Buyers Market, Sellers Market & General Updates

It was an year ago I asked to Exit Stocks to my Paid Circle.  At the time NIFTY PE was Peak at 29, along with Smallcaps & Midcaps were mindlessly over-valued.  If I remember correctly, Cera was valued at PE 60 with a Flat EPS Growth.

When I said to Exit the stocks, especially over-valued ones – few people contradicted it.  They were saying market will grow further from here & continued buying more.  Their confidence were built by just few years of investing.  However, I have cleared my stocks during the time ensuring I made profits & no losses further.

Today when I see the same Contra Investors, I cannot see that Buying Confidence in them.  They are already burnt their portfolio with 50% Loss and No Confidence in stock market!

What Happened here?

As I said before, there is Buyers Market and Sellers Market in any Investing Arena.  I used to handle multiple areas like stock market, real estate, gold market etc. – so I can assure that this Buyers Market & Sellers Market exists in all these areas.

What is Buyers Market?

Buyers Market is a state where Prices are Under-valued, Pessimism runs in the Veins of Investors,  Investors shy away from this market!

This is called Buyers Market because we Buy things Cheap here!  An Intelligent Investor would see this market as an Opportunity to Buy & Hold for Long term.

What is Sellers Market?

Sellers Market is contrary to Buyers Market where Prices are Over-valued, Optimism makes Investor blind on valuations, they run & accumulate all stocks on limelight.  This is extreme madness state.

This is called Sellers Market because we can Sell things at Higher Price here!  An Intelligent Investor would see this market as an Opportunity to Sell & Switch to other Investment vehicles.

Only 5% People really make money in Stock Market!

Nevertheless to say, Only 5% People make money in Stock Market as 95% act against the crowd by selling in the buyers market & buying in the sellers market.

In fact, these 95% amateurs are helping the 5% intelligent investors.  The amateurs buy at high price allowing the intelligent investors to gain more profits.  The amateurs sell at low prices allowing the intelligent investors to buy at cheaper prices.

So they just double the returns.  For example one who bought at Rs. 100 and Sold at Rs. 1000 will gain 1000% profits.  At the same time if it is bought at Rs. 50 during bear market and sold at same Rs. 1000 the gain will be 2000%!!

So what is the Current Market Situation?

As of now, we have provided our HNI Customers with the Market Situation reports.

India Large Cap Segment is SELLERS MARKET

India Mid Cap Segment is NEUTRAL.

India Small Cap Segment is BUYERS MARKET

So what should one Infer from it?

One should start selling over-valued stocks in Large Cap segments.

One can start buying under-valued stocks in Small Cap segments.

Think Long Term

During 2018 I sold my stocks & moved to other Investment Vehicles.  Again in 2019, I restarted buying stocks with a holding vision of 5-10 years or more.  I repeat, stock market is a place where we have to give ample time for the company to perform, grow, profit & reward the investor.  It is a compounding process taking time! So think Long Term & Start Investing now!!

You cannot Sail without a Bear Market

It is all about wrong education than if an Investor thinks they can completely Ignore a Bear Market – Absolutely Not!  In my case, even though I escaped from the biggest disaster, I still encountered losses after my restart in investment.

One time my portfolio went 30% on loss, but I continued buying more as “potato was cheaper”.  Now the Portfolio is in 10% profit level as the stocks recovered.

Even Warren Buffet does the same.  During 2008 crashes he Invested in Bank of America stock – but the stock went down from his price too – he continued buying and after few years – he is in deep profits!  So the lower the price – higher the profits!

My theory is simple, if one is expecting 500-1000% returns in stock market, he should be willing to see 30% losses in portfolio!

However, for a troubled investor these words will not add value – they will continue to be Idle in the buyers market & once the recovery happens – they will again buy on top & just having mediocre returns.

Few Stock Updates

Two of our 5-Multibagger-Picks got Listed in High Growth Asian Companies of India Companies 2019.  They have High EPS Growth along with Moderate or No-Debt.

One other company issued Bonus Shares.

Other one is having whopping 70% EPS growth too.

For those who have missed Investing in these 5-Multibaggers, can buy the eBook at a Discounted Price here.

five multibaggers india stock market 2019

Intrinsic Value Calculator

As part of Education & Evaluation, we have Built our own Intrinsic Value Calculator and Exposed as Free here.

Forum

We have started a Forum to Help Investors with Value Oriented responses.  You can register & start querying here.

 

Is Ashok Leyland a Multibagger Stock based on Warren Buffet Analysis?

Ashok Leyland Ltd.

NSE Code ASHOKLEY.NS
BSE Code 500477
URL https://www.ashokleyland.com
CMP 88
Free Report Yes
Publish Date Jun-14-2019

In this post we would like to Explore the Multibagger Stock Potential of Ashok Leyland based on a blog reader request.

