I am not sure whether anyone has looked at segment wise number. Particularly Unallocated Capital employed is Rs 138.81 Cr during December 15 Quarter vis a vis Rs 16.80 Cr during December 14 quarter.
Unallocated capital employed is around 43% of total capital employed. To an extent it might be Cash and Bank Balance net of debt, but still, would it not great that the company buyback share/pay of debt/declare interim dividend then to hold cash to drag on ROCE.
Dhiraj Ji, any senior level appointment takes 6 mths or at least 3 mths. 3-4 rounds of interviews, background verification, final offer, notice to earlier co, relocation and then joining.
Cheers
Vijay,
My point was to appoint a CS or any other compliance person to appoint as CFO rather then Mr. Sabu. That is generally what I have noticed in the companies. Also, while recruiting CFO, one would definitely take time to do background check and other points you suggested, but same CFO is relieved on same day as resignation (which is what has happen in Kitex on Jan 8)? I find this bit unusual.
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First there was some controversy related to cash on balance sheet, then sudden resignation of CFO and after that Mr Subu taking over role of CFO⌠somehow I do not feel comfortable with the sequence of events. Was thinking of investing but now would stay away from it.
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Can someone think of a positive scenario for this huge miss like big shipment en route to client.
I cannot think of any such scenario and would like to know if you can come up with any?
I donât mind few muted quarters but as per management their order book is full for current year and they are not taking any new orders. With full order book and so much demand, management shouldnât have any problem in meeting their guidance of 600 crores revenue and based on Q3 numbers, reaching 600 crores looks quite impossible.
Well, I am eagerly waiting for conference call. Please share if you have conference call details.
Disc: Invested.
I have no stakes here but it is no brainer that it was not for concentrated portfolio. Q3 nos. in itself should not worry but does the promoter look like having potential to become a biz leader rather than a political one?Many a times thought about converting page into Kitex but softer aspects prevented me. Just think about Genomals (Page Ind.) who come from outside, set up a huge biz in Karnataka having tens of thousands of employee without any political trouble. This guy is a localite and takes confrontation from all kinds of folks. Even CFO resigns without any notice. Why doesnât he threaten to move outside state and create pressure on the state govt. if everything is so genuine? Why distract yourself by involving in nonsensical panchayat polls?
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Somehow despite the smell I remained IN to wait for management to clear the doubts, now I have no option other than to book losses with a learning. It happened with me on many occasions where I was able to pin point the issue but didnât hear the inner voice despite sharing it in black & white with friends / boarders.
True⌠there is no free lunchâŚ
One of the things that I look for in seasonal companies preparedness for a big quarter is their inventory buildup before the big quarter. For example incase of Kaveri Seeds where the first quarter is the most important quarter the reported inventory numbers in Q4 of previous year gives an idea about their sales upside in the Q1. This is easier for companies where we have balance sheet available in the preceding. In the present scenario in Kitex where we do not have balance sheet number one thing that I look into P&L is under expenditure I look into Changes in inventories of finished goods work in progress and stock in trade, a very high -ve number (since it is under expenses) relative to sales here can indicate a build up in finished goods, raw material etc. An absence of it requires us to have better idea about capacity utilization levels to indicate anything about a big quarter.
Although it is a crude indicator but it is the only indicator that I have to peek into a big quarter ahead in the absence of a balance sheet.
Disclosure: Not invested in Kaveri or Kitex. No trades in last 6 months.
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Just went through the financials of Kitex
Balance sheet shows good capital reserves in relation to share capital. But also debt equity ratio is 0.6 though itâs coming down. They have very less money in current investments but maintain huge bank balance (200 crores in cash against few lakhs in investments) suggesting poor return on cash in hand.
Otherwise not significant changes in trade receivables or payables part.
Their net working capital is coming down coz of efficient management of Inventories whose turnover has gone up from 8 to 19.
Good cagr of sales and eps but a point to make is earnings growth outstrip sales growth by more than 4 times that makes us to think. Sales went up from 440 to 511 but earnings went up from 10 to 19â:flushed:
If you dig in, though the sales have gone up the cost of goods sold has come downđł- does that mean efficiency. Maybe efficient inventory management is having effect here.
If you look at cash flows operating cash flow has grown only 10% but free cash flow up by 120 coz of Capex has been reduced to more than half.
Return ratios like ROE and ROCE are excellent.
So overall though they are not making good use of cash in hand. They are managing the business very efficiently which is making them to report good profit. But for it to be sustained, the sales also should match their earnings growth.
Regarding promoter holdings - they consistently hold above 50% with no pledging.
Would like all of you to go through this give your valuable feedback.
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Guys, I have been an active reader of this thread for a while now. I refrained from posting since there were too many red flags for my liking. I believe that in a universe of 4000+ stocks there are a lot of other options which let you sleep peacefully at night even if they do not match Kitex garmentsâ growth profile. I have seen sheer optimism in this thread change to high pessimism lately.
However, that said one is not guilty until proven. Let us remember that this business model is very strong with a competitive advantage - provided its operations and numbers are authentic. I am passing no judgement on it whatsoever and I do not believe any one on this thread can prove anything as of now.
