Now S.P.Tulsian reco. P.I. as his multibagger idea 
_PI Industries_ has target of Rs 750, says Investment Advisor, SP Tulsian.
Tulsian told CNBC-TV18, “PI Industries is into agrochemical, specialty chemical, agri inputs like seeds and all that. The performance of this company has been quite good for FY11. The company has recently gone for stock split.”
He further added, “They have three plants, one in Udaipur, one in Ankleshwar, and one in Jammu. Recently if you see the Q1 results though the Q1 results of FY12 includes the sale of some Rs 30 crore odd gain, which they have done of the polymer compounding business because that was unrelated to their core business, so they knocked it off and made a gain of Rs 30 crore on that. But even if I take the net of tax liability, the company has posted a PAT of close to about Rs 48 crore for first quarter on a lower equity base of Rs 12.5 crore.”
“If you see traditionally Q2, Q3 and Q4 are always the best quarter for the company. Infact Q1 is the lean - least among all the four quarters for this company and this company has been steadily growing up their R&D and distribution network, probably these two are the strength of this company and that is why they have entered into an R&D. They have set up R&D center in joint collaboration with Sony Corporation, which has been recently setup and they will be ramping it up over the next couple of years and they have recently entered into a distribution agreement with an MNC also for distribution of agro chemicals.”
“So taking all these into consideration I am expecting that company should be able to post an EPS of close to Rs 42-44 for FY12 on a recently reduced face value of Rs 5 and I find tremendous value in this stock because talking the positive view on the agri inputs company and specifically on this stock if somebody can keep a view of about one year, they should be able to see a price target of Rs 750.”
However, there is no mention about CSM business in the whole investment rationale!!
Sandeep,
That is really good, as the element of surprise still remains
Ironwood Investment Holdings seems to have gotten stuck badly in essdee aluminium. If I remember correctly they had got around 1.8% stake in essdee at around 448 per share om all has around 4.88 % share. Currently the stock price is around 230 odd levels.
Maybe we should have a closer look at the company. Post merger of India Foils Essdee now has a huge capacity and has a big market in terms of FMCG and Pharma to cater to in the aluminium foils markets.
Anybody tracking this one?
Had met Donald last week in Bangalore and he had asked me to check out how Nominee Gold is doing on ground in Bhopal since I’m involved in farming in MP with some friends.
I sent someone to check and also spoke to the dealer in Bhopal, the salient points were:
Nominee Gold sells very well and it is more in demand than supply. This was the case last year as well as this year.
There has not been much marketing/promotion done in recent times that he was aware of. The sale currently comes from word of mouth amongst farmers and also the product
having worked well.
He was not aware when it was launched. And there are only 1/2 other folks who sell Nominee Gold in and around Bhopal.
Various other points related and my thoughts:
1). MNREGA has made finding labor expensive. Removing weeds by 2 people can take 2 weeks for an acre.
Applying weedicide on the other hand takes 1 day by 2 people.
With Bihar doing well nowadays states like UP, WB etc. have now started having dearth in labor. This also can drive weedicides up.
2.Weeds can use water so herbicides are important for water management also.
3). Direct seeding(wet seeded and dry seeded are 2 types of this) can be followed which is cheaper but this is more prone to weed attacks than transplanting. Direct
seeding also is better where rainfall uncertainity can be there. Transplanting is done by putting seeds with standing water on soil.
4). Nominee Gold is a preemergence weedicide whereas others like pretilachlor, butachlor are post emergence.
4). Bayer cropscience has some contries except India for Bispyribac Sodium using the trade name Nominee.
5). PI Industries has tied up with agri universities and this has helped them to scale quickly. Various contries have registered this in the last decade which implies
that this should do below for next few years in India as well.
Typically in absense of any knowledge farmers typically depend on fellow farmers to depend on weedicide recommendations.
Bispyribac Sodium is supposed to be less harmful to living beings.
6). PI Industries started with N. India specially UP and Haryana. I think they are strong here.
7). Godrej Agrovet I think is looking at patent for pyrimidinyloxybenzoic acid - this might be for a different process.
8). Monsanto who with Butachlor/Alachlor introduced weedicides in India had sold this division to Sinochem, China in 2008. This would also have opened some space for the other players.
Most of the big players typically have had these in their portfolio but they typically do not market as strongly. Also those having been around for quiet some time might not be effective as Weeds can develop resistance and hence new products need to be developed.
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Thanks a lot Saurabh for the detailed inputs. This is just great work! very valuable.
just trying to make things a bit more clear for everyone:
1). Nominee Gold - Brand Name - Chemical is -Bispyribac Sodium
2). Nominee Gold is a Herbicide - that when planted with the seed -protects the plant from Weeds.
