Month: June 2013

Update: This stock really is Not a Multibagger.  Since the Valuation change it is No Longer a Multibagger in our view.  You can check other stocks from our latest Multibaggers pack.

https://futurecaps.com/tag/multibagger/

Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.

In this article we would like to evaluate the Multibagger Potential of Can Fin Homes Ltd.  The primary attraction is this Branded Institution is quoting below Book Value.

About: CFHL was promoted in 1987, the “International Year for Shelter for the Homeless” by Canara Bank in association with reputed financial institutions including HDFC and UTI. Now NHB is also an important equity holder in CFHL.

Website: http://www.canfinhomes.com/

Let us start the job:

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow
Durable Competitive Advantage	Company provides attractive interest rates, but bigger player exists in the arena, the solid growth in housing loans remains the core potential for our company.  The recent management restructuring had paved 30% growth in EPS compared with the 10% growth for past 10 years.
Future Growth Drivers	India’s home loan market is growing in rate of 30%.
Conservative Debt (long term debt < 3 Net Profit)	No.  The total liabilities is around 300 crores & latest Net Profit is 55 crores, so the formula does not match.  But eventually Banks & Financing companies have high debt ratios.
Return on Equity must be Above Average	Company is providing ROE around 14%, which is slightly lower than our 15% expectation.
Low CAPEX required to maintain current operations	Yes.
Management is holding / buying the stock	Yes. Promoter holding is around 40%.
Price is Under Valued (< intrinsic value)	Stock is quoting 30% discount to Book Value.
Stock Price is consolidating	Almost consolidating with down from 52wh.

Additional Futurecaps Checklist

PE, PB Ratio	PE around 5, PB around 0.7 which are really attractive.
Cash Flow Positive	Negative Net Cash Flow, but Operating Cash Flow is positive.
Paying Dividends, Tax	Yes.
EPS Growth Rate	10% to 20%, but the Trailing year should show higher rates.
Expected Gain in 10 Years	Considering EPS growth around 20%, the stock price should double every 4-5 years.  For a 10 year period this could yield 4 times returns & a PE Peak around 12 should yield total of 8-10 times returns.
Power of Brand	Branding attracts more sales, more profit margins!  Company have the trust & fame of CANARA BANK!
Corporate Governance, Reputation of Leaders	Company consistently behave well on corporate governance norms.

Additional Points

The current past year results are yet to declare, it shown above 30% growth in Net Profit & yield higher EPS resulting in lower PE.  We expect the new PE Ratio around 3-4.

Declaration

Considering the under-valuation, growth rate, brand name, we declare Can Fin Homes as a potential multibagger.

Allocation

Although it is a B Group stock, but being large cap we recommend the regular 5-10% allocation of your total yearly stock corpus.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, We expect a 25% to 50% allocation of your savings in equity. The stocks recommended here are gone through Analysts of several years experience in stock market. Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  Filtering quality stocks from the total of 4000 companies should reduce the total risks.  The past performance of the company might not sustain in future, but through proper diversification we are sure about multibagger-returns in the total portfolio.  We recommend the reader to put his/her own thoughts, invest wisely taking responsibility by themselves.

Update: This post is Not a Multibagger post .  Since the Valuation change it is No Longer a Multibagger in our view.  You can check other stocks from our latest Multibaggers pack.

https://futurecaps.com/tag/multibagger/

Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.

Properties of Money

“A Professional understands all aspects of the Job” This is the core mantra of all successful leaders. They do not jump into situations without doing a proper learning. They won’t waste time in non-fruitful activities. Together with a leader can impose high growth’s to our life.

When talking about ‘Money’, i feel that the people dealing with it are not aware the ‘Properties’ of it.

Let us analyze the properties here..

Money is Value

Of course, we all know it & it is the reason we are working for fetching Money, as it is Valuable in the market.

Money is Devised

Money is a devised (created) mechanism for better functioning of economy. The older form of Money was barter system.

Money is like Oxygen

No one can deny “Money” in this materialistic world. It was possible in the Jungle Era, but we are no long there. The comparison with ‘Oxygen’ means, we cannot live without Oxygen, similarly we cannot live without Money.

Although, some people will say “They don’t care about money”, they are actually worried about it. Believe me, without having inherited family properties & passive income, we are under open risk.

Money is Storable

Imagine if you wanted to store food for your life remaining. You cannot store food for that much huge time. But you can convert the food items into Money equivalent & store it.

Money is Growable

Through proper investment, we can grow our money. This idea conveys our principle of “Placing extra Money” in long term, short term & liquid investments.

The Investment Vehicle we use, will determine the Growth of Money.

Money will attract Money

As the like attracts like, Money will attract more Money. So it is important that you have to have enough money to make it more.

For example: an ordinary software engineer with 50 thousand salary cannot invest on an apartment with EMI of 25 thousand. He will fear of going job-less. The reason is he is not having enough money to backup the investment.

So it is wise to have enough liquid money to protect future investments & future growths.

Money is prone to Value Depletion

In the same sense, money can grow, money can also diminish it’s value.

For example, if you store money as currency in your home locker, after end of year, the value will be 5% lost. This is due to Inflation.

Similarly, if you park the money in a car, after 1 year the car will cost 20% lesser in value.

In both the above cases, Money Value is Depleted.

So it is advisable to keep only short-term money in liquid format & others in Appreciation Vehicles like recurring deposits, fixed deposits, real estate, stocks, bonds etc.