As far as the quarterly aberration is concerned - as investors we cannot expect the business to grow linearly. Business world is very dynamic where things change everyday. When we invest in a company and believe in the model and the people running it then we must give them time to allocate our capital effectively over a long period of time. I personally do not believe in constantly keeping a tab on quarterly performance of a company-lets be honest the fundamentals of a business do not change in a quarter. This is just my personal opinion and I understand that many will disagree with me.
For those people complaining about the management guidance - this is not the first time Mr. Sabu overpromised and under delivered. It has happened many times in the past so one should have taken it with a pinch of salt.
We will only get to know the truth now after the conf call or the AR. If an investor is still not comfortable then there is no harm in booking losses(if any) and move on. The important thing is to learn from the mistake. Every investment cannot be a winner.
Disc: Not invested.
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China has recently ended its three decade old one child policy. So more babies will be born in China which will create more demand. Chinese kids garment companyâs will add new capacities? Wonât this give competitive advantage to Chinese players because of economics of scale?
Toys R US started their 100 the store in China on 18th Jan, 2016. Donât know whether they sell children garments in those stores. if they sell wonât it not be ant an opportunity for Kitex?
Disclosure: Invested. No trade in the last 6 months in this stock. You are responsible for your money so do your own research and build your own conviction. My views may be biased. Bought at around these levels about a year back.
I have looked in the thread from time to time but havenât really followed it i.e to say havenât really tried to understand the accounts in light of the doubts expressed in the thread. This is my first attempt at trying to make sense of the company from the accounts POV beyond the declared PAT/EPS.
Reading the posts after the latest results, I revisited the company data I had with me (Does not include the latest qtr).
Per Profit and Loss statement (AR_14-15),
PBT = 141.67 cr
Tax = 43.15 cr (Current Tax = 42.17 cr / Deferred Tax = 0.98 cr)
PAT = 98.52 cr
Tax rate = 30.45%
Per Cash Flow statement (AR_14-15),
Tax paid = 36.38 cr
Tax Rate (Actual paid) = 25.7%
I am not too good with accounting or Forensics but if the Cash Flow tax figure of 36.38 cr (25.7% on PBT) is not fudged, the PAT could be relied upon. Note I have checked only the last AR. Is there a way to check the actual tax paid by the company?
The other case could be that the cash balance is genuine but the management has diverted it for their own use and hence the excuse that it is parked outside India.
Other than that, I have rechecked my data and some of the basic calculations that I usually do and there seem to be no red flags i.e the PL and CF are in sync. If the books are cooked (or my data is incorrect) then all my analysis goes for a toss.
To sum up, my only real fear is the diversion of funds unless one doubts the cash flow statement tax outgo figures.
Again, You are responsible for your money so do your own research and build your own conviction. My analysis can certainly be wrong and views may be biased.
When a re-rating is done based on a quarters growth, guys should have questioned whether it can be sustained and that too in a textile sector. Never buy a stock in an euphoria. People should have looked at valuation. One cannot buy a stock , however fantastic it might be at 24 EBITDA multiple. Where is the MOS? Now it is 10 times EBITDA mutiple and I am buying.
My rerating of a stock is based on change in business fundamentals and I have not seen any deterioration in the business fundamentals. I dont get influenced by factors like CFO, Cash, etc where we do not have any full information where we can take an unbiased view.
The Company has not shown any negative growth in sales and profits, margins are intact and still growing and ROE @41%.
If my view is proved wrong, I will get out by minimising my losses.
Rgds
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Hi @sethufan,
Yes I concur with you. market is not a popularity contest. Do you have any idea when we have the concall for the result update? would be interesting to listen to mgmtâs commentry.
Regards,
Aksh
Disc: I was invested at lower price earlier, booked out at higher price after Q2 and entered with small exposure at a lower price before Q3.
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Hi all,
Disc : Invested and had very strong conviction in business and opportunity size. now very much concerned about the managenment
i still believe that business model is rock solid and present good opportunity size, but now questions really matters on the money management and quality of management.
Still our long lasting question still remains
- Very is the cash ( 200 crores )
- Whether the company has repayed the debt and debt free as stated in last concall.
- Give details of the cash being held.
If I or anyone get the concall details we need to drill the management very strickly to get the questions answered.
Why the hell Mr jacob is giving aggressive guidance and creating the pressure around him and company, when kitex is not a big company whose guidance does not matter ? He could silently give below guidance and over deliver.
Think he want to become a big shot in short time. Who is make him understand that it takes years to built a reputation and a moment to destroy.
Very much concerned because it finds a considerable amount of my long term portfolio.
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@sethufan If one looks at this quarters revenue nos on $ terms, revenue is down by 9% yoy (6% currency benefit led to a 3% decline on INR terms.)
@pankajs Regarding taxes, companies have to pay taxes in advance every quarter based on estimates. Thus, cash flow shows only taxes paid in cash during FY and not the actual tax liability⌠balance tax (actual liability-advance tax paid in FY) can be paid after end of year while filing returns.
Does anyone know if a concall is being scheduled in near future by the management to discuss Q3 results ?