Ashok Leyland Multibagger Stock
Screener: https://www.screener.in/company/ASHOKLEY/

About Company

Ashok Leyland is an Indian automobile company headquartered in Chennai, India. It is owned by the Hinduja Group. Founded in 1948, it is the second largest commercial vehicle manufacturer in India and fourth largest manufacturer of buses in the world and 10th largest manufacturer of trucks globally.  Company is mainly into LCV & MCV business & also generates Revenue from Power Solutions, Aftermath Accessories, Defense Vehicles, Foundry Division too.  The company have plants across 10 locations in Tamil Nadu, Uttarkand, Rajasthan and Maharashtra.

Indian Commercial Vehicle Industry grew 23% past year & this growth is going to stay for next 5 years based on Government push on Infrastructure growth & New Roads.

Bharat Stage IV (BS-IV) emission norms is boosting the Sales of Ashok Leyland. Union Budget is in Favor of Infrastructure & Automobile Sector.

The company was able to generate 15% growth in M&HCV segment i the past 5 years as displayed below.  IMF projecting India GDP growth of 7% should benefit the company.

Ashok Leyland Multibagger Stock
Ashok Leyland Multibagger Stock

Positive Factors

Here are the positive factors regarding Ashok Leyland.

  • Past year company launched 17 new products.  This will reflect in future sales.
  • Company is entering into Electrical Segments.  Aligned with Government initiatives this will support future growth
  • The LCV business recorded 37% growth and is growing 20% CAGR
  • The Defense business also grew by 32% with a 20% CAGR
  •  Credit Rating of the company was Improved after 18 years as AA+ rating
  •  Company has Unique iEGR innovation regarding BS IV standards.   This will give edge against competitors
  •  Company crossed 100 Thousand Unit Sales in Medium & Heavy Vehicle Segment, and 43 Thousand Unit Sales in LMV segment.
  •  Crude Oil Prices being supportive to Company operations.
  •  Government push on Hybrid & Electrical Vehicles will be Future Determination of Growth for Ashok Leyland.
  • Advantage of Price Crash will give Margin of Safety at Current Price.  There is a 50% discount to Fifty Two Week High Price on the company
  • Ashok Leyland have a Good Brand Reputation & Hence Low Risk Investors prefer to hold to this company
  • High Dividend Yield of 3%

Concern Factors

Here are the concern factors regarding Ashok Leyland.

  • High Capitalization  of 25000 Crore.  To become a 10-bagger it will be 2.5 Lakh Crore Capitalization which is too high to achieve.
  • Limited expected Multibagger Returns around 300%.
  • Pledged Shares exists which is a Red-mark on the company.  However the promoters are buying back more shares too.
  • High capex required for expansions.
  • No high massive expansion plans through new factory Or new market penetration.
  • Company is more dependable on India automobile industry
  • Company have only 5% share in the Indian Bus Market
  • BS VI norms becoming mandatory from 2020 will be a Challenge for the company
  • Threat of Low Sale Continuity in Auto-Sectors can adversely affect the Profitability of the company & thereby Price too Link

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 25000 Crore (Largecap) – already a Blue Chip level growth happened yellow
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Moderate. green
Future Growth Drivers / Sector Growth Yes.

(Electrical Segment)

green
Conservative Debt (long term debt < 3 Net Profit) Yes green
Debt Equity Ratio, Current Ratio Debt is Almost Zero.Current Ratio is 0.93 green
Return on Equity must be Above Average 23% superb
Low CAPEX required to maintain current operations No. yellow
Inventory Turnover Ratio, Debtor Days, ROCE Good.  Debtor Days reduced to 9 days.  ROCE is 28% superb
Management is holding / buying the stock Yes

*But pledging exists

red
Market Price < Intrinsic Value Yes. Intrinsic Value at Rs. 200 which gives 50% Margin of Safety.

See Futurecaps specific Intrinsic Value Calculator

green
Stock Price is consolidating (now) Yes green
Stock Price is growing in past years along with EPS growth Yes. green
Consolidated PE, PB Ratio, PEG Ratio PE 13 (okay)PB 3 (good)

PEG 0.23 (good)

yellow
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Negative

Net Profit %: Yes

green
Paying Dividends, Tax Yes green
EPS Growth Rate 15% above yellow
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS Yes

But, March q-o-q shows decline in profits

yellow
Expected Gain in 5 Years 200-300% yellow
Price Movement Graph, 52 Week High & Low Okay green
Volume Analysis 88 Lakh

(high liquidity / stable growth expected)

yellow
Power of Brand Yes green
Corporate Governance, Reputation of Leaders Yes green
Fraud reported No. green

Summary

Based on the above analysis I would like to say that the Ashok Leyland possess Multibagger Stock properties and one can Invest in 2019.  However one should not expect high compounded returns from this stock.  It can be considered as Low Risk Low Returns investment.

image

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will Not be provided.  We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

Free Multibagger Stocks

You can find More Free Multibagger Stocks here.

https://futurecapsblog.wordpress.com/free-multibaggers-2019/

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

Is Tata Elxsi a Multibagger Stock based on Warren Buffet Analysis?