3). The good thing to note is that Demand outstrips supply for Bhopal region. Awareness levels seems very high
4). From your comments, a natural query - Is Nominee Gold licensed from Bayer, with exclusive marketing rights for India?? If yes, then this has really been a coup for the company, Bayer having missed out in India! India crop market is substantially different from Bayers other markets?
5). Why is this Herbicide so effective/sells so well versus other Herbicides brands of PI itself viz: Altrazine, Fenoxaprop, Pretilachlor, Thiobencarb and that of Monsanto’s Butachlor/Alachlor etc.
You have mentioned that this is pre-emergence (seed) of plant whereas others may be post-emergence (plant). Let’s continue digging a bit more to establish sustainability of Agri inputs segment growth.
Any others Farmers? with farmer friends, please help collect field-level feedback
-Donald
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Nominee Gold is not under inlincensing from Bayer but is via Kumiai Chemicals, the original inventor/innovator company of nominee… Kumiai was the first company in the world who developed nominee with Bispyribac Sodium as active ingredient and bayer followed it after few years…
Rgds.
Thanks Mahesh.
Perhaps you can throw some light, esp on the chronology of registrations:
a) Looks like “Nominee” is Kumiai chemicals trademark registered in 1995 and ceased in 2004
b) Why did Bayer keep the same branding, and when did it first register it in some countries. and did PI register in India post Bayer registration in other countries?
c) What prevents Bayer from registering and launchingBispyribac Sodium based Herbicide in the country, if Kumiai patent/trademark has ceased from 2004.
-Donald
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Please have a look.
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Does this mean Bayer acknowledges Nominee is a registered trademark of Kumiai (see Trademark rights at bottom). Implies it would have signed a similar agreement like PI has with Kumiai Chemicals for India
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In which case, Its pretty clear that Kumiai will not allow Bayer India rights?
Hi Donald,
Kumiai is the original innovator of Nominee with Bayer I think having in-licensing arrangement with it for many countries like PI has in India… Both the companies, viz., Kumiai and Bayer share a long healthy relationship on this front which is evident from Bayers’ push and its victory for inclusion of bispyribac-sodium, the active ingredient of Nominee, in Annex.I of 91/414 EU directive (which is made very stringent recently) wef. 1st August 2011…
This will also indirectly mean more flow of orders for CSM segment as manufacturing of active ingredient for this product is taken care of by that segment of PI.
Rgds.
Mahesh,
1). The CSM segment upside is good news.
2). You have not answered whether Bayer can or cannot introducebispyribac-sodium based formulation in India?
-Donald
Of course not Donald… these are exclusive in-licensing arrangments and for India it is with PI…
Rgds.
**My Reply to a query of a member on another forum with rgds. to his apprehension that
Mr. Tulsian’s recommendations going bust… **
Agreed …but we need to go deep into the grassroots to see what is
happening…
The analysts which often come on Business Channels often miss the
ultra-fine details of the company and just recommend after doing just
top of the line homework based on the feelers that they receive from
markets ( in PI’s case it must be entry of Deutsche Bank & Sequoia
Capital in the company)… This they do mostly because of popularising
themselves in general public and gaining short-term profits out of
trading… However, such methods can’t work for too long as
ultimately its the fundamentals that will drive the stock price in the
medium to long run…
Now, in case of PI Ind., we can again see how less of the homework was
done by the analyst of concern which is evident from the fact that he
was not able to highlight the potential of CSM business (340 mn. USD
order-book) of PI and recommended it based on Agri-input segment and
Sony collaboration which is actually going to bear fruits few years
down the line…Having said these, we can’t ignore the fact that PI
Ind. is a strong company with great visibility of growth and the
target price that the analyst has put is much lesser then the
company’s fundamentals deserve…This I am not saying only now but am
saying it repeatedly since last 6 months or so when PI was trading at
a lower rate and no analyst had recommended it…
What I basically want to say is we can take analysts opinion to gain
ideas because of the ground level contacts and presence they have but
after having the idea we need to go deep into the concerned company to
assess the real potential of the company…We need to build
conviction ourselves to pin-point our entry and exit points for a
company and we should not go atall after anybody and invest blindly as
if we do like that it is only we are to blame and nobody else…
This is the basic reason why I am putting my detailed analysis on each
company I track for all to see and invite their views so that maximum
people can get benefited… Its only by sharing each of us’s
perspective that we will collectively reach to a logical conclusion
and benefit collectively…
If you or anybody has any queries on PI Ind. or Solar Ind., or for
that matter any company on which I have placed detailed analysis
report on this forum, do feel free to ask and I will try my best to
reply with utmost of my ability… I still maintain that **PI **Ind. is
the safest investment opportunity in current uncertain markets
followed by Solar Industries…
Rgds.
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I agree with all that Mahesh has put up.
