Archive for August, 2014

PTC Financial Services – Multibagger Analysis

August 31, 2014

PTC India Financial Services Ltd (PFS) is promoted by PTC India Ltd (PTC) as a special purpose investment vehicle to provide total financial services to the entities in energy value chain, which inter-alia includes investing in equity and/or extending debt to power projects in generation, transmission, distribution; fuel sources, fuel related infrastructure like gas pipelines, LNG terminals, ports, equipment manufacturers and EPC contractors etc.

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Company URL: http://www.ptcfinancial.com/

Screener URL:http://www.screener.in/company/?q=533344

Moneyworks4me URL:

CMP: 40

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Neutral.

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Future Growth Drivers Forecast 2 year Economic growth should enable the company to sustain & grow in profits. image
Conservative Debt (long term debt < 3 Net Profit) Current Liabilities stands around 140 crore & Net Profit at 240 crores; So Current Liabilities is less than 3X of Net Profit. image
Debt Equity Ratio 1.25; Moderate for financial companies. image
Return on Equity must be Above Average 8.69% which is below average of 15%. image
Low CAPEX required to maintain current operations Low CAPEX company. image
Management is holding / buying the stock Management is holding 60% of the share. image
Price is Under Valued (< intrinsic value) Yes. image
Stock Price is consolidating (now) Company is neat at 52 week high with 400% returns in past year. image
Stock Price is growing in past years along with EPS growth Yes.  image

Additional Futurecaps Checklist

Consolidated PE, PB Ratio PE 10 – good; PB 1.5 – good image
Cash Flow Positive, Net Profit % greater than 8% Cash flow is negative; NP% is 40% which is good. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 30% to 50% is the average.  image
Latest Quarter EPS Growth 50% growth q-o-q  image
Expected Gain in 10 Years 20-30 Times in 5 years considering 30% to 50% growth rate.  image
Price Movement Graph, 52 Week High & Low 52 wh is 400% than 52wl; So be cautious.  image
Volume Analysis Volume is high  image
Power of Brand Yes. image
Corporate Governance, Reputation of Leaders Yes. image
Fraud reported Not any in current search. image

 Declaration

Considering current EPS growth in annual & quarterly results, PTC Financial Services is a multibagger.  As it has already appreciated 400%,  I recommend entering in lower levels or installments.

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As the company have negative cash flow issues, please be watchful during economic down turns.

Allocation

2-3% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Basant Agro Tech – Multibagger Analysis

August 30, 2014

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Company manufactures fertilizers and seeds.  Renowned philanthropist 130 years old "Bhartia Group" Akola (India) and international business tycoon Mr. C.L. Jhunjhunwala were instrument in the inception of Basant Agro Tech (I) Ltd with its public issue in 1990. From then on, skilled entrepreneurship and advance manufacturing techniques ensured the company growth exponentially.

Company URL: http://www.krishisanjivani.com/

Screener URL: http://www.screener.in/company/?q=524687

CMP: 8

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Sales, Profit are increasing yearly & quarterly basis. But Cash Flow does not show steady growth. image
Durable Competitive Advantage

Company has its own brands.

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Future Growth Drivers Moderate. image
Conservative Debt (long term debt < 3 Net Profit) Liabilities far higher than latest Net Profit.  Company should face interest-payment issue in long term. image
Debt Equity Ratio 1.5 which is very high in this segment. image
Return on Equity must be Above Average 15% above image
Low CAPEX required to maintain current operations Not. There is high cash flow for financing activities. image
Management is holding / buying the stock Holding image
Price is Under Valued (< intrinsic value) Considering 20%-30% EPS growth rate, the price is slightly under-valued. image
Stock Price is consolidating (now) Not. The stock is peak at 52 week high. image
Stock Price is growing in past years along with EPS growth Yes. image

Additional Futurecaps Checklist

Consolidated PE, PB Ratio PE: 4, PB: 1 – both are good. image
Cash Flow Positive, Net Profit % greater than 8% Negative cash flow; Net Profit % is less than 8%. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 30% which is good. image
Jump in Trailing Results Not. image
Quarterly Results Growing Yes. image
Expected Gain in 10 Years 15-20X in 10 years if the current growth is maintained with no interest / debt issues.  PE resizing to 10 applied. (Sector Average) image
52 Week High & Low Company has appreciated 400% from 52weeklow image
Volume Analysis High Volume for a small cap company. image
Power of Brand

Company has its own brands.