Tata Elxsi Ltd.

NSE Code TATAELXSI.NS
BSE Code 500408
URL https://www.tataelxsi.com/
CMP 850
Free Report Yes
Publish Date May-24-2019

In this post we would like to Explore the Multibagger Stock Potential of Tata Elxsi.

Tata Elxsi Multibagger Stock

Tata Elxsi provides product design and engineering services to the consumer electronics, communications & transportation industries and systems integration and support services for enterprise customers. It also provides digital content creation for media and entertainment industry.

Company is Core Technology oriented & should benefit from upcoming IoT trends, Robotics, 3D printing, Autonomous Vehicles, Nanotechnology, AI, Automation, ML etc.

tata-elxsi-ai-iot

Tata Elxsi implements and integrates complete systems and solutions for specialized applications such as High-Performance Computing, Computer Aided Design, and Virtual Reality.

Globally, telecom operators are moving towards virtualization and creating Software Defined Networks (SDN) to reduce capital & operating expenditures.  Tata Elxsi has a comprehensive portfolio of SDN and virtualization services.  In the past year Tata Elxsi has been chosen by Airtel as Technology Partner.  The company has developed and integrated key software components to ensure that the Android TV application suite provides a seamless user experience whether the viewer accesses online or offline content.   Tata Elxsi has also partnered with Zee Entertainment multi-platform front-end application development of its new digital entertainment platform.

Positive Factors

Company is showing Consistent EPS Growth of 20% above in the Past 5 years.

Company has high ROCE 56% and ROE 37%.

Company has a Strong Moat of Technology Talents, Patents & Products.

Company gained several awards in categories of Best Electronics Design Company, Supplier Excellence, Women Empowerment etc.

Company has licensed Autonomous Vehicle Middleware PLatform AUTONOMAI scaled to Top 5 in world.

From the House of TATA.  Thus gets Preferred Supplier benefit from JLR (Jaguar Land Rover)

Company expanded its Solution Portfolio with 3D Printing in past year.

Company is growing in SDN segment.

Tata Elxsi is Debt Free.

Company had issued bonus shares in the ratio of 1:1 to all shareholders  past year.

Company is witnessing Increase in Net Reserves.

Company has good Revenue & Net Profit Growth.

profit-and-loss-result-tata-elxsi.jpg

Tata Elxsi is gaining various awards in respective fields.  It have been awarded the Jaguar Land Rover Supplier Excellence Award for 2017. This award recognizes
excellent on-time delivery, continuous quality, technical innovation and consistently meeting production and design challenges. This is a testimony to the customer focus and delivery excellence that Tata Elxsi provides to its clients.

tata-elxsi-awards.JPG

Concern Factors

Profit & Loss Statement shows Other Income of 43 Crores constituting 20% of Net Profit. Thus the Real Net Profit Margin should be re-calculated for Growth positioning.

Company have 90% Revenue from Global customers. Any Global slowdown affects the Revenue of the company.

Company is trading 5X of book value.

Debt is Zero. It is Good but also says company is Reluctant on Leveraged Growth.

Employee Bad Reviews are bit high about the company. Link

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization 5000 Crore (Largecap) – but ample growth opportunity is there. green
History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Yes. green
Future Growth Drivers / Sector Growth Yes. green
Conservative Debt (long term debt < 3 Net Profit) Yes green
Debt Equity Ratio, Current Ratio Debt is Zero.

Current Ratio is 5.3

superb
Return on Equity must be Above Average Yes. ROE is whopping high of 37%!! superb
Low CAPEX required to maintain current operations Yes. green
Inventory Turnover Ratio, Debtor Days, ROCE Constant yellow
Management is holding / buying the stock Flat yellow
Market Price < Intrinsic Value Yes. Intrinsic Value at Rs. 1800 Intrinsic Value Calculator green
Stock Price is consolidating (now) Yes green
Stock Price is growing in past years along with EPS growth Yes. green
Consolidated PE, PB Ratio, PEG Ratio PE 20 (high)

PB 5 (high)

PEG 0.4 (Good)

yellow
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Negative

Net Profit: Yes

green
Paying Dividends, Tax Yes green
EPS Growth Rate 20% above green
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS Yes green
Expected Gain in 5 Years 400-500% green
Price Movement Graph, 52 Week High & Low Okay green
Volume Analysis 2.5 Lakh yellow
Power of Brand Yes green
Corporate Governance, Reputation of Leaders Yes green
Fraud reported No.  But high remuneration ration & increments for core promoters green

Summary

Based on the above analysis I would like to say that the Tata Elxsi possess Multibagger Stock in Indian Stock Market & One can Invest during 2019 year.  Company aligns with Warren Buffet principles of Value & Growth Investing.  It  can be considered as Low Risk High Returns investment.

image

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will Not be provided.  We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

Classes of Investments All Investors should Know!

