are deeply cyclical.
Cement is not too much cyclical.
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Thanks @royatirek for the response. I usually see companies revenue & margin to check if the company/sector is cyclical or not. Please see below charts for steel and paper industry (vertical bars depict revenue while line chart shows net profit margin).
For tata steel, while, revenue’s are increasing but margins are fluctuating, hence yes, it is cyclical.
However, see below chart for JK paper
I see both revenues and margins growing consistently. Should we still consider this as cyclical?
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Market thinks so as the rerating in the paper industry is not happening.
I normally look at the EPS. PE vs EPS of 10 years for JK paper Ltd. (I must admit that it is looking less cyclical after your answer)
Andhra Paper
If it is able to sustain the net profit margins for very long time, hence changes of rerating can be there. It is only possible if this time by your research you can know that something is different this time or JK paper is a different beast.
From the article(How to do Business Analysis of Paper Manufacturing Companies - Dr Vijay Malik)
In cyclical industry, each time investors and owners think that this time is different and invest in capacities.
Though there are only few companies that are able to become consistent compounder from being a cyclical company.
In the article there is also a case study on Century Textiles & Industries Ltd,
I am not expert in the paper sector and hence will like to not answer it further.
Disclaimer - Not even a novice in a paper industry and take my feedback with the pinch of salt.
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Hi,
I want to invest in small or micro cap companies in US. Does anyone knows any ETF or Mutual Fund from US market which invest in small or micro cap? Like we have MOSL Micro cap 250 index.
Also how can we gain knowledge about small/mid cap listed companies in US. We know about Indian companies as we grew up there and used the products. But it is challenging to find small/mid cap companies. e.g. if we have to find wire and cable companies similar to Poly cab or any solar company, I have no idea to shortlist the company. So any pointer will be helpful
No of units will not increase, but NAV value will increase. This is same whether the fund is growth fund or dividend type(IDCW).
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Hello all,
I have a query after looking at performance of companies like RACL, SBCL, AngelOne ,MapMyIndia etc.
What should be the approach for a new investor when looking at companies with good result? Because these companies are in growth phase or already grown a lot, there valuation will always be on expensive side. What option does retail investor have in such scenarios? Does one wait for the correction in these companies or simply ignore these one and look for newer options. ?
This is not from a point of FOMO but when you encounter companies with good recent past record this question can be natural.
Thanks
There cannot be a standard one size fit all answer to all these companies. Its specific to each company. I can share my views about RACL . Auto ancillary companies are always dependent for their sales and price on big OEMs while.on raw material supply side they are dependent on big metal companies . So from both sides they are squizzed and hence not in a great position to expand their Profitability. So I sold it within weeks of realising this mistake. Since business model itself has no moat, I would.never care about its valuations. First business then valuations. Always.
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Thank you so much. This gives me a good prospective.
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There are always exceptions, the one just keep going. Example Mold Tek packaging. They should be squeezed from both sides as they do business with big companies. But they have created their niche.
RACL also seems like this. Going after high margin business, not going for mass produced vehicles but with luxury vehicle manufacturers.
These are my views only, do your own diligence.
Cheers
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Mold-Tek I am.holding. Its not.comparable to Auto ancillary companies. Mold-tek is diversifying into many sectors, be it Paints, FMCG, now even Pharma…And within each of these sectors, many big companies its working with. So they do have Pricing power. They are not totally helpless like auto ancillary. Correct me , if I am wrong.
Mold Tek does not have pricing piwer. Mold tek budiness practise is that allows it to earn good margins.
When you work with like of Asian Paints or Nestle or something and you are intermediary you do not have pricing power. They will just hung you dry to last drop to increae their margins.
What boxes they pack, others can also pack.
What they do to pack those boxes, others cannot do easily.
This is not mold tek thread, so will not discuss further.
Disc: not invested
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Is there any website where we can see industry category of each listed company? e.g. for each company, is there any place where we can see if it is finance or auto or chemical company? Not sure if this information is present in BSE or NSE website
On screener you can see from which sector it is alongwith its peer companies too.
I was looking for entire dataset of listed companies along with their sectors. It will be time taking exercise to go through each company on screener and finding its sector. Hence I was asking if this information is already available somewhere