Hello all,
What screeners or growth parameters we should use to determine a growing company seeing fundamentals of almost all companies have changed in the last year
Hey.
I have a few questions about contacting the Investor Relations dept. Iām assuming it would be better to send them an email rather than calling them.
Can I contact the investor relations dept if Iām not holding any shares in the company?
Also, does anyone have a sample email sent to the IR dept that I can read through?
what is the significance of tracking a companyās CWIP to GROSS BLOCK ratio ?
@Harish_Pareek
Depends on oneās style of investing. Personally, I prefer to use -
- Sales growth YoY
- EPS growth YoY
- ROE
@ExpelliMS
I have emailed investor relations a few times and never been asked whether or not I hold shares in the co. Even if they were to ask, Iād buy 1 share, email them and sell it once I get my answers.
I know of people whoāve attended AGMs after buying just 1 share, for the sake of it and then selling it after attending.
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@Harsh04
This helps in filtering companies that have an ongoing or a recently completed capacity expansion.
For example, Alembic Pharma had a sudden increase in their CWIP in 2018 and this was one trigger to start looking into the co.
To put it crudely, this number could help one determine which crops are potentially ready for harvesting.
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On a different note if this ratio remains perpetually elevated, could also point to unsubstantiated capex. One needs to understand the context though 
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I read somewhere that CWIP normally cannot be verified by auditors and they have to take the mgmtās word for itā¦
so my question is, Does a sustained high CWIP to GROSS BLOCK without subsequent increase in Fixed assets on balance sheet indicate conclusively that mgmt is siphoning off money ?
or even with a increase in fixed assets, can there be a red flag ?
orā¦am i just completely off track with my question aboveā¦
@Worldlywiseinvestors The context is important indeed. spot on
@Harsh04 Yes there are cases wherein money gets siphoned off for other stuff in the name of Capex. One reputed listed builder had been doing this and some analyst did actually figure this out.
Logically CWIP should eventually go into fixed assets.
However, at times, some companies do include (perhaps shadily) interest costs and operational costs towards new projects (particularly ones with longer gestation periods) under CWIP and this portion of CWIP doesnāt go into fixed assets.
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This is my first post. I have a basic query ( Source for all information is screener.in)
I cam across Suumaya Industries Ltd [BSE: 780011 NSE : SUULD]
Tremendous increase in Revenue and Profit in Past year
However, in the cash flow i found almost all payments is due in receivables . In fact they also havenāt paid people and their payables is also exceptionally high,
So they reported Profit , but cash from operating activities is still negative
Same is reflected in higher Debtor days
The share price has gone significantly high in last 1year
I want to understand is it a normal case for growing business or they cooking their books
Apologies if the question is too basic
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Did you find any satisfactory answer to this? I am also keen to know
@barathmukhi @Worldlywiseinvestors
I heard this many times, where some companies expense their capex on p&L does that mean this value never goes into CWIP / Gross block (Sorry if question is not clear or dumb, often I heard this Laurus case )
Also how to quantify the capex spent on IP (Intellectual capital, for example money spent on R&D, patents, scientist etcā¦ )
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Basically, they take preoperating expenses via the P&L and not the balance sheet. Some companies show preoperating expenses, R&D expenditure and interest expense as a part of Cwip. What Laurus did was conservative accounting, they could have easily showed lesser expenses on P&L. They didnāt choose to, which is a good accounting policy in my view. On the other hand, Alembic Pharma capitalized preoperating expenses and R&D expenditure. Nothing against the business as capitalization is allowed by accounting policies.
Intangible asset creation on the Balance sheet and R&D expenses shown in the annual report will help you to identify the amount the business is spending on R&D, intangible assets like Computer software and Patents and their worth on the B/s. Some intangible assets though never get measured. Eg-: Brand of Maggi owned by Nestle. This is where accounting lags
Another draw back is what if we have superb managements like Mr. Narayan Murthy, even that is not possible to recognise as a part of intangible assets. Accounting like all the things in investing is roughly right and lags in some areas
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@Worldlywiseinvestors is spot on.
Adding to what he has said, take the example of Gulshan Polyols in 2014, which increased its assets by 44 Crs in 2014.
Did assets increase because the co. retained its earnings from the previous year? No, because FY2013 retained earnings were much lesser than 44 Crs.
There was no significant reduction in their working capital requirements either.
That means that a good portion of the increase in assets should have come from debt.
Debt actually increased by 50 Crs in 2014.
Assuming a minimum interest rate of 10% per annum, this would mean an additional interest outgo of 5 Crs.
But surprise, surprise, instead of increasing by 5 Crs, their interest outgo actually decreased by 70 Lacs.
How can interest exp reduce in a year when debt has gone up? The answer lies in their accounting poilcies.
Although, how much of interest should have been charged to the P&L would be open to debate, essentially mgmt was saying, we will not defer gratification, inflate our profits this year, kick the can down the road and instead of charging interest to the P&L, we will include it as a part of fixed assets+CWIP.
Why show an expense when we might as well hide it? 
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Not really. I guess the reason must be similar to what one of the above replies says, but that doesnāt make for a compelling case IMHO. Perhaps we should ask the managements directly in the concall or AGM to understand their perspective.
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Hi,
Starting the basics of understanding fundamentalsā¦
Am reading Beating the street by Peter Lynch. He is talking about comparing the stock price to āearnings lineā - Looks like a logarithmic comparison of the stock price starting at 1$ and PE starting at 15.
I am guessing this is relevant in India Scenario also (maybe a slightly higher PE)
Is there a tool or way to get or plot this earnings line ? OR if someone can say how I can download screener data and plot the line, that will also be good.
Many thanks for your comments,suggestions.
The observation is correct. Company seems to have reported sales but its not realized into actual money. This can happen due to many reasons. Say company wants to gain market share and decide to take profit later or delayed profit. This might not be good.
For your question of ānormal caseā. Usually Debtor days in Indian business is between 30-60 days. This is āusualā. It really depends on business to business and also how the company genes policy has. Some companies really have cash first policy, so they will not give on book(receivables). Good business usually have less debtor days. Great business sell with cash and raw materials are received with credit. So you can make out, in these cases company does not need much money to run their day to day odds.
This is personal feeling looking at the business of this company, since they are in fashion business, I feel they are trying to show the sales and also due to pandemic situation their payments might be on hold. But waiting 10 months for payment is too much.
I will leave you with the question āHow are they financing their operation then?ā
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A company is making Conference Call with respect to the Unaudited Financial Results and not posting the details of meeting held. Can we ask the concall details from company?
Search on youtube for trendlyne and alphastreet india , they upload a recording of the concalls of all major companies.
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yes. Check the investor relation address in their AR you can send mail or call them. Following is example from VST industries limited.
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