Category: Daily Analysis

JainMatrix Investments June 2014 updates

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June 6th 2014

Dear Reader,

This is a very exciting period for Indian investors. Normally Time is Money, but the current time is like Gold.

After the election results, the new government has made many very good moves. The bold invitation to the neighbor country leaders was a wonderful way to start conversations. The decision to merge some related ministries to improve decision-making and unify leadership roles is impressive. Less government and more governance is a super goal.

The market has welcomed these moves with approval in the form of big buying and this week the Sensex crossed 25,000 decisively and Nifty the 7,500 mark.

At JainMatrix Investments we are happy to note that our stocks are riding these times very well. Lets recap our recent reports and articles.

  1. The Wonderla IPO recommended as a Buy did exceedingly well. At last count the firm was up 70% from the IPO pricing. The flip side of course was that only a few lucky people got shares on IPO allotment.
  2. Next we reported on Petronet LNG – A Recovery in Kochi. Surprisingly, it is already 11% up in the last month.
  3. In the article “How many mutual funds should I hold?” we encourage investors to buy Direct Equity with the help of an Investment Service like the one we have at JainMatrix Investments, so investors can reduce costs, maximize gains and gain control in the investment process.
  4. This website has been created to be a valuable resource for the investor. There are now over 90 reports and articles here which track the equity fundamentals, analyse events, comment on sector performance and educate the Investor. At JainMatrix, we want to make equity investments easier for each and every visitor of this website. To use this resource best, find the Company or Sector of your interest from the Search Boxes, or use the drop down second row Menus above for guidance.
  5. We presented the Large-Cap Portfolio Investment Note, mapping the economic and investing related events. This recommended portfolio has held up well for Subscribers, tracking closely the major indices.
  6. We updated our Track Record on 20th May, and reported that our universe of 46 stocks appreciated 41.2% annualized, and the top ten by an amazing 125.3%. Surely there is something we are doing right.
  7. The political clarity that came post elections threw up new opportunities, so we presented Subscribers a Post Elections opportunistic buy list. We are confident that these stocks will do well in the 1 year holding period.
  8. And finally today we presented Subscribers with an interesting stock idea from the Oil & Gas space. But we have committed to One Month of Silence, so readers will have to wait to hear more about this.

But if Time is Money for you, it will give us pleasure to add you to our group of Subscribers.

I hope you find these reports useful, rewarding and informative.

Regards,

Punit Jain
Bangalore
JainMatrix Investments

Do you find this site useful?

  • Visit the SUBSCRIBE page to find how you can get more. Click LINK
  • Register Now to get our Free reports and much more, on the top right of this page, or by filling this Signup Form CLICK.

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

VST Tillers Tractors – Agro Growth

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Two recent updates/ news articles on VST Tractors & Tillers

  1. VST forays into mini tractors – LINK
  2. VST to roll out mini tractors for small farmers – LINK 

This is interesting news for followers/ investors in this firm.
Cheers,
Punit Jain

JainMatrix Investments's avatarJainMatrix Investments

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  • Date 4th Mar 2014,
  • CMP: Rs 825
  • Small Cap – Mkt Cap 716 crores
  • Advice: Buy

Here is a note on VSTT (VST Tillers and Tractors Ltd).

Business Overview

  • VSTT is an agriculture equipment manufacturing firm with products like tractors, power tillers and rice planters.
  • Its turnover in FY2013 was 482 crores, with profits at 49 cr. Market Cap. today is 716 cr, at CMP 825.
  • The mfg plant is at Whitefield, Bangalore for all 3 products with capacities of tractors (5k), tillers (25k) and engines (32k). It has commissioned a new tractor plant in Hosur, TN with capacity of 36k tractors. (k=1000)
  • VSTT has tie ups with several companies of Mitsubishi of Japan for tractors, tillers and diesel engines.
  • The Sales numbers in FY13 were tractors (6,233), power tillers (21,231) and rice planters (404).
  • Products are also exported – Forex revenues in FY13 were 16 cr., while…

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March 2014 updates

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Dear reader,

This has been an eventful period for investors. The market has entered all time high territory. Election fever is on in the country. Here’s an update on the reports from JainMatrix Investments in this period.

  • We were intrigued by an interesting small Cap – and created VST Tillers Tractors – Agro Growth in early March. This share is up 20% already. See LINK
  • We recommended CPSE ETF to readers. The NFO was successful, and investors have already gained 12% even in this passive, conservative fund. See LINK.
  • We were glad to see some justice for a well-known personality. See LINK
  • There was an update of the JainMatrix Investments Mid Cap portfolio, with a helpful note – See LINK
  • We revisited Yes Bank to create another timely report, Yes Bank – A Rediscovery.
  • We updated our Track Record, to find our top ten of the tracked portfolio is up 83% on an annualized basis – See LINK
  • With so much recent success in our investments, is it time to slow down things and worry a bit? Not really. I believe that the stock market is a moody monster, alternating between periods of high rapid gain – such as now, and of deep depression, such as 2008. Right now may be a time to join it and enjoy the ride up.