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Corporate Governance, Reputation of Leaders Reputed Leaders exists. image
Fraud reported Not yet image

 Declaration

Company is not a clean multibagger as it has rough edges.

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Allocation

1-2% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

R Systems – Multibagger Analysis

August 25, 2014

R Systems, founded in 1993, is a specialized IT Services & Solutions and IT-enabled Services provider catering to a wide range of global customers. We are endowed with some of the industry’s highest quality certifications and standards, including SEI CMMI Level 5, PCMM Level 5, ISO 27001:2005 and ISO 9001:2008. Our IT services and solutions span five major verticals which include Telecom & Digital Media, Banking & Finance, HealthCare, Manufacturing & Logistics, and Government Services.

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Website: http://www.rsystems.com/

CMP: 53

Screener: http://www.screener.in/company/?q=532735&con=1

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Okay.  Company is not a big player; No niche segment share.

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Future Growth Drivers Good.  For next 2-3 years IT should provide good growth. image
Conservative Debt (long term debt < 3 Net Profit) Yes.  100 crore is current liabilities, net profit 69. image
Debt Equity Ratio Good at 0. image
Return on Equity must be Above Average 25%. Impressive image
Low CAPEX required to maintain current operations Good. image
Management is holding / buying the stock Flat. Indian Promoters increasing stake, Foreign Promoters selling few in past 2-3 years. image
Price is Under Valued (< intrinsic value) Yes. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Okay. image

Additional Futurecaps Checklist

PE, PB Ratio Consolidated PE: 9 (good); Standalone PE: 17; PB 2.5 (little high) image
Cash Flow Positive, Net Profit % greater than 8% Yes.  NP% around 20% of Sales. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 30% to 100% in past 1-2 years. image
Jump in Trailing EPS Yes. 30% image
Jump in Quarterly EPS Yes. image
Expected Gain in 10 Years 10-12X in 5 years considering 30% as average EPS  growth & PE resizing in 5 years to 20 (IT standard) – If current growth level is maintained. image
Volume Analysis 41 thousand. Good to catch fire. image
Power of Brand Company is building around product brands. image
Corporate Governance, Reputation of Leaders Good. image
Fraud reported Not in current serach. image

Declaration

Considering the historical growth & on the grounds of value-analysis Futurecaps declares R Systems as a Multibagger.  Be watchful on the quarterly results.

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Allocation

2% to 3% of your portfolio. 

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Vinyl Chemicals – Multibagger Analysis

August 25, 2014

Vinyl Chemicals India Ltd , A Parekh Group company is in the business of selling various specialty chemicals mainly to textile, paints and adhesive sectors since 1991.

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Website: http://www.vinylchemicals.com/

CMP: 38

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Yes. Company mainly sell product to Pidilite Industries.

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Future Growth Drivers Increasing market share of Pidilite should improve Vinyl Chemicals as well. image
Conservative Debt (long term debt < 3 Net Profit) Not.  The short term liabilities is very high for the company.  It is around 50 and the past year Net Profit comes only around 5 crore. image
Debt Equity Ratio Good. image
Return on Equity must be Above Average Impressive. 33%. image
Low CAPEX required to maintain current operations High CAPEX required. image
Management is holding / buying the stock 50% is management holding. They are holding flat for past 3 years. image
Price is Under Valued (< intrinsic value) Yes. Considering past 3 years earnings-growth. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Yes.  Price grown 4 times in past 1-2 years. image

