Category: Company Analysis

Suven Life sciences – Demerger to create Value?

Suven Life sciences is a company that I am tracking from 2014 This is what I wrote in 2014 on their optionality

But as you would have seen expecting the company to not to commercialize any R&D work for 18 years would be a real surprise

In 2015, I noted the possibility of monetizing their lead molecule in 2017

SUVN 502. For this molecule, we completed Phase-Ib trials and commenced preparations for the Phase-IIa (POC) trial. We hope to initiate patient trials during the second half of the current year and are hopeful of monetising this molecule post successful completion of the study in fiscal 2017

But few years with the company and I understood that

Drug discovery is a long, hard and uncertain process and putting your odds is as good as throwing a dice. There are far few too many variables to model an outcome

However we also observed that the company is building a different and more sustainable game plan

For a company earning 12-15% ROE and growing at 10-15%, this seems to be fair or even above par, however, we need to be cognizant that Suven is building various verticals that are yet not contributing … Read the rest

Annual Review – Ashiana Housing 2019

My last year review of Ashiana housing can be read here where we concluded that

The company has diversified into different cities but they are significantly dependent on Bhiwadi. Take this, Bhiwadi accounts for

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  • 40% of their current project’s unsold inventory
  • 45% of their future projects saleable area
  • 35% of their Land back

Lets first look at how they did in Bhiwadi, sales improved by 60% clearly showing early sign of recovery. The management in conference call indicated that even though the inventory overhang in Bhiwadi is 9 to 10 years they have performed significantly well … Read the rest

BSE – Heads I win, Tails I don’t lose too much

Established in 1875, BSE Ltd is the oldest stock exchange in Asia and operates the BSE exchange platform (formerly Bombay Stock Exchange). People often refer BSE as a duopoly with NSE being the other player however its a lopsided duopoly with NSE bossing the equity segment. Below is a snapshot of NSE dominance

Source – NSE Presentation

Not only NSE is dominant it is gaining market share due to its network effect.

How did an exchange so prevalent lost its Mojo?

CEO Ashish Chauhan has put it very aptly in his interview with Forbes

The BSE was late to the derivatives game. Typically, one is likely to trade equities at the same exchange where one trades derivatives. So a gap was created. The BSE had basically zero market share in derivatives, currencies, commodities… pretty much everything except a little bit of equities and some initial public offerings (IPOs). The technology wasn’t considered very good. People had pretty much written the BSE off. Why did the NSE become so big? Not on the back of the past but on the back of the new [offerings]. Derivatives played a big role in it.

So there were mainly five issues which the BSE … Read the rest

Annual Review – Ajanta Pharma 2019

To get yourself familiar with Ajanta Pharma read my opening post about the company. In last year review sent to premium subscribers, we had projected below

There was steep degrowth in Africa Institutional business and Branded generics, Also in Asia, they underperformed their own expectations resulting in modest growth. India business outperformed their own expectations (even mine) and USA business did very well too.

Three reds meant that they had their first topline decline in the last 15 years. The beauty of doing predictions is to get humbled very quickly in markets. In my 2017 review send to subscribers I had pasted projections from brokerage houses in the end note, I am reproducing them below

What was not baked in estimates was visible in price, The PE derating clearly told in advance that market doesn’t expect company do well and as it happens many times price discounts the performance for next 24-36 months in advance

 

Having spent enough time on past lets now review the current year

 

India business

During this time, the key ingredient of cheapest cialis onlines in bloodstream and become effective to provide extreme satisfaction to men and women. purchase viagra … Read the rest

GRUH Finance – Mr Consistent

Virat Kohli picture is not a coincidence he is “Mr Consistent” run-scoring machine for Indian cricket team just like GRUH finance the money making top-notch HFC.