Dear Friends,

Here I am going to List down Different Classes of Investments & Their Returns.  You should definitely get few action items on these.

First I put down the Core Motivation behind your Investment as:

  • Wealth Creation
  • Income Generation

Wealth Creation

In the Wealth Creation, the Investment has Appreciate above Inflation.  Taking India Average Inflation as 4.5% the Real Wealth Creation happens only above this.

Classes of Investments

https://www.statista.com/statistics/271322/inflation-rate-in-india/

Income Creation

This is another Fundamental Purpose of Investment but Less Investors look over here.  The goal of Income Creation is to generate Passive Income or Cash Flow to take care of the expenses.  In this way the Investor can lead a Financially Free life.

Classes of Investments

Fixed Deposits

Fixed Deposits provides Easy Investment with Usual Returns of 8% (Inflation + 3%).

Example: 8%

Economic Activity: Under the hood Fixed Deposits of Customers will be used by the Bank for Giving Loans.

        AdvantagesSafety, Online Opening Flexibility, Easy Liquidation

        Disadvantages: Low Returns of 3-5%

Corporate Deposits

Corporate Deposits gives Higher Returns than Fixed Deposits.  They can provide up to 12% (Inflation + 7%) per annum.

The trouble here is Research needed to Find Credible Companies.

        Advantages: Safety, Higher Returns

        Disadvantages: Lock-in Period, Research Overheads

Real Estate

Real Estate Investment includes Buying a Plot, House or Apartment.  Here Wealth & Income creation is possible.

Real Estate can give Returns like Inflation (4) + Interest Rate (8%) + Utility Value constituting around 15%+ in a growth economy.  During Economic downturns the returns can go south too.

The trouble with Real Estate is that Long Documentation & Research Work is required to Identify a Good Investment.

        Advantages: Low Fluctuations,Safety in Long Run, Higher Returns if Themed

        Disadvantages: Research Overheads, Liquidation Delays

Gold

Gold is a Preferred Investment option by Old Investors since it has been used for Backing Currencies, Mining Limitations, Utility Value etc.

The Returns is not clearly defined and it fluctuates during Economic up/down times.  If you take the 30-Year Returns on Gold from 1990 to 2020 the Returns is 400% which is Just Around Inflation Returns (4%) per annum. Link

However, Gold Prices move up during Economic down turns where a Holding of 1-2 years can give 50% returns.  Preferred: Gold ETFs as No Storage overheads.

        AdvantagesSafety, Hedge Advantage during Recessions

        Disadvantages: No Clear Returns, Storage Overheads, No Economic Activity

Stocks

Stocks have an Attraction from Surplus Income Class & Youth.  Stock provides opportunity to buy a company during an early stage, hold for wealth creation, generate income from dividends etc.

Stock Provides higher Returns of 20-30% after Inflation.  This is because Stocks have an Underlying Company which is Performing Growth.  At the same time, It requires Heavy Research & Monitoring to ensure the company is not loosing the Growth track.

The complexities are high research, monitoring is required.

    Advantages: Massive Wealth CreationEasy Liquidation

    Disadvantages: High Fluctuations, High Risk, Heavy Research & Monitoring

Hybrid

Hybrid Investing is the Most Preferred way of Investing & Usually it is called Diversification.

We recommend the following level of Diversification:

  • Fixed Deposits + Gold ETF equal to the Amount of your 12 Month Expense to Cover Risk of Economic Downturns, Job Loss etc.
  • Stocks + Mutual Fund up to 50% of your Investments
  • Real Estate + REIT up to 50% of your Investments including your Home.

Following would be the Financial Protection Circle:

circle.png

Advantages of Financial Protection Circle

At Futurecaps we encourage our Clients to have a Financial Protection Circle like above.

The advantages of having 1 Year Liquid Fund (FD, Gold etc.) are:

  • It will Save you during a Job Loss
  • It will Ensure your Long Term Investments are not Interrupted

Summary

In this post you have encountered the various Asset Classes, Advantages & Disadvantages of them & How to Strategize the Financial Protection Circle.

