Author: Vivek Bothra

Is market screaming buy?

I recently shared my review of Symphony limited with subscribers, you can get a copy here

One of the things that stood out was how luck has played a huge part in my returns from this position. See below table

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2013-14 (Mar)
2017-18 (Mar)
Increase (X)
CAGR
Q1 FY19 Current
Revenues (INR cr)
503.41
852.39
1.7
11.1%
701
Net profits (INR cr)
105.72
192.55
1.8
12.7%
130
PAT%
21%
23%
19%
Market Cap  (INR cr)
2800
13400
4.8
36.8%
6900 (Sep 2018)
PE
26
70
2.6
53

For the last 5 years, Sales and Profits grew at 11-12%, however, I got lucky as the … Read the rest

Suven Life Sciences – Building multiple pillars of growth

I have written about Suven multiple times, you can read previous updates here to get familiar with the company

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2014 – Introduction to company
2015 – Identifying multiple triggers embedded in company and way to value it
2017 – An annual update on the thesis last year
I am mightly impressed how this small company has built multiple pillars of growth, In space of 9 years they have built two revenue pillars while enhancing their core CRAMS offerings
All figures in INR cr except % 2010-11 2015-2016 2016-2017 2017-18
Base CRAMS [Balancing Figure] 87 244 253 324
CRAMS Commercial Supplies 0 0 34
… Read the rest

Management Intentions can’t be calculated in Excel

In the year 2018, I have been rubbed wrongly thrice now by controlling stakeholders (Management)

  • Fraudulent disclosures (ASX GSX)
  • Ungainful dilution (ASX LBT)
  • and now this one ..

this is my learning from investing in LEEL electricals.

I created this position at ~1100 crore, My initial thought process was company has sold its consumer division for an enterprise value of Rs. 1550 crores, on debt free cash free basis.

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The overall borrowings were ~1000 crores after paying off everything they would still have ~550 crores and a business left
I was paying 550 crores and getting a business with sales
… Read the rest

Two years and No returns

My Last year’s review of Ashiana can be read here

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The real estate industry continues to be impacted by oversupply and demand pressure, this graph from their detailed investor presentation points out the fact, The lead indicator which is Area booked continued to be at the same space like last year and realization are flat
The Area Booked, however, is improving from last three quarters and we need to track sustainability of the trend

 

Like all years their annual report is very informative and management is clearly indicating that they are seeing this as an end of a downtrend for real estate markets for their key operating markets . The company has identified Bhiwadi, Jaipur, Gurgaon, Chennai, and Pune as key focus markets. 
… Read the rest

75 hidden gems Article

Recently I wrote an article for special edition of Indian Economy and Investing – 75 Hidden Gems

This is reproduced for you below. I am long on stock not traded in last 90 days

SATIN CREDIT – CASTING AWAY DEMONITISATION DEMONS

Satin Creditcare is a large microfinance company providing collateral free, microcredit facilities to economically active women in both rural and semi-urban areas. Satin Creditcare Network Limited(“Satin”) was conceptualized and founded in 1990 by Mr. HP Singh – a qualified Chartered Accountant with over 25 years of experience in retail finance industry. In around 27 years since its inception, Satin today is India’s second largest MFI (as of Jun 2017) having started its journey with individual microloans to urban shopkeepers. Today, the Company has an established, scalable and a sustainable business model. On a consolidated basis, Satin had an AUM of Rs. 4,493 Crores as on Sep 30, 2017. SCNL offers its clients a variety of loan products under the MFI segment. The company also offers a bouquet of financial products in the Non-MFI segment (comprising of loans to MSMEs), and business correspondent services & similar services to other financial Institutions through TSL, a business correspondent company and an 88% … Read the rest

Thomas Cook – Are sum of parts greater than M-cap

Below is a post based an edited note to Insider Subscribers

***

Thomas Cook (TC) now is a mini holding company which has multiple lines of businesses (a company which has 53 subsidiaries ) – A business analyst’s nightmare

 

Investment in TC is investment in Prem Watsa who has tremendous record of long term wealth creation, although I was not happy when he started a new fund in 2015 to invest in India in parallel to TC, cause at time of acquiring TC he commented that all new investments in India will be via TC however in his recent letter to shareholders he has made it clear that only related business (read travel and hospitality) will be acquired by TC rest would go to Fairfax India as much as possible

Over time Fairfax Financial would prefer to have all of its Indian investments (as far as possible) in Fairfax India with the exception of Thomas Cook and its subsidiaries, Quantum Advisors and ICICI Lombard General Insurance Company Limited.

