Originally posted by BGKGURU
basantji
what abt competition. I think capacity is increasing day by day and new players coming. Anyway why indotech promoters are selling?? they must know much more than us. |
Maybe they know more but for every seller isn't there a buyer? At the end of the day it is a commoditized business but money can be made buying commodities provided people have a) An exit strategy these are not buy and hold for ever stocks and b) Buying at very cheap valuations c) Getting protection through payout d) Buy only after stocks have moved sideways for 4-6 months!
Please do not pounce on me since this is anew startegy I am following to buy commodity cyclicals will elaborate in detail on the steps I take to buy such companies.
Also as long as earnings do not collapse (plus minus 10%) one should make money buying a stock that trades at less then 4 times ex cash and offering payout protection with high RoCE and zero debt.
Also these companies tarde at market caps of Rs 400 crores and that is not expensive. Plus many of these stocks are available at below Book Value and 20% of market cap in cash.
Now with that kind of a fundamental scenario one cannot start looking at moats and competitions.
Finally stock market is all about the odds and there is nothing sure shot or fool proof.
Originally posted by chimak10
Brics Securities
this is from feb-09
For 9MFY09, Voltamp Transformers (VTL) PAT improved 45% to Rs846 million, while revenues climbed 13.4% to Rs4.76 billion.
While we estimate earnings to improve 41% for FY09E, we expect a decline of 11% for FY10E mainly on 3% volume decline and 360bps drop in operating margins.
This drop in margins is mainly on account of lower order intake and an almost depleted stock of legacy orders, taking out operational leverage.
VTL is a debt-free company and is expected to record free cash flow of 64% CAGR over FY09-11E in spite of only 5% revenue CAGR on the back of declining volumes.
At current EV/EBITDA of just 2x FY10E, we rate the stock BUY with a price target of Rs431, assigning an exit P/E of 4x FY10E (discount of 60% to its average two- year forward multiple of 10.8x), offering an upside of 28.4%. |
At that rate the company will earn back its market cap in 30 months and the existing assets will add as further margin.
|
We have necessarily put a bottom to the economic data
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Plus this is what the Big Lady Bear of the Indian markets suggests! Obviously when economic revival happens all cyclicals will enjoy a decent run up.
My reference to the Big Lady Bear is just an attempt to show how the bears are viewing the economic data and not with any intention to follow any Brokerage or Fund house.
Edited by basant - 19/Apr/2009 at 12:11pm
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