Doubt Relief !!

[karthikmarar]

Well ... Life is full of unfulfilled dreams and unanswered questions, isnt it ?
No one bothered to respond to my repeated pleas on the 'riddle' surrounding Mysore Cements .

As if to appease me and provide my DOUBTS some RELIEF, Mysore Cements scrip has woken up from its deep slumber and starting rallying today (up 10% to 27.3 as I write). So maybe the turnaround (on the back of rising cement prices) is indeed beginning to take root.

Now really do I understand whay this thread has been titled DOUBT RELIEF !!

Thanks , Karthik, for your earlier analysis ( and mind you.... as a tip .... if the turnaround is indeed IN place, this scrip can yield 50 % gain in 6 mths ... after all, it is still well below its highs of 2005)

AGILENT

Agilent

Ya.. it was a nice move today on mysore cements. Let us hope it realy moves up further. Ofcourse looking at the ratios the turn around will really take a long and not going to be easy. Whatecer it is, if this move gives an oppurtunity to exit without loss, it will be nice. In future do have a brief look into the fundamantals before you put your money in small cap shares. It saves you from lot of pain anguish later on.

For the present 29 is the big obstacle for mysore cements. Hope for the best..

All the best

regards

Karthik

 

[karthikmarar]

Hi Karthick,

I'm holding 500 IDFC @70. Could you please give an outlook on it for next 3-4 months.

Thanks
Mejo

Hi Mejo

There has been a lot of interest in IDFC among the members. So I thought of doing a detailed analysis to see where it really stands. What I see is very encouraging in the long-term perspective. It is a very good long term investment and most probably turnout to be multi-bagger.

In the 3- 4 months horizon I dont see a great increase in the stock value. The stock has been trading in a narrow range of 62 76. Even the excellent second quarter result has not been able to push the stock to higher levels. There is lot of resistance around 76. The recent attempt to cross this level also failed making this resistance even stronger. This may be because most of the future growth is already factored in the shares high valuation.


Now let us look at it with a long-term view. IDFC has emerged as one of the major players in the infrastructure financing business. Its business growth over the past few years has been about 40 per cent. IDFC has one of the strongest asset quality positions amongst the financial entities in India. It had lower than 1% gross NPAs and nil net NPAs at the end of FY05. Also the company is flush with funds for further investments.
The profitability parameters of IDFC are among the best in the banking business.
The Company reported a 39.5% rise in net profit in the second quarter ended September 30. The companys total income for the second quarter ended September 30, 05 rose 60.4%. For the first half, gross approvals and disbursements rose 67% and 54% for 48 projects respectively.

The rate of approvals for fresh projects is impressive. The robust rate of approvals indicates that disbursement growth in FY 2006 will remain high.
IDFC had invested in such companies as Bharti Tele-Ventures, Gateway Distriparks, Indraprastha Gas, Power Trading Corporation and Jet Airways. These venture capital investments have paid off and IDFC is sitting on sizeable unrealized gains.

IDFC is already in high growth trajectory having financed nearly 25% of the total infrastructure outlay in the country in FY05. It is a stock worth accumulating at every dips.

Hope this helps.

Warm regards

Karthik

 

[mohanlate]

Hi Mejo

There has been a lot of interest in IDFC among the members. So I thought of doing a detailed analysis to see where it really stands. What I see is very encouraging in the long-term perspective. It is a very good long term investment and most probably turnout to be multi-bagger.

In the 3- 4 months horizon I don’t see a great increase in the stock value. The stock has been trading in a narrow range of 62 –76. Even the excellent second quarter result has not been able to push the stock to higher levels. There is lot of resistance around 76. The recent attempt to cross this level also failed making this resistance even stronger. This may be because most of the future growth is already factored in the share’s high valuation.


Now let us look at it with a long-term view. IDFC has emerged as one of the major players in the infrastructure financing business. Its business growth over the past few years has been about 40 per cent. IDFC has one of the strongest asset quality positions amongst the financial entities in India. It had lower than 1% gross NPAs and nil net NPAs at the end of FY05. Also the company is flush with funds for further investments.
The profitability parameters of IDFC are among the best in the banking business.
The Company reported a 39.5% rise in net profit in the second quarter ended September 30. The company’s total income for the second quarter ended September 30, ‘05 rose 60.4%. For the first half, gross approvals and disbursements rose 67% and 54% for 48 projects respectively.

The rate of approvals for fresh projects is impressive. The robust rate of approvals indicates that disbursement growth in FY 2006 will remain high.
IDFC had invested in such companies as Bharti Tele-Ventures, Gateway Distriparks, Indraprastha Gas, Power Trading Corporation and Jet Airways. These venture capital investments have paid off and IDFC is sitting on sizeable unrealized gains.