Additional Futurecaps Checklist

PE, PB Ratio PE 4.2 which is good; PB 2.5 little higher in this capitalization range. image
Cash Flow Positive, Net Profit % greater than 8% Not.  Comes around 4% image
Paying Dividends, Tax Yes. image
EPS Growth Rate 20% to 50% image
Jump in Trailing Results Yes. 100% jump in trailing year. image
Quarterly Results Growing Latest quarter shows growth. Past quarter shows de-growth but. image
Expected Gain in 10 Years Maximum 3-5 times in next 5 years. image
Volume Analysis Apt volume. image
Power of Brand Company mainly work with Pidilite, hence brand does not matter in backward-integrations. image
Corporate Governance, Reputation of Leaders Flat. image
Fraud reported Flat. image

 Declaration

We cannot really sure about declaring it as a Multibagger.  It could provide decent returns, but as we have other strong multibaggers, let us skip this.

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Allocation

0%

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Going through Trigyn Technologies

August 24, 2014

I was analyzing on Trigyn Technologies based on a reader’s input.  At first look the company was promising. PE at just 5 & EPS growth at 100%.

But looking into the Profit & Loss, Cash Flow statements there are some mismatches.

Net Profit is higher than Operating Profit.

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Cash Flow does not reflect the Net Profit for 2013.

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Clearly such companies requires more analysis; mean time we can study 5 such companies, hence we are not working on Trigyn further.

RS Software – Multibagger Analysis

August 20, 2014

For few weeks I am observing RS Software on the limelight – more investors and mutual funds are choosing it.

Is it valid to purchase an already spiked stock?

A value investor ensures the spikes did not made the stock over priced based on value parameters.

About RS Software

RS Software has focused exclusively on the payments industry since its inception in 1991. Our payments expertise has helped clients address the convergence of payment types, the proliferation of mobile devices, the move to cloud computing and the introduction of new strategies, such as behavioral targeting. No other custom software provider delivers more industry-specific knowledge and experience to organizations competing for market share in the payments space.

Company URL: http://www.rssoftware.com/

Analysis URL: http://www.screener.in/company/?q=517447&con=1

CMP: 525

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Yes.  Company is into payment verification business & own a niche share in India.

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Future Growth Drivers Yes.  Growing market. image
Conservative Debt (long term debt < 3 Net Profit) Yes. image
Return on Equity must be Above Average Yes.  Company have 38% where we prefer 15% as the average. image
Low CAPEX required to maintain current operations Average. image
Management is holding / buying the stock Yes. 38%.  Promoters increased holding 2 years back. image
Price is Under Valued (< intrinsic value) Yes.  Considering 30%-50% growth the company is trading below its Intrinsic Value. image
Stock Price is consolidating (now) Not.  Only recently the stock witnessed high price movements. image
Stock Price is growing in past years along with EPS growth Yes. image

Additional Futurecaps Checklist

PE, PB Ratio PE: 12; PB 3; Average image
Cash Flow Positive, Net Profit % greater than 8% Cash Flow is Positive.  Net Profit is around 12% which is Good. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 10% in latest year; 50% in previous year; image
Jump in Trailing Results Not. image
Quarterly Results Growing Latest quarter shows 50% jump too which is hopeful. image
Expected Gain in 10 Years Considering average EPS growth of 30% & PE resizing to 20, we can expect the company to give 5-6 times returns in 5 years & Upto 25 in 10 years. image
Volume Analysis High Volume is there; We do not recommend that. image
Power of Brand Good Brand is there. image
Corporate Governance, Reputation of Leaders Good. image
Fraud reported Not in current search. image

 Declaration

Considering the latest quarter & expecting 30%-50% growth in upcoming quarter, coupled with the recent limelight effect on the stock which should attract more investors, we declare the stock as a multibagger.

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But watch upcoming quarter carefully.

