Background: It belongs to a non-agriculture industry that provides largest direct and non-direct employment in India. The industry relies heavily on government support for its survival and government has a special loan scheme for this particular sector. All the companies in this sector have huge debt on their balance sheet. The companies in this sector keep on diluting their equity to service their debts.
The Gem: What if there’s a company that has not diluted equity in last 8 yrs and has also drastically reduced debt (just through internal accruals)? What if the company has even pre-paid the loans and now has a debt to equity ratio one of lowest in the industry (without diluting equity remember)? What if I tell you that had you bought that company five yrs back (2009) then what ever you had paid in stock price have almost all been returned to you by means of dividends? Also, the dividends are increasing every year. What if I tell you it has one of the best 5 yrs RoCE/RoE/RoA in the industry? What if the PE is way below industry PE, infact is almost just twice of its Dividend Yield for this wonderful company? Ok, wait, What if I tell you that they have one of the best Net profit margins in the industry? What if I tell you that the stock is rock solid even in the most turbulent times? Whereas, companies in this sector has taken expansion at the expenditure of several hundred crores, this company I am talking about has already enough spare capacity? The company has been generating tremendous cash and that has played a significant role in debt reduction and has also increased the reserves tremendously (when reserves becomes several tens of times the equity capital, the companies normally give bonuses too – I am not saying it will happen, just FYI) and CRISIL has taken a note of it and has upgraded this gem’s rating for both short term debt and long term debt recently. Its product is used in manufacturing a premium day-to-day item and is number one in this important segment. It has never had any complaints with either clients or suppliers.
Technicals: Has Broken out after 10 yrs consolidation so technically brilliant.
Note: Please understand that that this sector is filled with gems and therefore, one should not look for a turnaround candidate (until and unless there’s an exceptional case). A turnaround candidate makes sense in established sectors. This sector has this brilliant company then why should we worry about companies that are trying to turnaround. Shouldn’t we stick to companies that have stood the test of times. Normally, the safest companies are the best investing options for long term and provides maximum wealth creation. Just take yourself to 2009 and think panic. During that panic you had a choice between a Kajaria Ceramics and Madhav Marbles, which one we should bet? Valuations wise not much difference right? Should we try to bet on madhav and pray every day and night for turnaround to be sustainable or just buy the best in business, kajaria and enjoy life?
By the way keep an eye on this sector as this sector has never led a bull market and with Modi Govt’s “Make In India” movement, along with the sector’s employment potential, this might be the sector to be in so if there’s a great gem available at throwaway valuations that has potential of becoming a large cap, it might be a good idea to invest in it for long term and reap the benefits in future.
In case you have any questions regarding this, mail me, no discussions on the blog please. Market cap is sub-300 cr as with the policy of this blog. Name would be revealed on Monday. God Bless.
I know the answer
great… 🙂 .. God Bless.
Viraat industries?
pls email me the answers as mentioned in the blog
ACE, I also joined the party to put some effort and come to conclusion with one stock and send to you by mail… will you revert back in the mail or the result will be announced in the blog…
Respected Ace,
Please reveal the name Monday early morning itself so that we may have the time to have some study about the stock before market opening.
ACE,
Was the rating upgraded in November?
no
dear ace..please give ur mail id. I got the answer. Please confirm
aceinvestortrader@yahoo.co.in
I know the answer
Ok thats great then…
Not clear about the Market Cap you posted (sub-300??), Can you please explain or you are referring to free float Market Cap?
ofcourse total market cap sir
Dear aceinvestortrader;
First of all please accept my sincere thanks to you for providing this selfless service. To me the sector you are referring to in above mail is Textiles or Tourism but your indication about government support for its survival and government has a special loan scheme for this particular sector makes me believe that you are referring to Textiles sector. Which company still trying to guess. Regards
Piccadily Agro
kindly email the replies.
Sir, what was the technical breakout level for Cybertech?
already replied to exact question earlier, could you pls search it blog
My comments are deleted thats good. Why not it is your blog.
hello harish, its possible that your comments had some links or something that my BOT considered against rules and moderated it…i beleive my own comments also got deleted…i am still trying to perfect NLP processing so pardon me. Kindlly email me if something urgent… God Bless..
hello manoj, will have to delete the comment as it contains link, but thanks for the tip. according to me the first resistance was broken on 28-29…and then 55-60 band. Yes, 41 (so 42) was also a resistance though not a big one according to me.
What stock are you talking about
Dear ace…when will you reveal the name of stock… Will it be during market hours
tomorrow….the name would be disclosed during market hours on the blog..
sorry change of plans because of unforeseen circumstances. will have to reveal today
Thanks Sir!
This was about Cybertech for others information.
means what ?
How to check equity dilution and crisil rating for any company?
exchanges have all the information also you could use a screening service.
hi ace,
by screening service, are you referring to screener ? that is the only free service which provides a decent snapshot of financials..
could you give some tips on how you look at the numbers ? do you copy paste all the data from the AR’S onto an excel and then have a good look or your custom made software does all the work for you ?
custom made software…why to do copy paste, excel (which requires such a costly licence) …and automation is always better.
ace could you guide a bit on how you “pull” the data ? i would be really thankful. do you pull from “screener” ? can we use excel macros somehow ? thanks
i use coding to do it…yes you could probably use macros too.. try googling
Respected Aceji,
Please share your opinion on CORAL LAB.
coral is decent but i am not confident about its growth prospects as of now
the industry PE is in late teens according to me….also could you be kind enough to not dicuss on the blog pls. The comments could be moderated by my bot…sorry for the inconvinience, you could mail me.
I want to know that is Dairy or milk production companies will come under AGRO sector or in processing sector?
it could come under various bse categories, could be agro, could be processed foods, packaged foods etc…
Thanks ACE for confirming the answer in the mail… i would request to try to post the article today. so that other friends in the blog aswell could take time to review and could take position for the tomorrow market.
Let people work on the research buddy.
What are your views on Shivalik Bimetalik co trols ltd. And control print ltd.
not confident of shivalik, control print already replied multiple times
Ace can we consider this NTG Series -1
In future NTG -2 …?
It will help us finding good stocks.
dont know…lets see buddy
What month should we consider in 2009 for ‘What if I tell you that had you bought that company five yrs back (2009) then what ever you had paid in stock price have almost all been returned’?
you can roughly consider the lows…
what’s your view on ic&semiconductor manufacturing sector right now
dont knwo which ocmpany is talking about
Sir when the name will be declared i.e. during market hour or before market hour.
sir request to declare name during market hours so that we can get chance to buy.
What make u so uncomfortable to change ur plans? My suggesstion for u that plz do reveal the name tomorrow only in market hours. Just a suggesstion. Bcoz if u reveal the name now. It will open either on circuit or very higher to get any benefit. Kindly have look at my request.
Hello Ace,
How does Sunil Healthcare look like?
already replied on this