Thursday, February 25, 2010

Some Graham plays?

Following is the list of companies which Graham could have bought:

CompanyNet Current Assets+InvestmentsDebtNet Current Assets + Investments - DebtMarket Capitalization
Modern Shares9.82+2.422.719.534
Medi Caps4.11+44.67048.7818.16

Modern Shares is giving dividends for last ten years, at least, and MediCaps is giving for last six years. MediCaps has a big investment portfolio in Liquid Mutual funds while Modern Shares has most of its investments in fixed deposits. Priya's net current assets is mostly in debtors which needs more research.
Bookmark and Share

Tuesday, February 23, 2010

Mutual Fund Mistakes

I have already talked about reckless investment practices of mutual fund here and here. One more example I got to know when I was analyzing a company named Shanthi Gears.

HDFC Mutual Fund holds a very large stake in this company through various mutual fund schemes. If you look at the block deals of the company, HDFC Long Term Equity Fund bought the shares at INR 78.5 on 26 April 2006. HDFC Prudence Fund bought the shares at INR 61.5 on 21 June 2006. This was a boom time for auto/capital goods industry. The stock price peaked in January 2008 at INR 115 and bottomed in March 2009 at INR 25. As can be seen today, the company's share price is hovering around INR 37 after three years and nine months.

Bookmark and Share

Thursday, February 18, 2010

Special Situation in Solvay Pharma

This is my first post on a special situation. Abbott of US announced to acquire pharmaceutical business of solvay group of Belgium for EUR 4.5 billion on 28 September 2009. Both Abbott and Solvay has listed subsidiaries in India. Since Solvay has a listed subsidiary in India, SEBI's takeover code comes into effect and the acquirer, which is Abbott in this case, needs to make an open offer. The open offer has been announced and the offer price is INR 3054.73. The last traded price of Solvay shares on BSE is INR 2879.85 on 17 Feb 2010. So how can a value investor take advantage of this opportunity?

Bookmark and Share

Saturday, February 13, 2010

Where are the lakhs?

I am talking about the missing lakhs from the results of Atul. The company has from the last three quarters started omitting lakhs from every item of its result and reporting everything in rounded "Crore" figure. One more company that follows the same practice is Infosys which started the practice from SEP 05 Quarter. It is surprising suddenly the company started doing business in round figures of "Crores" when the company's total yearly revenue is just around INR 1200 Crore. Infosys started doing it when its revenue went above INR 2000 Crore quarterly.
Bookmark and Share

Friday, February 5, 2010

Sensex - Nifty EPS after Q3FY10

Sensex EPS stands at Value-16224.95/PE-20.11=INR 806.81 as per BSE on 4 February 2010. Nifty EPS stands at Value-4845.35/PE-20.84=INR 232.5 as per NSE. ACC and Ambuja results were still not counted so this may change a little bit.
S&P CNX 500 EPS stands at Value-4139.7/PE-18.6=INR 222.56. BSE500 EPS stands at Value-6484.64/PE-20.06=INR 323.26 while that of BSE SMALLCAP EPS stands at Value 8344.74/PE-16.02=INR 520.895.

The following table may summarize better:

DateSensexNiftyS&P CNX 500BSE 500BSE SMALLCAP
Jan 7, 2008734.39222.629203.26295.67603.15
Mar 9, 2009702.27210.74174.99254.52482.61
Feb 4, 2009721.71210.91174.92278.62599.46
Two Year CAGR4.8%2.19%4.64%4.56%-7.07%

This shows that even though the profits of Indian companies may have risen by 20-25%, due to dilution of equity, the EPS has risen by 10-12% for Sensex and Nifty. The rise in EPS for broader indices like S&P CNX 500 and BSE500 is more due to the fact that they fell more too compared to Jan 7, 2008 levels. For all the indices, the EPS growth is less than 10% when compared to January 7, 2008 in two years, i.e. less than 5% compounded annually and negative for BSE SMALL CAP index. People are still optimistic and saying INR 1250 EPS for Sensex and INR 375 EPS for Nifty in FY12. Pretty stupid forecasting.
Bookmark and Share
Related Posts with Thumbnails