Money is Freedom

You can think of your current job, the amount of hours spend, surely it is stealing your freedom. Many of us enjoy the work, but not all days are enjoyable. May be, we are required to work in different passion of our soul, but shortage of money restricts us to continue restricted..

But this is for only present tense, future could be different if we properly plan & invest. Attaining passive income (free income every month to carry out the expenses) will make us chase the passion @ life.

Money is not always Happiness

Talking with the poor class people of society, i had a feeling that they equate money to happiness, they think the riches are happy as they have money. This makes them spend whatever money coming in to the entirety & feeling happiness. Surely this is a myth, i can show dozens of rich families having chaos situations.

The poor people will remain poor until they realize that excess money should be used for investment. This excess money will protect them from future money shortage situations.

Money plus Idea yields more Happiness

Although there are rich people who are sorrow at heart, i believe through proper usage of ideas they can thin the air.

For example, idle time can be converted to fun activities if they can spend money & buy events, celebrations, vacations etc.

They can also avoid being with chaotic situations Or problematic people as money gives the freedom of move.

Money is Energy

There is a psychological connections saying that money is energy. It says, if we feel we have excess money the Universe will make it happen, similarly the shortage feeling about money will create disastrous situations. To an extend it is true, but i recommend good feeling & wise spending.

Myths about Money

Following are the ‘Myth’s’ created about Money, they are ‘Myths’ to the trained mind.

Money is Evil This depends on the person who uses it. If an amateur uses extra money for boozing, spending on offensive activities in society, then surely Money is Evil. I believe we all are responsible persons to use the excess money for the good of us, society & world. I can readily give good examples like Bill Gates, Narayana Murthy, PNC Menon who used their wealth to help back the society.

“So if you have extra money, you could enjoy the happiness of helping others”

Additional note that companies, religions insist on saying “Do not focus on money” as having money in possession will make people move out of job, move out of church & thus they loose a skillful worker or paying devotee. So always try to see the other side of the situation, Is there anybody benefitting from your lack-of-money’?

Summary

So following are the conclusions:

1. Work Smart, Earn Smart, Invest Smart
2. Feel God about Money
3. Keep enough Liquid Savings of Money

I am open for thoughts from your side..

Update: This stock really is Not a Multibagger.  Since the Valuation change it is No Longer a Multibagger in our view.  You can check other stocks from our latest Multibaggers pack.

https://futurecaps.com/tag/multibagger/

Futurecaps is a SEBI Registered Research Analyst providing Multibagger service to Indian Stock Market.

In this post, we would like to screen Infotech Enterprises Ltd. as a potential multibagger.

Infotech Enterprises provides leading-edge engineering solutions, including product development and life-cycle support, process, network and content engineering to major organizations worldwide. With over two decades of continuous growth, Infotech leverages a global delivery and collaborative engineering model to achieve measurable and substantial benefits for our clients. Whether your organization needs to design innovative products faster, optimize R&D costs, increase market share, enhance operational efficiency or maximize the return on investment in your networks, Infotech Enterprises is the ideal partner.

Infotech has 10,000+ associates across 36 global locations. We adopt a proactive approach to serve our clients with our best-in-class delivery centers in North America, Europe, Middle East and Asia Pacific. Our clients span multiple industries such as Aerospace, Consumer, Energy, Medical, Oil and Gas, Mining, Heavy Equipment, HiTech, Transportation, Telecom and Utilities and include 22 ‘Fortune 500’ and 27 ‘Global 500’ blue chip organizations.

Research Link

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow	Yes, Sales & Net Profit increasing 20% plus every year.  Trailing year too expressed growth.
Durable Competitive Advantage	We believe the product portfolio & niche skills will enable this company to continue as a Profit Player.
Future Growth Drivers	Information Technology sector is expected to grow further in long term.
Conservative Debt (long term debt < 3 Net Profit)	Yes.  It is less than 2 times of Net Profit
Return on Equity must be Above Average	Return on Equity is around 15%.  Theoretically it should be above 20%.
Low CAPEX required to maintain current operations	CAPEX is around 20%.
Management is holding / buying the stock	Management is Holding the stocks, but only around 22%.  This leaves room for concern, as our happy promoter holding percentage is above 50.
Price is Under Valued (< intrinsic value)	Considering the Growth, Intrinsic Value is many fold of current price.
Stock Price is consolidating	Stock is around 52 week low, but not seems to be in down trend.

Additional Futurecaps Checklist

PE, PB Ratio	PE is half of Industry PE, so good.  Price is quoting just 30% above Book Value, so good.
Cash Flow Positive	Company is maintaining a Positive Net Cash Flow.
Paying Dividends	Yes.
EPS Growth Rate	20% to 30% EPS growth for past 3 years, Impressing!
Expected Gain in 10 Years	If the stock can maintain 30% growth rate every year, then in 3 years price should double, resulting in 8 times returns in 10 years.  Company hold a Blue Chip shine during the time & can command high PE Ratio up to 20 (current is 8), so there is further 2x opportunity.  So MAX GAIN expected is around 16 times.
Power of Brand	Branding attracts more sales, more profit margins!  Our company is building a brand & quite possible to be a brand like Infosys, TCS in future.

Conclusion

Considering the Performance, Value Factors we see Infotech Enterprises as a potential Multibagger.

Disclaimer

Investment Decision is your sole responsibility.  Futurecaps recommends proper diversification in your Portfolio.