Tata Coffee - Discover the refreshing world of value pick!!!

Hi,

This presentation was partially delivered on March 15, 2014 to Equity Pune group and later improvised. In this presentation, I discussed challenges in front of world Coffee industry in general and prospects of Tata Coffee in particular and why the stock is all set to give handsome returns.

You may download the presentation from the link:

http://www.slideshare.net/ndharmawat/tata-coffee-discover-the-refreshing-world-of-value-pick

Please share your valuable feedback.

Regards,

Niteen S Dharmawat

How one could have avoided Everonn Education

This post on Everonn Education has a thread that goes back about 2.5 years ago, see below. One of my friends asked my opinion on Everonn Education when one of Everonn's key management personnel (MD and founder of Everonn Education) was just arrested by CBI.

The stock was trading around 350+, see below note. However, the stock bounced back for a brief period sometime in Oct 2011 and reached a high of 390. I was of the firm opinion to exit this stock and this price movement was god send for the friend.

Later this stock, read the darling of once upon a time of the market punters, could never see those levels. Today that friend reminded me of Everonn Education and asked me to check the price. Its today's price is Rs34 which is a loss of about 91% of the capital from Rs390 levels. I am sure if it will never see those levels again in its lifetime. It will be worth reading below communication and if you have any opinion, please do share.

Cheers,
Niteen S Dharmawat

On Fri, Sep 2, 2011 
Niteen S Dharmawat wrote:
 

How one could have avoided Everonn EducationEveronn Education which came in news because CBI had arrested the founder and managing director of Everonn Education Ltd., P. Kishore, on charges of bribing an Income Tax official with Rs 50 lakh. 

This will adversely affect the stock price of Everonn Education. Everonn Education had been a darling of stock punters for last several months/years due to various reasons including flamboyant business model, appointment of prominent personality like Dr. J. J. Irani on the board of the company, selling stakes to prominent shareholders like Sea King Infrastructure's (SKIL) Mr. Nikhil Gandhi and investment by some prominent non-promoters (part of public shareholding) in the company include  Morgan Stanley Mauritius Company (4.32%),  BNP Paribas Arbitrage (1.31%), Citigroup Global Markets Mauritius (1.30%), Reeshanar Investments Ltd (2.96%),  JF Eastern Smaller Companies Fund (2.05%), India Fund Inc2.28%), Indea Capital Pte Ltd A/c Indea Long Termopportunities Master Fund(2.08%), Amundi Funds India(1.82%) and New Vernon India Ltd (5.69%).

Could we as an investor save ourselves from investing in a company like Everonn Education? Yes, certainly. If someone had just followed the parameters described in my investor education presentation, s/he would have never invested in this company. One of the reasons which would have given a red signal is ‘Skin in the game: Promoters buying or selling’. 

If you see the Shareholding Pattern (SHP) of Everonn then you will find that main promoters are holding 42.67% of shares. This 42.67% includes the diluted stakes by selling 40 lac shares (which is equivalent to 20.83% of total shares of Everonn) to SKIL Infrastructure. If you see the SHP reported in June 2011 (same in March’11) this entire stake of 40 lac shares is pledged by SKIL Infrastructure. In other words, the skin in the game of promoters is reduced to 21.84%. Out of this 21.84%, the main promoters have also pledged 8,13,989 shares. If we remove this also then the promoters holding comes down to 17.6%. One would not have invested in Everonn Education because: 

- Promoters have pledged significant stake and thereby reducing their stakes in the game significantly 

- The main promoters have less 20% stakes remaining with them (don't smell a similar to Satyam? we forget so fast.) 

- Never get tempted in the company just because of big names are part of the venture instead a due-diligence would have helped.

  

Trust this is of help. Please share your views.

Happy investing,

Note: the views expressed here are in all respect my personal and may go completely wrong. This is for private circulation and has been sent only to limited people to get their views. You are requested and advised to do your due-diligence and take the advice of a qualified financial advisor before taking any financial decisions.

Suni Hitech Engineers - BSE: 532711, NSE: SUNILHITEC

CMP: INR 53. Market Cap: Rs 65Crs, PE: 2.6, Div Yield: 2.3%, Book Value: 227

Trailing Twelve Months (TTM)

Revenue: Rs1172Crs

Net Profit: Rs 25Cr

Dec QTR:

Revenue: Rs 362.09Crs

NP: Rs 6.26Crs

Promoters holding: 53% (no pledging)

Foreign holding 10.45%, 

Non Prom Corp 4.26%. 

Public 32% i.e. Rs 21Crs

Also in public category, more than 1%:

Bessemer Venture Partners Trust: 8.96% (click here to know more about BVP investments: http://www.bvp.com/portfolio). They acquired a long back and if I remember it correctly it was close to Rs400 per share.

Ashish Dhawan: 2.00%

So remaining from public category is Public 21% i.e. ~Rs 14Crs

Cheers,
Niteen S Dharmawat


IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above. I sincerely request you to do your homework before you take any position whatsoever. I, my relatives or friends may have/have positions in the stocks discussed here.

Eimco Elecon: The Power of Quality Undervalued Stock

Hi,

I delivered a presentation today on Eimco Elecon. I believe that it is an undervalued stock.

Eimco Elecon is a leading, profit making and established manufacturer of various Mining equipment. It is a zero debt company available at a Market Cap of just Rs92Cr (CMP INR 160). More importantly it has an investments of INR 60.42Crs in high grade shares and mutual funds. So effective market cap is just INR 32Crs i.e. INR 55 per share. Besides Net Current Asset per share is INR 154 and book value of INR 295. It is like company paying us to acquire its shares. Some additional highlights include consistency in operating and free cash flow, dividend yield of 2.5% (paying dividend for last several years), ROCE in double digits during last 6 years, and high promoters at 74% stake including 25% by Sandvik group. Also HDFC holding 4.79% for last several years. The key negatives are slowdown in mining and construction industries and overall economy & equipment industry and the stock is an illiquid/low volume stock.

You may get the presentation from: http://www.slideshare.net/ndharmawat/eimco-elecon-the-power-of-quality-undervalued-stock

Please share your feedback.

Regards,

Niteen S Dharmawat

Persistent - a small story

Hi,

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.

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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%.

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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

Cheers,
Niteen S Dharmawat

On Fri, Nov 8, 2013 at 12:32 PM, Niteen S Dharmawat <niteen.dharmawat@gmail.com> wrote:

Hi,

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...

Enjoy...

Cheers,
Niteen S Dharmawat

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.

http://www.slideshare.net/ndharmawat/the-paper-products

Your feedback is most welcome.

Cheers,

Niteen S Dharmawat