Precision wires : Is stable growth company, They are not very aggressive… My reading of the sector and the company is …last two years climate has been slow so they have not expanded…They are 100% market leaders in their segment… evident from there ratios…Further they are producing higher end cables (more value addition) in the last few years… This knowledge come from being in a similar sector… they are definitely ahead of the curve… all monies made are reinvested in the company … they are not diversifying into real estate etc etc… like most other companies facing slow down… that makes me comfortable … that they are focused on creating better value within their business
Modison : again niche producer … high quality products for the electrical industry … slow down in the power sector has affected both these companies … Modison faces competition mainly from Chinese producers but the Chinese quality does not match up to them… I have heard this from multiple of their customers.They create custom made products which really helps the company…
To answer your question on scalability… i do not think either will be doubling their capacity in the near future… but should see stable 15-20 % growth year on year.
I believe its a sound investment strategy to book profits at regular intervals, based on macro factors and setting a threshold for profit for oneself (say @ xx% profit, I am getting out). It is my hunch that the market will correct after the Budget because in reality, the macro factors that existed during the previous regime have not changed. This will take a long time to correct.
Now I may be totally wrong, because the Indian stock market is more like a casino than a stock market.
I agree, 60-70% price rises in 6-8 months, without change in fundamentals is absurd (In fact in Ador’s case deteriorating profits). I also believe corrections are due, I do believe in the India Growth story but its definitely not happening overnight.
Stocks move from a period of underownership to overownership. What we have seen in last few months is only a slight change in ownership. Markets discount everything what is avb on media …inflation macros fed fomc iraq etc …its the surprise which moves them. And in hindsight everything seems explained .A bull market will always start on skepticism ( like we all are ryt now) will mature on good news coming out and will blow out on euphoria.we ll know of euphoria when every tom d…and harry will be suggesting stocks for quick money. People in india are stilll fearful of owning stocks. We need to wait for the frenzy.
The above talk is completely independent of fundamental stock picking. A good scalable business with honest management should be brought a good price and should be hold on to irrespective of market cycles. The eight wonder of this world is power of compounding.
I am surprised by your advice. It makes sense to book profit if the stock is overvalued or fundamentals deteriorated. But booking profit just because it is gone up by 50-70%? In mid, small and micro stock universe when the gap between value and price is closed you often see huge run up. Some times in multiples. Recent examples that I can share from my portfolio- SRF, Ajanta Pharma, Atul auto , Aurobindo etc. Typically you see power law in your portfolio returns. Few stocks give you most returns. If you happen to sell those early because they have gone up by 50-70% then you may lose out on returns in the long run. I understand traders frequently say you can’t go broke by taking profit. It makes lot of sense there because chances of going broke are very high in trading as you are not investing but speculating and it makes sense to take the money and run.
Girish, my view is based on the belief that the markets will correct after the budget. Presently, almost every scrip is trading near its 52 week high or lifetime high. Time to take money off the table and return later.
I do not disagree with what you have stated. We are both entitled to our view.
I like graphite india. A solid company in a very cyclical slow growing industry. They are mostly depended on Steel industry growth.
They have moat which most people do not realize inthat the industry is slow growing so adding new capacity is not much interest to new players. So this way the company has good down side protection. Graphite India management understands this and manages downturn well.
But to make money in this company, in my opinion is to catch the cycle of steel industry growth.
PWIL, incorporated in 1989, manufactures copper winding wires, Continuously Transposed Conductors (CTC) and Paper Insulated Copper Conductors (PICC) which are used in manufacturing of rotating as well as static electrical equipment.
Installed capacity of 34,140 metric tonne per annum.
Demand of PWILâs products is linked to the investment scenario in power sector, transformers, automotive and consumer durables.
Established track record in manufacturing copper winding wire
Established and repute clientele
Strong distribution network.
Low profitability due to limited value addition and its presence in a competitive industry.
MARKET CAP (Rs Cr): 148.01 Crore
BOOK VALUE (Rs): 174.86
INDUSTRY P/E: 27.46
EPS (TTM): 12.49
FACE VALUE (Rs): 10.00
Their growth has been constraint last 2-3 years, I believe the power sector should pick up now and they are poised for good growth then.
Very sound management, Debt Free company, with good dividend policy.
They are a cut above their competitors due to established position in the industry, due to margins not being very great very few people entering this industry. Takes a large capex to set up new facility.
I do not follow Graphite India but took a quick glance at the financials after this thread. Immediately observed that ROE is low. It is barely around required return on equity for this firm in my opinion. Yes it was a value buy below Book value (< 84) with good dividend. I agree. Now it is 1.36 times BV. It looks overvalued for current profitability. I assume people presume profitability on equity capital will improve going forward. But 10 year average ROE is only 17%. So we are expecting the future that is lot different than the past decade.
Again these thoughts are only based on a quick glance.