IDFC is already in high growth trajectory having financed nearly 25% of the total infrastructure outlay in the country in FY05. It is a stock worth accumulating at every dips.

Hope this helps.

Warm regards

Karthik

Hi Karthik,

And the most important plus in the investment rationale for IDFC is that the company is spearheaded by Mr. Deepak Parekh of HDFC. No wonder why we see so much similarity in the profitability ratios and NPA numbers. Also check out the OPM figures. Consistently above 80% for last 5 years. Fantastic !

In my view, the biggest growth asset IDFC has is that its management team has in depth expertise in understanding the businesses of the domains they invest in. It is the same with HDFC. They understand the business models so well that the chances of their investments turning into NPA is very slim.

Definately a "must have" in your portfolio for long-term investment.

Karthik, how would you compare IDFC with SREI ? SREI is trading at a FY06 multiple of 20 something while IDFC is at 40.

Thanks,

Mohan

 

[karthikmarar]

Hi Karthik,

And the most important plus in the investment rationale for IDFC is that the company is spearheaded by Mr. Deepak Parekh of HDFC. No wonder why we see so much similarity in the profitability ratios and NPA numbers. Also check out the OPM figures. Consistently above 80% for last 5 years. Fantastic !

In my view, the biggest growth asset IDFC has is that its management team has in depth expertise in understanding the businesses of the domains they invest in. It is the same with HDFC. They understand the business models so well that the chances of their investments turning into NPA is very slim.

Definately a "must have" in your portfolio for long-term investment.

Karthik, how would you compare IDFC with SREI ? SREI is trading at a FY06 multiple of 20 something while IDFC is at 40.

Thanks,

Mohan

Hi Mohan

Very rightly said. Thanks for pointing out this important fact about the management team.

Yes, Mohan the comparison between IDFC and SREI is quite interesting, isnt it.?

The scale of operation of SREI is much smaller compared to IDFC. Sales turnover for FY05 for SREI was 129 Cr compared to 718 Cr of IDFC.

SREI has got a higher EPS (5.31) and Book value (30.5) compared to that of IDFC (3.04 & 18.89). Also SREI paid a higher dividend.

Looking at these figures SREI should command a higher valuation.

But the comparison gets interesting as you look at the other figures for the last three years.

The sales turnover, OPM and PAT of IDFC has been rising at a very fast rate for the last three years. In the case of SREI the rise is rather pale compared to the IDFC figures.

It is obvious that the growth of IDFC is on fast track. I think that the higher valuation of IDFC can be attributed to this high trajectory growth.

(I would have loved to put the comparison figures here. But it would make this post very big and unreadable... )

Best regards

Karthik

 

[mohanlate]

Hi Karthik,

The reason why SREI cannot command better valuations than IDFC is also because SREI has negative cash flows and a high D/E ratio. But just look at the operating ratios. In spite of being such a small company, SREI's operating efficiencies are so close to those of IDFC which is a leader in the NBFC sector!

Yes, SREI is not growing as fast as IDFC. But SREI is more profitable as compared to IDFC. SREI ROE grew from 9 to 18% in 5 yrs as compared to IDFC's growth from 10 to 16%.

I guess SREI will be rewarded a better P/E once their cash flows turn positive and they do some debt restructuring. It may take them a couple of quarters to reach there. Am sure IDFC wont be left far behind themselves.

It will be exciting to watch these two companies in the coming years.

Thanks,

Mohan

 

[anilsharjah]

Dear Karthik,

Thank you for the reply ( Hindalco).

I am sitting on some gains from 3I infotech, balapur chini and Ge Shipping . Is it advisable to enter Reliance Ind. ( RIL) Present position. I am confused about de-merger plans and much discussion about this. What will be the effect in RIL ? . Waiting for your advice.



Anil Kumar.

 

[dheerajmehta]

Hi Karthik,

could you please tell me why ginni filaments has hit lower circuit today?..i jus know its IPO was supposed to open today....if you could shed some light on what has happend...i'll be very greatful..

Regards,

Dheeraj M

 

[karthikmarar]

Dear Anil and Dheeraj

Sorry... I am not in a position to answer your queries as I will be travelling to India for my vacation. Will be back soon... till then please bear with me.

Thanks

warm regards

Karthik

 

[gopii]

hey karthik

have a nice holiday in india and we wait for u.

all the best
b rgds
gopii

 

[murthymsr]

Dear karthik,
Have a nice holiday in India with family and friends.

Though not posting queries, I was reading your answers and trying to
understand the logic behind them with the help of charts, as part of my
Technical Analysis ducation.

May be the 'Ekalavya' style of learning.

murthymsr