Allocation

2% to 3% of your portfolio.  Buying on installments advised.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Kovai Medical Center and Hospital Ltd

August 18, 2014

Kovai Medical Center and Hospital (KMCH) is a 750- bedded Multi-Disciplinary Advanced Super Specialty Hospital nestled in a serene atmosphere of over 20 acre piece of land. The location enables the patients to enjoy the rule of quietude, away from the hustle and bustle of city life.

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CMP: 313

Website: http://www.kmchhospitals.com/

Analysis URL: http://www.screener.in/company/?q=523323

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Cannot judge this parameter. 

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Future Growth Drivers Yes.  Indian specialty hospitals are in up trend. New and new players like Manapuram too entering into this segment.  Company is expanding. image
Conservative Debt (long term debt < 3 Net Profit) Yes. image
Return on Equity must be Above Average Yes. It is 30% and our average requirement is 15%. image
Low CAPEX required to maintain current operations Yes.  Investing Cash flow required, but it is low compared with Operating Cash flow. image
Management is holding / buying the stock Yes.  50% is current holdings. image
Price is Under Valued (< intrinsic value) Average. Price is quoting around 3 times of book value, which  is not too good, but still adaptable. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Yes. image

Additional Futurecaps Checklist

PE, PB Ratio PE 13; PB 3; Moderate. image
Cash Flow Positive, Net Profit % greater than 8% Yes. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 30%.  We are happy to see 50% growth. image
Jump in Trailing Results Yes. But only 30%. image
Quarterly Results Growing Q-Q 20% growth in sales & 100% growth in profits. image
Expected Gain in 10 Years 10X in 5 years through EPS growth & PE resizing on limelight.  In 10 years it could cross 40X. image
Volume Analysis Low volume.  Good for price fire. image
Power of Brand Hospital Reputation good.  It can attract patients & students. image
Corporate Governance, Reputation of Leaders Yes. image
Fraud reported Not in current search. image

 Declaration

Here by we declare that the stock has multibagger properties.

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Allocation

3% to 4% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Control Print – Multibagger Analysis

August 16, 2014

Seamlessly integrating precision, reliability, and cost-effectiveness, Control Print’s abilities stem from our leadership, in association with our partners, in hard-core technology and product engineering. Augmenting these capabilities is our expertise across applications and industries combined with an extensive support infrastructure to provide the highest quality products and services in the Coding & Marking Industry across the Indian Subcontinent.

Website: http://www.controlprint.com/

Analysis URL: http://www.screener.in/company/?q=522295

CMP: 136

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Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes.  Company is steadily increasing in sales & profit. image
Durable Competitive Advantage

Yes.  Company has power of brand & good growing network in India.

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Future Growth Drivers Yes. image
Conservative Debt (long term debt < 3 Net Profit) Yes. image
Return on Equity must be Above Average Yes. 19% image
Low CAPEX required to maintain current operations Moderate as Investing Activity Cash Flow is negative. image
Management is holding / buying the stock Yes. 49% is existing holding & it is increasing all past 4 years.

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Price is Under Valued (< intrinsic value) Yes. image
Stock Price is consolidating (now) Moderate. image
Stock Price is growing in past years along with EPS growth Moderate. image

Additional Futurecaps Checklist

PE, PB Ratio Good. image
Cash Flow Positive, Net Profit % greater than 8% Not. image
Paying Dividends, Tax Yes. image 
EPS Growth Rate 30% image 
Jump in Trailing Results Only 30% image 
Quarterly Results Growing Increasing 30% above. image 
Expected Gain in 5 Years Maximum it can go 20X in 5 years.  Price doubling on every 2 years & PE resizing to industry average due to stock recognition. image 
Volume Analysis Moderate. image
Power of Brand Moderate. image
Corporate Governance, Reputation of Leaders Good. image 
Fraud reported Nil found. image

Declaration

Here by we declare that Control Point Ltd. have multibagger properties provided it is able to continue the past growth levels.

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Allocation

As it is a small cap we recommend around 2%-3% allocation.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.

