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Sunday, January 26, 2014

Persistent - a small story


I have often been asked this question, as recently as last week. How to identify winning stock? I delivered one presentation (uploaded on my LinkedIn) on this subject of how to identify a winning stock. 

I would like to today sight a real example where we identified a stock, Persistent, that has delivered another stellar performance. Persistent was identified at a price close to Rs. 300 about 2 years ago. Now at 1000 + dividends. 

Frankly speaking, I have not done a very detailed financial analysis about Persistent (forget about financial modeling). A quick glance at numbers was sufficient, my presentation "how to identify winning stocks" was handy. So that allowed me to spend time somewhere else.

Phil Fisher said that if you want a detailed and accurate picture of 5 companies then go to five of them/their vendors, ask each of them intelligent questions about the points of strength and weakness of the other four, and nine times out of ten a surprisingly detailed and accurate picture of all five will emerge.

I went to five of my friends, relatives (little bit inputs from my side too) who understand technology industry, technology environment of/ challenges/ opportunities available to Persistent. Since Persistent operates from Pune some of them could give me inputs about the quality of its management. One of them worked, from Persistent's client side, on a highly acclaimed product that was delivered by Persistent to its client. These inputs were very very critical. This is how a decision was made to invest in Persistent. So really speaking, it was not a rocket science to identify Persistent. Why to waste time in building a rocket/model? Sometime a rocket/model may be required but most of the time NOT.

Disclosure: I am holding this stock.
Persistent Systems delivers another strong quarter

Persistent Systems reported another strong quarter, with 2.2% quarter-on-quarter growth in dollar revenue and 5.6% rise in profit after tax.

The company, which provides software product related services, is one of the few that has lived up to Street expectations, especially in the mid-cap IT space.

“We have delivered another strong quarter with 3.8% Q-o-Q growth in services and improved operational efficiencies. Our continued investment in technology has helped us establish leadership position in the Social, Mobile, Analytics, Cloud space,” said Dr. Anand Deshpande, Chairman, Managing Director and CEO, Persistent Systems.

“We continue to focus on products and IP-led revenue, tracking new industry trends, and encouraging innovative ideas that solve real-world problems.”

Persistent Systems reported a revenue of 69.94 Million, representing a Y-o-Y growth of 15.1%. In rupee terms, revenue was 4,327.57 mln, up 30.0% year on year. Quarter on quarter growth was only 0.1% due to the appreciation in the value of the rupee.

EBIDTA was Rs 1,197.25 million, up 45.3% year on year and 6.7% on quarter.

Profit before Tax (PBT) was INR 865.27 million, up 21.9% year on year.

Profit after Tax (PAT) came in at INR 641.98 Million, representing a Y-o-Y growth of 29.7% and Q-o-Q growth of 5.6%.

Wednesday, January 8, 2014

Vinati Organics...

Vinati Organics is a gem. I identified this stock at around 64 levels sometime in Aug 2011. 

The stock today touched 218 and going strong. This is a return of, including dividend, 250%.

Professional management, worldwide leadership position in its segment, strong financial performance, dividend paying, high promoters stake, no pledging, low debt, cheap valuations and a history of performance coupled with right expansion moves made this company an attractive investment opportunity.

Later some of you bought @100 or so when I discussed this and I hope they enjoyed the ride.

We met with Pune Equity Group on Jan 4th and I discussed about Paper Products. It is another long term bet.
Please feel free to invite anyone that you feel would benefit from the discussions.

To understand the product lines of Vinati please use the below link. This will help to understand why we need to be bullish on Vinati (other than the financial factors): http://in.finance.yahoo.com/video/demand-products-remain-buoyant-vinati-073004369.html

Niteen S Dharmawat

On Fri, Nov 8, 2013 at 12:32 PM, Niteen S Dharmawat <niteen.dharmawat@gmail.com> wrote:
Remembering that you bought/discussed Vinati at around 110 levels. After that it came down 85 levels. But now look at the stock. It is zoooming past 150...
We identify and bought Vinati for the first time at around 65 levels...


Niteen S Dharmawat

Saturday, January 4, 2014

The Paper Products - the power of undervalued stock

Delivered this presentation to equity investment enthusiasts in Pune. First slide was about recap of the earlier presentation delivered to the same group. Enjoyed interacting with the group.

Your feedback is most welcome.

Niteen S Dharmawat