Birla Corp

I took a dig at Birla Corp today .. at about 325 rupees. (I had previously bought it at rupees 210 and sold it at 350 .. it seemed attractive again). As usual, haven't gone into the details much and based the investment on a back of the envelop calculations. Quick notes -
1. One of the lowest PE ratios among all cement / diversified stocks (about 6.5 on a 1-yr fwd)
2. Investments of about 420 crs in the B/S (haven't seen the annual report, but should atleast come at cost .. effectively, 60 rupees per share)
3. Profits for last 4 quarters, between the 95 crs - 105 crs range (annual profit estimate at 400 crs, hmm .. ingenius calculations)
4. Debt recap ratio at 50% ... quite comfortable !

And.. just to be sure .. i searched for an analyst report on Birla Corp. Fortunately, not many analysts are following it. Religare did publish an update in Nov '07 and has put a buy indicator on it with a target of 500 rupees

Amtek India

Some back of the envelope calculations ... Amtek Auto shares, in Amtek India are worth about 75 rupees per share.

In isolation, Amtek India is at a P/E of 8. Fundamentally, auto ancillaries should be a big gainer with the 1 lakh rupee car etc. perching on Indian roads. Additional infrastructure and rising incomes also help.

KRBL

I had made a mention of KRBL early this week. I got two comments .. one, an anonymous user (read: free stock tips loader) in his/her classical brevity wrote : 'where is the text?'

The other, Amit posted the following report from ICICI Direct (here)

The Pankaj Pandey (the analyst tracking KRBL) report was an excellent overview of the industry, fundamentals and financials that KRBL rides. My reasons for picking KRBL were based on Grahamian principles (to a decent extent) :

a) NCAV .. KRBL enjoys an NCAV of Rs. 30.5, which would have been a no-no in Ben Graham's blue book of stock picking rules but still is much better than other companies.

b) The more interesting and valid justification of the stock came from the debt recapitalisation method which puts KRBL's safe borrowing capacity at 370 crs. And while KRBL's m-cap is only 257 crs, you have a brilliant margin of safety of over 100 crs with KRBL

c) PE is definitely a killer ... my 1 yr fwd PE for KRBL was a miserly 3.9

I bought about 200 yesterday and another 150 today

Andhra Cement

I picked up about 700 shares of Andhra Cement. I am sharing some quick facts here -
a) Sales have gone off the roof. From 100 crs last yr (in 18 mnths) to 270 crs this year (on 12 months) is brilliant. Also the Q-on-Q sales have been on the rise.
b) Profits : dont look at PAT because last yr's 40 crs is laced with an extra-ordinary income of 65 crs. The op profit was -25 crs for last year. This year, Andhra Cement closed at 38 crs of net profit.
c) The 1 yr fwd P/E is around 6, which makes it one of the cheapest cement stocks in the market.

Cement stocks are a function of the infrastructure growth in the country and although, I despise fundamentals and industry analysis .. i can see it's effect on the company financials here.

Net net, Andhra Cement is extremely convincing. Currently at about 40 rupees.

Holding on

I sold equities worth about 4.7 lakhs on Friday, in the process realising a pre-tax gain of about 2.2 lakhs on an investment of 2.5 lakhs. This cumulates to an absoulte return of 88% in a 8-month period and an annualised 132% return. Of the stock, two stocks had risen by 200% while one stock gave a 300% return of the investment.

Interestingly, it brings me to the subject of holding onto stocks. This is perhaps the first time, I've actually cashed-in on my buys by being patient and not selling off the stocks at a frantic 50% rise. There's much more to be made on holding onto stocks.

I now plan to re-invest these 5 odd lakh rupees in a chunks of 40,000 rupees in 8 different stocks while the rest of the monies will be in parked in cash and liquid investments (in a 50:50 ratio). In essence, we'll now work like a small PE firm with a holding period of 4-5 years on every stock. The target annualised yield at the end of 5 yrs will be about 30%. The 5 lakh rupees would thus have risen to 18 lakhs.