Stocks for the long and short term portfolio

[jamit_05]

This has increased its ROCE dramatically.!!

Lets look at the Interest Expense in comparison with Interest Income.

23500 IE
32000 Income

IE is almost 75% of Interest Income. Meaning it is paying a good amount of interest and this is at par with the industry.

DHFL is a well based company and in a thriving industry. However, focus on two of its shortcomings in comparison with Gruh:

1) Low Possibility of at least 15% growth in EPS on such a big base... 5 times Gruh.
2) High cost of money that it is paying, reflected in a significantly lower Gross or Net profit margin.

Due to these reasons, its PE is very low... 4x hence it is a attractive stock but at lower levels. In another vein, for small companies like Gruh PE is not all that important because a few years down the line it will have a much higher EPS hence PE will normalize as the company grows.

If you find anything special with DHFL please share.

Numbers of Gruh for the same year.

IE 4000
Income 6200
Ratio: 65%

Gruh is better. Hence, has a better profit margin.

 

[jamit_05]

What does it mean for me to "Investment in Stocks"?

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[Einstein]

Lets look at the Interest Expense in comparison with Interest Income.

23500 IE
32000 Income

IE is almost 75% of Interest Income. Meaning it is paying a good amount of interest and this is at par with the industry.

DHFL is a well based company and in a thriving industry. However, focus on two of its shortcomings in comparison with Gruh:

1) Low Possibility of at least 15% growth in EPS on such a big base... 5 times Gruh.
2) High cost of money that it is paying, reflected in a significantly lower Gross or Net profit margin.

Due to these reasons, its PE is very low... 4x hence it is a attractive stock but at lower levels. In another vein, for small companies like Gruh PE is not all that important because a few years down the line it will have a much higher EPS hence PE will normalize as the company grows.

If you find anything special with DHFL please share.

Numbers of Gruh for the same year.

IE 4000
Income 6200
Ratio: 65%

Gruh is better. Hence, has a better profit margin.

interest income and expense finally shows up in net reported profit.

yoy both companies have average net profit rate, historically 5 year dewan housing seems to have better net profit growth. can't tell as my excel is busy. If this is correct because of their debt restucting (low debt to equity), this company have a very very good change of growth here by simple getting more funds from rbi and make profit out of it. its a multibagger here.

looking at quartely results, dewan has recently posted nearly triple and double the average profit amount in last 2 quarters. this has also inflated the price.

 

[Einstein]

one more thing, in my early days I also use to screen stock with PE and EPS, didn't even use to bother looking for balance sheet of companies with PE higher then 20. recently warren buffet bought heinz with the PE of 32. is it expense?? I had seen that company and im sure he will quadruple his money in next 5 years alone.

 

[jamit_05]

one more thing, in my early days I also use to screen stock with PE and EPS, didn't even use to bother looking for balance sheet of companies with PE higher then 20. recently warren buffet bought heinz with the PE of 32. is it expense?? I had seen that company and im sure he will quadruple his money in next 5 years alone.

Makes sense. Much like Gruh. If the investor has learned that the company is still very aggressive on growth, which Heinz is, then PE does not matter beyond a point!


These guys make projections for the next 5 years and find that the ratio of the future EPS by CMP is attractive! But can we do it? Well, not really. So our safety of capital lies in seeing the EPS on the balance sheet... else sell the stock

 

[Einstein]

http://www.moneycontrol.com/news/cn...-paints-how-everyone-got-it-wrong_974072.html

downgrade asian paints?? how did they did it? coin toss??
I guess few weeks ago you mentioned Asian paint in here, its a good company can be compared with coca-cola and walt disney. you cannot downgrade coca-cola , walt disney.

Its a very well organized company only bad thing is price!! as an value investor I will buy as much as possible in next recession maybe in next 10 years lol.

 

[jamit_05]

What does it mean for me to "Invest in Stocks"?​

Let us get down to basics. Why should someone invest in stocks when money can safely and easily grow in almost 100% reliable medium term debt funds at near 10% Interest rate, if timed well? You can do away with all the study and the risk.

So, let us first get our objective straight, lest our efforts should misfire.

Let me do aside with a popular misconception. Investments are popularly believed to be a super-shrewd transactions at the end of which one makes "multi-baggers" and nothing short will do. This may work for some, but that is not my pursuit.

My Objective is humble and achievable by almost anybody. Mine is not a path of fire and there probably won't be much excitement. It will give mediocre returns.

My objective is this: If debt funds can give 10% annually, then I will not buy a stock which gives me any less. Then you may ask, why stocks? Just buy debt funds. Hold that thought.

In addition I also want the EPS of my purchased stock to have the potential to grow by atleast 10% every year. This is what makes stocks a more attractive proposition.

Let us see what are the implications of that by taking up a stock I am currently keeping a tabs on: Petronet LNG.

I see its EPS settling at around Rs.10. Since, I want 10% return on my money... I am looking to purchase this stock at Rs.100 and not a penny more. It is a reliable stock, backed by GOI. I also expect its EPS to steadily grow as it has another plant in the pipeline. I cannot pin an educated number to it, but 10% is a fine estimate.

So, after 10 years, at a compounded growth of EPS at 10%, I will see its EPS become Rs.40. Since I had purchased the stock at Rs.100.... a EPS of Rs.40 means a 40% growth every year then on! (This beats debt funds, hands down.)

However, it is a matter of ones education, his committment to learning the investment process to make sure he picks stocks that are able to transfer the success on the field to its Share Price. Many big names have failed.

Some managements lose their heads in success. They end up making acquisitions and are then unable to unlock potential, like Opto Circuit. OR economic conditions take a turn for the worse and they are unable to service debt and have to go in for debt-restructuring. This is an investment gone bad. So, you must get out. This is what makes the process interesting.

 

[shreeux]

What about MM Forgings Limited?

Yeasterday break upper circuit, today was not moving?

 

[Einstein]

What about MM Forgings Limited?

Yeasterday break upper circuit, today was not moving?

May I know why you choose a company to invest in with only 110 crore market cap??

 

[roketsingh]

jamit/einstein: I am not sure if this is the right forum but I wanted to ask a completely different question here

Do we have any place where one can see the holdings for a fund, like MF or individuals/enterprise? To give an equivalent example, long holdings of various funds, HF or MF, in the US can be seen in 13D filings.