I hope you find these reports useful, rewarding and informative.
If you haven’t already, do sign up on the website to receive free new article alerts by registering your email ID.
Only Paid Subscribers have access to the Portfolios and some of the more valuable reports.

Regards,
Punit Jain
Bangalore
JainMatrix Investments

Do you find this site useful?

  • Visit the SUBSCRIBE page to find how you can get more. Click LINK
  • Register Now to get our Free reports and much more, on the top right of this page, or by filling this Signup Form CLICK.

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

An Investor’s Checklist

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Nice to know that Suchitra Krishnamoorth fought and won and settled this case as per this news update –

http://timesofindia.indiatimes.com/business/india-business/HSBC-settles-actor-Suchitra-Krishnamoorthis-case/articleshow/32237261.cms

JainMatrix Investments's avatarJainMatrix Investments

I came across a Post in one of my Investor Groups: Unfaithful Banks and the Importance of Financial Literacy:

Large Bank loots Celebrity after big promises of 24% returns – See LINK 

Now I’m not sure about this particular incident, but I have certainly come across a number of cases of Investors who have lost money after investing funds with well known brokers or banks.

I’d like to dedicate this post to this issue.

Many Investors have a fear or complex about finance and investments. Yet realize that their savings need to put aside carefully.

The larger the brand in financial services, the greater the trust people have in it. However many times this trust is usurped by these famous firms, and the savings are lost.
All investors need to realize that they themselves alone need to monitor their investments.

Investors Checklist

This simple 5 point set of questions should be asked by any 

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VST Tillers Tractors – Agro Growth

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  • Date 4th Mar 2014,
  • CMP: Rs 825
  • Small Cap – Mkt Cap 716 crores
  • Advice: Buy

Here is a note on VSTT (VST Tillers and Tractors Ltd).

Business Overview

  • VSTT is an agriculture equipment manufacturing firm with products like tractors, power tillers and rice planters.
  • Its turnover in FY2013 was 482 crores, with profits at 49 cr. Market Cap. today is 716 cr, at CMP 825.
  • The mfg plant is at Whitefield, Bangalore for all 3 products with capacities of tractors (5k), tillers (25k) and engines (32k). It has commissioned a new tractor plant in Hosur, TN with capacity of 36k tractors. (k=1000)
  • VSTT has tie ups with several companies of Mitsubishi of Japan for tractors, tillers and diesel engines.
  • The Sales numbers in FY13 were tractors (6,233), power tillers (21,231) and rice planters (404).
  • Products are also exported – Forex revenues in FY13 were 16 cr., while imports were 21 cr., a net importer.
  • VSTT has a strong brand and good reputation in the farm sector in India.
  • Domestic sales are through a nation-wide network of Dealers. See segments Fig 1.
Business Segments, JainMatrix Investments

Fig 1 – Business Segments, JainMatrix Investments

  • Shareholding pattern is Promoters – Indian 51%, Foreign 3%, MF/FII/Institutions 7.8%, Individuals 30.2%, Bodies Corporate 6.4% and Others 1.6%. It appears to be widely distributed in Retail.

Capacity Expansion

  • The Hosur plant was set up with 70 cr investment and was funded through internal accruals.
  • It will have a 36k tractor capacity. At full capacity it will generate revenue of 890 crores. Thus in a 2 year period the current revenues can triple. (JainMatrix estimates – based on FY13 tractor average revenue of 2.47 lakh/unit)
  • Tractor is a fast growing segment, and the projected sales volume will be 7.1% market share (of FY13 market).
  • To expand exports, VSTT has successfully homologated and obtained export certification to expand its global footprint for tractors, for the current markets of Africa, Middle East, Russia and Turkey, and beyond.
  • This aggressive growth plan looks possible.

Agriculture Sector

  • In India, agriculture is a steady industry with a growth rate of 3.3 % (CAGR) over last 7-8 years. The projection for FY14 is 4.8% growth, compared to FY13 with just 1.9% growth. (per PM’s Economic Advisory Council).
  • VSTT represents the mechanisation and automation requirements of farming. This trend is visible with the rising cost of rural labour and productivity pressures.
  • Food demand in India is inevitably surging as 1) the population grows 2) improving affluence of population, all results in 3) better diet and nutrition levels.
  • The govt. has boosted agriculture with tax concessions for farmers and funding schemes for their investments. It has also raised Minimum Support Price (MSP) for produce and they buy from farmers at these higher rates.
  • The Power Tiller industry relies heavily on Government subsidies and schemes for funding purchases.
  • The Indian tractor market is the largest in the world. Tractor sales in FY13 were 5,90,672 units.
  • Thus VSTT at 6,233 had just 1% of the Indian tractor production in FY13.