You can also visit our Paid Subscription plans.

Is Jiya Eco Products a Multibagger Stock based on Warren Buffet Analysis?

Jiya Eco-Products Ltd.

NSE Code JIYAECO.NS
BSE Code 539225
URL https://www.jiyaeco.com/
CMP 55
Free Report Yes
Publish Date May-15-2019

In this post we would like to Explore the Multibagger Potential of the company. This is based on a blog reader request.

Jiya Eco Products  Multibagger Stock

Jiya Eco is into a unique business of manufacturing of Pellets and Briquettes. The company operates in Bhavnagar, Gujarat.  The offered products are manufactured from agriculture and forest waste, which are the cost effective, high yielding and sustainable bio fuel alternative. Modern algae processing techniques are implementing the production of our products. Further, Pellets manufactured from agriculture and forest waste have a huge demand in the marketplace owing to their zero smoke & fly ash emission, easy handling, uniform in diameter, high fuel efficiency, and more.

The product Briquettes is a substitute of solid fuels like coal, charcoal, firewood etc. It is used in Pharmaceuticals, Textiles units etc.  The product Pellets are used as Fuels for Electric Power Plant Homes and a Substitute of Fuels like Diesel, Kerosene, LPG etc.

In short, the company provides Alternative Bio-Fuel to the Customers which are Cost Efficient & Eco-friendly.  This is a unique business with lot of opportunity in the sector.

Positive Factors

Company is showing almost 100% growth in Sales & Profits compared with previous year.  The EPS growth is clocking around 200%.

jiya-perf

Solid Expansion Plans. The new Pellet manufacturing unit in Gandhidham will be commissioned in next 2 years which will be be Doubling the current capacity.   Company is undergoing Greenfield & Brownfield Expansions.  Company has multi-year Lease of Land providing easy access to raw material & lower transit cost.  The company is currently expanding outside of Gujarat to Rajasthan and Madhya Pradesh.

Forward Integration of Burner Manufacturing business ensures growing demand for current Pellet business.

Company have boost from NTPC, Government Initiatives to support Bio-fuels etc.  Since this is a Unique model of business, Jiya Eco is the only company in this sector.

Company has good Revenue & Net Profit Growth.

jiya-pandl

Other positive factors are:

  • High ROE.
  • High ROCE.
  • Managed D/E at 0.4.
  • Increasing Net Worth & Reserves.
  • Trailing Numbers are good.

Concern Factors

Reduction in Promoter Holdings of 30% in last 3 years.  Huge Promoter Holding Sale in last 1 year. link.  There is an Allegation that Warrants are converted to Shares too.

No Dividend Payouts.  Although the company may be reinvesting the profits in the business which is considered good.  Tax advantages of 5 years seems to be maxed out.

Sales are mostly into Credit.  Debtor Days increased 100% in past 1 year.  This may induce Working Capital problems.  Cash Flow is flat/negative.

Low Liquidity Stocks can become a Manipulation Instrument.  Hence allocate 50% less money if investing, then increase progressively for next 6 months.

Debt is moderately high. Increasing Borrowings.

SME category risk of price crashes during bear times.

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. green
Durable Competitive Advantage Yes. (no visible competitors) green
Future Growth Drivers / Sectoral Growth Yes.  (unique sector) green
Conservative Debt (long term debt < 3 Net Profit) Moderate. Cash Flow issues are there. yellow
Debt Equity Ratio, Current Ratio Moderate. Increasing Borrowings a Concern. yellow
Return on Equity must be Above Average Yes. green
Low CAPEX required to maintain current operations Not. yellow
Inventory Turnover Ratio, Debtor Days, ROCE Increasing. Concern. red
Management is holding / buying the stock No. Promoters have High Selling in past 3 years. red
Price is Under Valued (< intrinsic value) Considering the EPS Growth it is Super Under Valued green
Stock Price is consolidating (now) No. It had a fall & now spiked back. yellow
Stock Price is growing in past years along with EPS growth Yes. green
Consolidated PE, PB Ratio, PEG Ratio PE 7 (moderate)

PB 4 (high)

PEG 0.05 (very low)

yellow
Cash Flow Positive, Net Profit % greater than 8% Cash Flow: Negative

(expansion plans induced cash crunch)

Net Profit: Okay

yellow
Paying Dividends, Tax No. red
EPS Growth Rate 100% above green
Jump in Trailing Result EPS Yes green
Jump in Quarterly Result EPS Yes green
Expected Gain in 5 Years 500-1000%+

(If promoter concerns are resolved & more investors are attracted including MFs)

green
Price Movement Graph, 52 Week High & Low High: 78

Low: 32

green
Volume Analysis 2 Lakh yellow
Power of Brand Moderate yellow
Corporate Governance, Reputation of Leaders No frauds reported. But few concerns on Warrants issues at Peak price exists. yellow
Fraud reported Same as above. yellow

Summary

Based on the above analysis I would like to say that the Jiya Eco possess Multibagger properties & considering the concerns it is categorized as High Risk High Returns stock.  If invested do tight monitoring on the company news & events.

image

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will not be provided.  We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

 

Learn how Multibagger Stocks are Created through Value Investing

If you are a new investor, we recommend you go through this table below.  This will help you understand the Multibagger Creation Journey.