Important Ratios

August 16, 2014

As per readers input, we are publishing the important ratios we use here with examples.  Please check back for updations.

EPS

Earnings per share.  It is the Net Profit divided by Number of Shares.

Example: If your company earned 200 rs. profit and there is 100 shares outstanding.  The EPS is 200 / 100  = 2

Inference: Higher the better; More growth the better.

PE Ratio

Price to Earnings Ratio. This is derived from EPS and CMP (Current Market Price).

As you know CMP is the market given value to the share.

PE = CMP / EPS

If the above company is trading at 100 rs, then PE = 100 / 2 = 50.

If the above company is trading at 200 rs, then PE = 200 / 2 = 100.

So we should try to find low-pe stocks.

Inference: Lower the better;

Book Value

This is the value of the share on books. That means, the price you are going to get if the company liquidates today & trading is stopped on this stock.

PB Ratio

Price to Book Value Ratio.  This is the CMP to Book Value Comparison.

Example Book Value is 25 for the above stock & CMP is 100. Then PB Ratio is 100 / 25 = 4.

Inference: Lower the better;

In value investing, we do not prefer stocks having high PB value. Something around 3 is good.  Less than 1 is very good.

Reference

Warren Buffet and the Interpretation of Financial Statements

Lloyd Electric and Engineering Ltd. – Multibagger Analysis

August 16, 2014

Lloyd Electric and Engineering Limited is a publicly traded company with its headquarters in New Delhi. It is the leading and largest producer of Coils / Heat Exchangers (Fin and Tube type) in India, serving the entire spectrum of HVAC & R industry in the country as well as OEM’s in North America, Europe, Middle East and Australia. Lloyd Electric also manufactures Air conditioners for the Indian Railways, Metro Rail and Buses at its Bhiwadi factory.

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CMP: 140

Screener: http://www.screener.in/company/?q=517518&con=1

(warning: promoter holding data is incorrect)

Website: http://www.lloydengg.com/

Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. image
Durable Competitive Advantage

Yes. Good Brand, Distribution network.

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Future Growth Drivers Indian Consumer Market is growing & growth projected. image
Conservative Debt (long term debt < 3 Net Profit) Debts around 350 crore & Latest net profit slightly less to cover the 3X.  Not Pass. image
Return on Equity must be Above Average Yes. above 15% image
Low CAPEX required to maintain current operations Not. Investing Activity negative. image
Management is holding / buying the stock Yes. Through 2013 to 2014 they are increasing holding %.  Current holding is around 50% image
Price is Under Valued (< intrinsic value) Yes. Considering intrinsic & book value. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Yes. image

Additional Futurecaps Checklist

PE, PB Ratio PE 5; PB 0.8 (Quoting below book value) image
Cash Flow Positive, Net Profit % greater than 8% Cash Flow Positive; But Net Profit less than 8% – company may face cash-crunch on tough expansion situations; but compared with consumer-electronics sector & marketing overheads, this is adjustable. image
Paying Dividends, Tax Yes. image
EPS Growth Rate 50% with latest growth. Past year was flat image
Jump in Trailing Results Yes. 50% jump; Good to buy & hold for 1 more year & sell if no growth further. image
Quarterly Results Growing Yes.  Almost 70% jump in latest quarters image
Expected Gain in 10 Years 20X if trailing growth level retained & PE resizing to peers happens @ 30. image
Volume Analysis High Volume – Mass Fire possibility is least. image
Power of Brand Recognized Brand, but not the Top though. image
Corporate Governance, Reputation of Leaders Good. image
Fraud reported Not any in current search. image

 Declaration

Here by we declare that LLoyd Electric is a multibagger.

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Though keep a watch on next year growth.

Allocation

3% to 5% of your portfolio.

Disclaimer

Futurecaps recommends 50 to 100 multibaggers per year, we recommend 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.  So we recommend the reader to put his/her own thoughts & invest wisely.