I have done the comparative analysis of Housing Finance Companies (GRUH/REPCO/CANFIN) in past, you can read them here and here

In 2018 (At Q4 Mar 2018) GRUH Finance and Canfin grew their loan book by 18% and REPCO’s loan book grew by 10% with GRUH having healthy growth in disbursements. The yearly growth had slowed down (from last year levels) for both Canfin home and REPCO while GRUH maintained its consistency

Both GRUH and Canfin homes had better bottom line growth as well

This was driven due to

  • Cheaper costs of funds
  • Significant improvements in cost to income ratio, branch employee productivity gains
  • Improving and retaining net interest margin

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Suven Life Sciences – Building multiple pillars of growth

I have written about Suven multiple times, you can read previous updates here to get familiar with the company

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2014 – Introduction to company
2015 – Identifying multiple triggers embedded in company and way to value it
2017 – An annual update on the thesis last year
I am mightly impressed how this small company has built multiple pillars of growth, In space of 9 years they have built two revenue pillars while enhancing their core CRAMS offerings
All figures in INR cr except % 2010-11 2015-2016 2016-2017 2017-18
Base CRAMS [Balancing Figure] 87 244 253 324
CRAMS Commercial Supplies 0 0 34
… Read the rest

Management Intentions can’t be calculated in Excel

In the year 2018, I have been rubbed wrongly thrice now by controlling stakeholders (Management)

  • Fraudulent disclosures (ASX GSX)
  • Ungainful dilution (ASX LBT)
  • and now this one ..

this is my learning from investing in LEEL electricals.

I created this position at ~1100 crore, My initial thought process was company has sold its consumer division for an enterprise value of Rs. 1550 crores, on debt free cash free basis.

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The overall borrowings were ~1000 crores after paying off everything they would still have ~550 crores and a business left
I was paying 550 crores and getting a business with sales
… Read the rest

Two years and No returns

My Last year’s review of Ashiana can be read here

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The real estate industry continues to be impacted by oversupply and demand pressure, this graph from their detailed investor presentation points out the fact, The lead indicator which is Area booked continued to be at the same space like last year and realization are flat
The Area Booked, however, is improving from last three quarters and we need to track sustainability of the trend

 

Like all years their annual report is very informative and management is clearly indicating that they are seeing this as an end of a downtrend for real estate markets for their key operating markets . The company has identified Bhiwadi, Jaipur, Gurgaon, Chennai, and Pune as key focus markets. 
… Read the rest

75 hidden gems Article

Recently I wrote an article for special edition of Indian Economy and Investing – 75 Hidden Gems

This is reproduced for you below. I am long on stock not traded in last 90 days

SATIN CREDIT – CASTING AWAY DEMONITISATION DEMONS

Satin Creditcare is a large microfinance company providing collateral free, microcredit facilities to economically active women in both rural and semi-urban areas. Satin Creditcare Network Limited(“Satin”) was conceptualized and founded in 1990 by Mr. HP Singh – a qualified Chartered Accountant with over 25 years of experience in retail finance industry. In around 27 years since its inception, Satin today is India’s second largest MFI (as of Jun 2017) having started its journey with individual microloans to urban shopkeepers. Today, the Company has an established, scalable and a sustainable business model. On a consolidated basis, Satin had an AUM of Rs. 4,493 Crores as on Sep 30, 2017. SCNL offers its clients a variety of loan products under the MFI segment. The company also offers a bouquet of financial products in the Non-MFI segment (comprising of loans to MSMEs), and business correspondent services & similar services to other financial Institutions through TSL, a business correspondent company and an 88% … Read the rest

Thomas Cook – Are sum of parts greater than M-cap

Below is a post based an edited note to Insider Subscribers

***

Thomas Cook (TC) now is a mini holding company which has multiple lines of businesses (a company which has 53 subsidiaries ) – A business analyst’s nightmare

 

Investment in TC is investment in Prem Watsa who has tremendous record of long term wealth creation, although I was not happy when he started a new fund in 2015 to invest in India in parallel to TC, cause at time of acquiring TC he commented that all new investments in India will be via TC however in his recent letter to shareholders he has made it clear that only related business (read travel and hospitality) will be acquired by TC rest would go to Fairfax India as much as possible

Over time Fairfax Financial would prefer to have all of its Indian investments (as far as possible) in Fairfax India with the exception of Thomas Cook and its subsidiaries, Quantum Advisors and ICICI Lombard General Insurance Company Limited.

The management had said that they would not prefer one over another however this year’s chairman’s letter made it clear that non travel business would go Fairfax India way,This fact is … Read the rest