Basically tulsian has the mandate to come out with 2-3 ideas almost 2-3 times a week. So I dont think he will have too much time to research individual stocks too closely. He may be depending on his assistants if he has a few or else as Mahesh says, sources his ideas from various places.
Regarding the query on the other forum donald mentions I also read it but I guess one should not read too much into it.
We should be happy that the stock is now being discussed actively on tv at a price much higher than where it was when it was placed on this forum. Shows that we are way ahead of these people.
In its latest issue dated 8th September 2011, Moneylife Magazine, in its cover story “6 Stocks for a Bear Market” recommends a Buy on both PI Industries and Solar Industries.
Dear Mr. Donad,
The Agro-chemical business of PI industries is very difficult to understand.
Fisrt, 60% of their sales is from their Agri-inputs: The products of this segment can be followed by only Agri related people. That is,market size of the products, market share,competitors for the products, major customers, upcoming of any better products etc.
Second, 35% of their sales is of Custom Synthesis business: Process development, patented molecules etc. Whether it is same asProcess development, patented molecules of Pharma companies?. How many molecules of the company is patented and for how many years? This segment has to comply many authorities for acceptance in Europe & US. (We might have seen news paper report about warning letters and non-approval of plant, process, molecules etc of Aurobindo Pharma, Dr. Reddy’s, Cadila etc).
Company is the only source for each and every information about their products. In my opinion, it is a dangerous sign.
Now, every thing is going fine and bullish sentiment prevails. However, one has to be very cautious as negatives (such as order cancellation of custom synthesis business) can be revealed by the company only at a later date. Exit point will be very difficult.
Hi Mr. Sivasubramania,
When one thinks of equity investment based on thorough research, he/she has to go deep into many companies (as Donald does) as well as their operational segments and such operational segments are many and not confined to one or two… If one’s knowledge and research gets confined to one or two operational segments then its more of a Top-down approach rather than Bottom-up approach…
Secondly, each segment other than our core, is difficult to understand and one has to spend many resources, especially time and effort, to understand the segment… An Equity Analyst focussing on Bottom-up approach has to go deep into the segment he picks and he can’t just say that its difficult to understand…
Thirdly, Equity Investment is like a business of investing into a management because it is afterall managed by guys other than us… Hence, we need to go deep into the credibility and capability of management before making investment… After doing that, we need to rely, to an extent, on the management words and we need to cross-check their saying as also look at their history of commitments… No investment can be made without trusting the management (ofcourse not blidly trusting them)…
Now, specifically with rgds. to PI Ind., I think you have not got into the detail of the business model of PI and I request you to read all 4 pages of this forum on PI and grasp it properly and you will find the answers of many of your queries…
Lastly, every equity investment is prone to risks and we need to assess how de-risked business model of our investment is… Always look for long term investment and try to predict where the company will be few years down the line only then one will be able to invest prudently…
Rgds.
…
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Dear Siva
I have been travelling…hence the delay in responding.
1). Conviction is something not easily transferable. You have to do your own due diligence. Agree with you it is mostly company fed information - and we are trying to corroborate things slowly.
2). What you can do - read the last 10 years ARs - Mahesh has been kind to send us all- that’s what I started with. It showed me that the custom synthesis business was built brick by brick -over the last 14 years - that they now can boast of a $340 mn order book. the concall transcripts also help
It may be difficult to understand, but exactly why its worth making the extra effort to understand it - that is also the opportunity - the rewards can be proportionately that much higher! The Quality of the business is superior to most other opportunities around - but you need to judge that out for yourself. See the Capital Allocation thread for pointers on Business Quality,http://www.valuepickr.com/forum/valuepickr-scorecard-aug-2011/399834292 Link: …/…/…/valuepickr-scorecard-aug-2011/399834292
If we keep making the effort, there is no reason we can’t get to understand the business better. Meanwhile keep asking farmer friends & pharma friends to corroborate different elements of the story.
-Donald
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Dear Mr. Mahesh & Mr. Donald, I think I could not explain my question in detail. I wanted to share my two decades experience (last 15 years actively)in shares with you as most of the members came out with their honest opinion which is very rare in any professional financial site.
I could make good money only in simple business model companiesof consumer oriented products/service where I could also track the news from other sources/ media etc. Sectors of this nature are Banks, Consumer durable, FMCG segment etc.
I am in service with a large mining PSU and I can understand the business of Solar Industries better than a common man. Common man may not be aware of mine accidents which stops mining activity immediately. Onlyvery major mine accidents are reported outside. Normal mine accodents (including many fatal cases) are suppressed and managed through large suppliers. Suppliers are compensated later by the mining company. So supplying company’s margin will always fluctuate.
My purpose was not to post a negative report about the company. I just cautioned that only relying on company’s guidence may prove dangerous.