KSE - Value buy?

The company Kerala Solvent Extraction (now KSE) was established in the year 1963 and entered into cattle feed industry in the year 1976. The company later also entered into the business of milk procurement, processing and creating dairy products like ice-cream, ghee and packaged milk.

Financials
The average ROCE of the company over the last ten years is 30% while it is higher at 45% in the last three years. The company's net current assets at the end of FY2016 was 45 Cr. The operating cash flow of the company over the last ten years was average 12.11 Cr while higher at 15.78 Cr in last five years.

Shareholding
The promoter shareholding came down from more than 32% in FY2013 to less than 27% now. But that might be due to sharp increase in share price of the company. The same promoters increased their holding between FY2010 - FY2013.

Valuations
At the current market price of INR 550, the company has a market cap of INR 180 Cr. The share price was trading around INR 250 between 2005-2013. During this time the book value of the company increased from INR 80 to INR 240 now. The company is not very cheap but not very expensive either. It might become attractive if price corrects by half.

Sumedha Fiscal Services - Value Buy?

The company was established in the year 1989. It provides a wide array of services including Investment Banking, Wealth Management and Broking Services.

Financials
The average ROCE of the company over the last 10 years is 28.29% and is lower at 20.31% in the last 3 years. The company has current assets to the tune of INR 20.13 Crore. The average operating cash flow of the company over the last five years is around INR 1 Crore. The company has remained profitable and paid dividends over the last 11 years.

Shareholding
The promoters hold 49.57% of the company on March 2016. It has increased from 46.86% in December 2015.

Valuations
At the current market price of INR 14.7, the market cap of the company is INR 11.73 Crore. The stock price is barely trading higher than its price in year 2005 when it was trading between INR 8 and 9. The book value of the company has increased from INR 12 to INR 39 during these ten years, the EPS has gone up from INR 0.57 to INR 2. The company's valuation is below its net current assets. The company doesn't seem to be very expensive at this price.

How markets can be very wrong

I had in previous post already mentioned names of several commodity companies Peabody Energy and Arch Coal. The graph on LA Times about Electricity produced from coal in the state of California is reproduced below:

It is clearly visible that something drastically changed in 2011 and the coal based electricity production fell off a cliff. The charts of both the companies' stock price is shown below:

Both the shares were trading at much higher prices in 2011 ($3250 for Arch Coal trading at $0.36 now, $72 for Peabody trading at $0.95 now) that means the market was not discounting the event of replacing coal with other cheaper options for producing electricity. Both the company's filed for bankruptcy recently.

How can market be right in 2011?