Year Description Returns

Starting Year

Here you Identified a Multibagger based on Past Performance & Growth aspects.

For example, The capitalization is 300 Crore & PE is just 5.

Imagine you Invested 1 Lakh Rupees on it.

0% on 1 Lakh
After Year 1 The company performed well as expected and displayed 20% EPS Growth.

Now PE is 4.

But all EPS growth will not be reflected in Price, especially in the beginning years.  Hence you will get +/- 20% returns.

+/- 20%
After Year 2 Now the company performed well again with another 20% EPS Growth.

This time the price will have to start reflecting as more & more analysts, people, funds will be looking into the stock.

Let us say the price gained 50%.

The PE is 5 again.

+ 20% | 1.5 Lakh
After Year 3 Your company is performing well with another 20% EPS growth.

This time the market visibility is high & hence the price jumped another 100%

Now the PE is around 8 with Capitalization 600 Crore.

+ 100% | 3 Lakh
After Year 5 Now you are on Year 5.  The compounded EPS growth of 20% lead to 100% EPS growth in 5 years.

Since the Capitalization is above 1000 Crore, Mutual Funds will start Investing. Big Money & Increased Visibility leading to Higher PE.

Now the PE is 20 with Capitalization 1200 Crore.

+100% | 5 Lakh

5X Gain in 5 Years

Now onward 20% EPS growth leads to 30% price growth.

Also, you will earn 100% return on original capital.  i.e 1 Lakh gain every year.

After Year 10 Now the company is growing again at 20% CAGR.

Now the PE is 30.

+500% | 30 Lakh

At this point you will start getting Dividend Yield 1% as 30 Thousand rs. per year.

30X Gain in 10 Years

Wealth Creation!

After Year 20 If you are lucky to have a Superbagger with 20% CAGR. Eg: Infosys, Wipro, Page Industries etc.

Now the PE is 40 and you have a 100X returns on original capital.

All these are possible as, Infosys gave 300X returns in 20 years!

+3000% | 10 Crores

Now the Dividend Yield will be 1 Lakh rs. per month equal to your Original Capital investment.

100X Gain in 5 Years

Cash Flow Generation!

This is how Stock Market creates wealth & cash flow.  It takes really long time for the compounding to work.  No shortcuts!

So here are the problems of amateur investors:

  • They add more stocks than above learning & tracking capacity
  • They exit stocks every other year breaking the power of compounding positioning

SO I recommend each & every investor to understand this process & continue holding stocks long term discarding noises, as long as their fundamentals & growth factors are intact. Be like Pro!

Is Atul Auto a Multibagger Stock based on Warren Buffet Analysis?

Atul Auto Ltd.

NSE Code ATULAUTO.NS
BSE Code 531795
URL http://www.atulauto.co.in/
CMP 335.00
Free Report Yes
Publish Date Apr-13-2019

In this post I would like to Explore the Multibagger Potential of the company. This is based on a blog reader request.

Introduction

The company based in Gujarat founded in 1980s is into the business of Vehicle Manufacturing primarily in the 3-wheeler targeting Cargo & Passenger segments. Company maintains No.1 position in the Diesel 3-wheeler segment in Gujarat.

Earlier in 1970s, the company started with invention of ‘Chakkada’ which was a big success. The current CEO inherited the business from his father & currently have PAN India presence with 330+ primary & secondary networks of distribution centers across India.

The company also have Petrol/CNG variants with Overseas presence. The company has 850+ employees and 60000 production capacity.

atul-auto-multibagger
Atul Auto Multibagger Stock

CEO

The company CEO is Mr. Jayantibhai J Chandra. He performed previously as Managing Director of Khushbu Auto Finance Ltd. another subsidiary.

Positive Factors

Following are the Positive Factors identified:

Company has a Good Research Team. The company produces 3-wheeler in all Fuel range Petrol, Diesel, CNG, LPG and Electric. Electric Vehicles R&D on Card to accommodate Future trends.

Good Array of Products visible while ATUL Shakti is the new in array covering Passenger & Delivery segments.

atul-auto-multibagger-autos.png

FY18 had Sales Growth of 24% and Export growth of 40%. India three-wheeler market is projected to exhibit a CAGR of more than 15% by 20235.