Share Overview, Financials and Valuations

  • The Share of VSTT with FV=10 has risen sharply by 151% in last 1 year. See Fig 2.
  • It’s a regular dividend stock, and the 90% declared has a dividend yield of 1%.
  • There was a share bonus in 2010 with ratio 1:2.
Share Price, JainMatrix Investments

Fig 2 – Share Price, JainMatrix Investments

  • Revenues, EBITDA and PAT have grown at 18%, 21% and 22% CAGR over a 5 year period. See Fig 3.
  • Margins are showing an improving trend over the last 3 years.
  • Current P/E is 9.8 times (TTM). Price/ Book is 2.9 times.
  • The FY14 estimate shows a good upside on EPS. The projected P/E based on this will be 9.2 times.
VSTT Financials, JainMatrix Investments

Fig 3 – VSTT Financials, JainMatrix Investments

  • Cash flow has been mostly positive or a small negative, see Fig 4.
Cash Flow, JainMatrix Investments

Fig 4 – Cash Flow, JainMatrix Investments

  • Debt is zero, and cash on hand is 32.9 cr, about Rs 38/share.
  • ROCE is 29% and RONW is 18%. These are very high, and also may rise in 1-2 years with the utilization of the new capacities.
  • PEG at 0.38 indicates undervalued status.

Overall Opinion

  • VSTT is a firm riding on three clear trends:
    • Automation in Indian farming is up as farming incomes rise even as rural wage costs inflate. 
    • Massive expansion of VSTT tractor manufacturing capacity which can triple revenues in 2 years. 
    • FY14 will be a very good year for Indian agriculture, providing incomes needed to invest in automation.
  • Based on all this, VSTT is an aggressive agricultural growth stock.
  • Buy with a 2-3 year perspective.

JainMatrix Knowledge Base:

See other useful reports

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  • Visit the SUBSCRIBE page to find how you can get more. Click LINK
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Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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JainMatrix Investments – Jan 2014 Updates‏

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Dear Reader,

What a terrific month we have had, to usher in the new year. JainMatrix Investments presents Investors a January 2014 roundup of reports.

  • The new technologies listings firm Just Dial Ltd had us intrigued, so we created an Equity Research Report. Note that it’s up 23% in a month – this company may be interesting.
  • Success isn’t limited to new tech – we noted that our Aug 2013 report on BHEL was timely – and it has appreciated 40% in this period.
  • We tracked the top 10 of the portfolio and found they were up 80% annualized – Track Record.
  • Our New Year message – Think Big in 2014.
  • The Power Grid FPO was a success and the share is up 14% in 1.5 months. See Analysis and current opinion.
  • There’s a lot of criticism the Indian IT sector attracts, so the piece – ‘In defence of the Indian IT industry’.
  • We also created reports on
  1. Repco Home – A Fortune at the bottom of the Pyramid
  2. Bajaj Finance – Equity Research Report 2014

I hope you find this useful, rewarding and informative.

If you haven’t already, do sign up on the website to receive new article alerts by registering your email ID.

Or register as a Paid Subscribers to receive the Large and Mid/Small Cap Portfolios and have full access to all investment reports.

Regards,

Punit Jain
Bangalore
JainMatrix Investments

Do you find this site useful?

  • Visit the SUBSCRIBE page to find how you can get more. Click LINK
  • Register Now to get our Free reports and much more, on the top right of this page, or by filling this Signup Form CLICK.

Disclaimer:

These reports and documents have been prepared by JainMatrix Investments Ltd. They are not to be copied, reused or made available to others without prior permission of JainMatrix Investments. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

Also see: https://jainmatrix.wordpress.com/disclaimer/

BF Utilities – This can be a NICE buy

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Dear Investor,
A long time ago, I had researched this firm, BF Utilities/ NICE of Bangalore. Within a short period, the share price plunged. By Aug 2013, it had even fallen by 75% to Rs 118 (from my recommended 444). But I am happy to note that in the last 3 months, it has come roaring back. It may appear to be a trading stock, but there has been a big news that makes the prospects look up. Check this news –

http://www.business-standard.com/article/markets/bf-utilities-zooms-175-in-two-months-113122000432_1.html

In short, BF Utilities got on Oct 30 2012, approval from the Karnataka High Court (to NICE/NECEL) to develop a residential layout in its project by the BMICAPA (Area Planning Authority). This is in line with their framework agreement signed between NECEL and the state government of Karnataka on 3rd April 1997.

This is a good affirmation for BF Util, and will allow them to start monetizing their terrific land assets. And hopefully their Bangalore to Mysore highway, so badly required, is not far behind.

Today the share is 27% up from the recommended price, and locked on the upper circuit.

Good luck and Happy investing.

JainMatrix Investments's avatarJainMatrix Investments

Date: July 6, 2012                CMP: 444               Mkt Cap: 1,674 crore

P/E: 488 times                Advice:  A high risk high gain Investment with 3 year horizon

BF Utilities, a part of the Bharat Forge group, is engaged in developing the Bangalore – Mysore Infrastructure Corridor. The high potential project has been stuck for over a decade due to land handover issues, and the firm is making losses.

However recent reports indicate that it may be close to resolving legal disputes, and is raising a second round of PE funds for project execution. The share has recently crossed its 200 DMA. Investment in BF Utilities is an act of faith in the management, an understanding of how badly this project is needed, and a confidence that the risk return balance is tilted…

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