Virat Industries

The company manufactures and exports quality stocks to mainly European markets and Middle East… Some of their customers are John Lewis and Ted Baker in UK, Shoe Mart in Middle east and Migros in Switzerland…

They are approved suppliers to PUMA in UK…

Sales have increased 25.8% QoQ from 5.50 to 6.92cr… (3 yrs growth is 15.23 % )

Cost of materials have increased by 11.7 %…

Profits by 107.5 % and Tax expenses by 109.7 %…

**MCap = 13.97 cr **( **Too risky **)

and its in PCAS

Dividend yield = 5.30 %

Pe = 4.04

CMP = 28.50…

EPS = 7.06

disclosure- Nil… Tracking

Can anyone caution if there are any red flags in balance sheet/company/promoters ?

( Quality of business not satisfied.They lack ‘brand’… But felt the valuations are cheap )

Microcap with good ratios. MDA of 2013 AR of the company has a nice descriptions of the oppurtunity/risk involved.

Plus Points:-

  • ROE/ROCE increasing every year and are now 20+
  • Low PE, High Div yield
  • Positive cash flow

Negatives:

  • Unknown management credentials ???

  • Unknown moat - What special thing they poses, which will make customer comes to them year after year. This spurt in sales might have been come due to weak rupee ?

  • Unknown moat #2 - Why cant exporter from Bangaladesh/Vietnam/Philipines can out-compete them?

  • High dependence on export. Forex fluctuation risk. There have been cases of EU backslash against Chinese dumping.

  • The advantage of Turkey for exporting socks to EU cant be ignored

  • PCAS

Thanku Subash…

Came across more info - http://180stocks.github.io/day-17/… Due to Pratyush, who is always ready to help/guide… thanku…

Charlie is Charlie…Excerpts from his essay

Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns 6% on capital over 40 years and you hold it for that 40 years, you’re not going to make much different than a 6% returnâeven if you originally buy it at a huge discount. Conversely, if a business earns 18% on capital over 20 or 30 years, even if you pay an expensive looking price, you’ll end up with a fine result.

So the trick is getting into better businesses