Company does not have any Debt problems as it maintains Debt as Zero & Current Ratio above 1.8. CRISIL has reaffirmed rating as CRISIL “A” with stable outlook. HDFC Small cap & ADITYA BIRLA Mutual Funds are Invested.

Company has invested into the Green Vehicles Variant to curb the Vehicle Pollution issues. It owns a Subsidiary Atul Green Automotive to accommodate this Green Variants.

New plant in Bavla near Ahmedabad which supports Future Expansion aspirations.

Urbanization, India Growth Story, Green & Electrical Vehicle usage will be Boost to the company in coming years.

Concern Factors

Following are the Concern Factors identified:

Demonetization & GST has impacted the Sales of the company. Any such reforms in the future will Negatively affect the company.

The past FY 2015 seems to have the higher number of sales. The direct Competitor Bajaj Auto although seems to have higher sales in FY2018 too.

Cash Flow seems to be not steady. FY2017 seems to have provided the highest cash flow. Current year Net Cash Flow is negative due to Capex expenditure.

Few misalignments with Industry Growth also visible. In few years the company growth was lower than the industry growth. (In high growth companies this will be the opposite)

image

Crude Oil Price increase can adversely affect the company sales.

Management seems to be Immune to Debts. This affects the Leveraged growth & expansion of the company. The sluggish growth rate of 10% may be due to these factors.

Major competitor is Bajaj Auto which dominates the 3-wheeler industry. Other Competitors are Piaggio & Mahindra. The Penetration & Network of Atul Auto needs to be multifold increased for growing above these niches.

Sales & Profit Growth

Sales & Profit Growth is visible for the current year.

image

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

History of Consistently Increasing Sales, Earnings & Cash Flow Yes. However the Rate of Growth is Not too Impressive. image
Durable Competitive Advantage Moderate. (compared with competitors) image
Future Growth Drivers / Sectoral Growth Yes. 15% CAGR Sector Growth forecasted for next 5 years. image
Conservative Debt (long term debt < 3 Net Profit) Debt is 0. image
Debt Equity Ratio, Current Ratio DER is 0. CR is 1.8. Both are Very Good. image
Return on Equity must be Above Average 22% image
Low CAPEX required to maintain current operations Not. image
Inventory Turnover Ratio, Debtor Days, ROCE All 3 are decreasing for current 2 years but within range. image
Management is holding / buying the stock No changes. image
Price is Under Valued (< intrinsic value), PEG Ratio PEG is high. image
Stock Price is consolidating (now) Yes. image
Stock Price is growing in past years along with EPS growth Yes. image
Consolidated PE, PB Ratio 2015 holds the highest price value. image
Cash Flow Positive, Net Profit % greater than 8% Yes. image
Paying Dividends, Tax Yes. image
EPS Growth Rate Yes. image
Jump in Trailing Result EPS Yes. image
Jump in Quarterly Result EPS Yes. 50% image
Expected Gain in 5 Years 300%. (Not impressive expectation) image
Price Movement Graph, 52 Week High & Low Okay. image
Volume Analysis Low Volume. Good if Growth manifests. image
Power of Brand Moderate Brand compared with Big Peers. image
Corporate Governance, Reputation of Leaders Yes. image
Fraud reported Not in current search. image

Summary

Based on the above analysis I would like to say that the company possess Multibagger properties but not in a Great Order. Hence be cautious about Investing in it.

image

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will Not be provided.  We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

More Free Multibaggers

You can find More Free Multibaggers here.

https://atomic-temporary-50748686.wpcomstaging.com/free-multibaggers-2019/

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

 

Atul Auto – Multibagger Analysis

Atul Auto Ltd.

NSE Code

ATULAUTO.NS

BSE Code

531795

URL

http://www.atulauto.co.in/

CMP

335.00

Free Report

Yes

Publish Date

Apr-13-2019

In this post I would like to Explore the Multibagger Potential of the company. This is based on a blog reader request.

Introduction

The company based in Gujarat founded in 1980s is into the business of Vehicle Manufacturing primarily in the 3-wheeler targeting Cargo & Passenger segments. Company maintains No.1 position in the Diesel 3-wheeler segment in Gujarat.

Earlier in 1970s, the company started with invention of ‘Chakkada’ which was a big success. The current CEO inherited the business from his father & currently have PAN India presence with 330+ primary & secondary networks of distribution centers across India.

The company also have Petrol/CNG variants with Overseas presence. The company has 850+ employees and 60000 production capacity.

image

CEO

The company CEO is Mr. Jayantibhai J Chandra. He performed previously as Managing Director of Khushbu Auto Finance Ltd. another subsidiary.