The management had said that they would not prefer one over another however this year’s chairman’s letter made it clear that non travel business would go Fairfax India way,This fact is … Read the rest

Canfin homes – The out performance continues

Previously I wrote on Canfin homes here

The sustained outperformance was noticed when I was reviewing GRUH and REPCO a few days back

****

GRUH Finance and REPCO homes both had decent year however when compared with Canfin homes there was performance was little subdued, which you will see in detail below

The top line (Loan book growth) was good for both companies including loan mix

Bottom line growth has clearly tapered down to 20s from 30s seen in FY12-14 years, both firms exercised good control on operational costs thereby continuing to reduce cost to income (C/I) ratio , GRUH following HDFC is having industry leading C/I ratio

On Contrary CanFin homes had an another fantastic year

Lending practices were tight with minimal net NPA

GRUH’s return metrics remain best in class however others are closely catching up

Overall both companies had a very decent year. But clearly, now 3 years in a row CanFin homes have outdone its fancied peers

Future variables to track

  • Loan book growth
  • Net NPA

If an individual has difficulty in buying viagra in uk gaining weight because of excessive stress, it will be relieved with this herbal ingredient. Likewise, take it while you are … Read the rest

Forecasting and Reality – Review of Suven Life sciences

I have previously written by Suven Life Science here and here

Reading and learning about Suven Life sciences has been huge learning curve, it has taught me few things

  • Forecasting in excel and actual numbers in real world are two different things, so one should not take their excel skills seriously. If you need a proof just refer my revenue and bottom-line prediction from last few years for Suven
  • Drug discovery is a long , hard and uncertain process and putting your odds is as good as throwing a dice. There are far few too many variables to model an outcome
  • Entrepreneurship is a long term commitment and as Investors, we are so lucky to jump the ship after a poor quarter, not the promoter who many times has put his/her everything on line

Reviewing 2016-17 performance of the company

Firstly numbers and management’s guidance for next year

 

All figures in INR cr except % 2015-2016 2016-2017 Growth 2017-18 E
Base CRAMS [Balancing Figure] 244 253 4% 291
CRAMS Commericial Supplies 0 34 100% 60
Speciality Chemichals 224 224 0% 224
Technichal Services 32 33 3% 33
Revenue From Operations 500 544 9% 608
Other Income 19 21 11%
… Read the rest

Why we get fat and what can we do about it ?

This article is not about investing love reading them go here.

Why I am writing on health on a financial blog – Cause true wealth is of no use without great health

Most of what I am writing below is my interpretation of a book by Gary Taubes Why We Get Fat: And What to Do About It . It’s a must read for breaking myths and our long held untrue beliefs.

What is the first thing that people tell us when they see us becoming fat?

Everyone will tell us to get our running shoes out and start burning those excessive calories. It’s indeed natural to think whatever we have gained can be burned off with increased physical activity.

Incorrect

The science tells us that obesity is ultimately the result of a hormonal imbalance, not a caloric one

as we very likely will work up an appetite

Is it true that we can increase our expenditure of calories, burn an extra 150 calories a day, say, or go from being sedentary to active or from active to very active, without changing our diet—without eating more—and without maybe decreasing the amount of energy we expend in the hours between our

… Read the rest

How I missed Canfin Homes

There is a beautiful passage in Steven Johnson’s Where Good Ideas come from

“Good ideas are like the neo nurture device. They are, inevitably constrained by the parts and skills that surround them. We have a natural tendency to romanticize breakthrough innovations, imagining momentous ideas transcending their surroundings…… We like to think of our ideas as $40,000 incubators direct from factory, but in reality they have been cobbled together with spare parts that happened to be sitting in the garage.”

This passage has a striking resemblance to how I look for new companies to invest, trying hard to find a hidden jewel in an obscure corner outside BSE 500 without realizing that many of them are tangled in many spreadsheets stored on my PC

Let me run you past one such case last year I was reviewing one of my existing positions GRUH Finance and unlike previous years I wanted to review GRUH not only in comparison to itself but to its peers – REPCO and Canfin homes. The reason for picking these two Housing Finance Companies  was

  • I also had REPCO in my portfolio so I will kill two reviews in a single seating 🙂
  • Loan book size
… Read the rest