Positive Factors

Following are the Positive Factors identified:

Company has a Good Research Team. The company produces 3-wheeler in all Fuel range Petrol, Diesel, CNG, LPG and Electric. Electric Vehicles R&D on Card to accommodate Future trends.

Good Array of Products visible while ATUL Shakti is the new in array covering Passenger & Delivery segments.

image

FY18 had Sales Growth of 24% and Export growth of 40%. India three-wheeler market is projected to exhibit a CAGR of more than 15% by 20235.

Company does not have any Debt problems as it maintains Debt as Zero & Current Ratio above 1.8. CRISIL has reaffirmed rating as CRISIL “A” with stable outlook. HDFC Small cap & ADITYA BIRLA Mutual Funds are Invested.

Company has invested into the Green Vehicles Variant to curb the Vehicle Pollution issues. It owns a Subsidiary Atul Green Automotive to accommodate this Green Variants.

New plant in Bavla near Ahmedabad which supports Future Expansion aspirations.

Urbanization, India Growth Story, Green & Electrical Vehicle usage will be Boost to the company in coming years.

Concern Factors

Following are the Concern Factors identified:

Demonetization & GST has impacted the Sales of the company. Any such reforms in the future will Negatively affect the company.

The past FY 2015 seems to have the higher number of sales. The direct Competitor Bajaj Auto although seems to have higher sales in FY2018 too.

Cash Flow seems to be not steady. FY2017 seems to have provided the highest cash flow. Current year Net Cash Flow is negative due to Capex expenditure.

Few misalignments with Industry Growth also visible. In few years the company growth was lower than the industry growth. (In high growth companies this will be the opposite)

image

Crude Oil Price increase can adversely affect the company sales.

Management seems to be Immune to Debts. This affects the Leveraged growth & expansion of the company. The sluggish growth rate of 10% may be due to these factors.

Major competitor is Bajaj Auto which dominates the 3-wheeler industry. Other Competitors are Piaggio & Mahindra. The Penetration & Network of Atul Auto needs to be multifold increased for growing above these niches.

Sales & Profit Growth

Sales & Profit Growth is visible for the current year.

image

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

History of Consistently Increasing Sales, Earnings & Cash Flow

Yes. However the Rate of Growth is Not too Impressive.

image

Durable Competitive Advantage

Moderate. (compared with competitors)

image

Future Growth Drivers / Sectoral Growth

Yes. 15% CAGR Sector Growth forecasted for next 5 years.

image

Conservative Debt (long term debt < 3 Net Profit)

Debt is 0.

image

Debt Equity Ratio, Current Ratio

DER is 0. CR is 1.8. Both are Very Good.

image

Return on Equity must be Above Average

22%

image

Low CAPEX required to maintain current operations

Not.

image

Inventory Turnover Ratio, Debtor Days, ROCE

All 3 are decreasing for current 2 years but within range.

image

Management is holding / buying the stock

No changes.

image

Price is Under Valued (< intrinsic value), PEG Ratio

PEG is high.

image

Stock Price is consolidating (now)

Yes.

image

Stock Price is growing in past years along with EPS growth

Yes.

image

Consolidated PE, PB Ratio

2015 holds the highest price value.

image

Cash Flow Positive, Net Profit % greater than 8%

Yes.

image

Paying Dividends, Tax

Yes.

image

EPS Growth Rate

Yes.

image

Jump in Trailing Result EPS

Yes.

image

Jump in Quarterly Result EPS

Yes. 50%

image

Expected Gain in 5 Years

300%. (Not impressive expectation)

image

Price Movement Graph, 52 Week High & Low

Okay.

image

Volume Analysis

Low Volume. Good if Growth manifests.

image

Power of Brand

Moderate Brand compared with Big Peers.

image

Corporate Governance, Reputation of Leaders

Yes.

image

Fraud reported

Not in current search.

image

Summary

Based on the above analysis I would like to say that the company possess Multibagger properties but not in a Great Order. Hence be cautious about Investing in it.

image

Source

http://www.futurecaps.com

Value

Research. Affordable.

SEBI Registration

INH200006956

Disclosure

Adviser do not hold above stock

Disclaimer Futurecaps is an independent equity research team. Use of the information herein is at Investor’s own risk. This is not an offer to sell or solicitation to buy any securities and Futurecaps will not be liable for any losses incurred for the investment based on the advice.  The Investor is advised to do due diligence in the scrip mentioned.  None of Futurecaps Advisors hold 1% above Holdings of this company.

Premium Services

This stock analysis is part of our Free Services where Tracking & Updates will not be provided.

We encourage Serious Investors to Buy our Premium Service where our Adviser Team is investing along with Tracking & Updates.

image

Blog at WordPress.com.

Up ↑