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Thursday, 9 November 2017

Star performer: Dalmia Bharat Ltd stock turned Rs 10,000 into Rs 2.3 lakh in 4 years

Unknown November 09, 2017 0

The cement sector has been busy multiplying investor wealth over the past four years. And the stock that has grabbed maximum attention from investors is Dalmia Bharat.

With over 2,200 per cent returns in last four years, it is probably the best and most successful growth story in India’s cement space, says brokerage Nirmal Bang Securities.

If you had just Rs 10,000 investment in this stock in November, 2013, it would have grown to over Rs 2.35 lakh today. The scrip traded at Rs 2,972 on November 8, 2017 compared with Rs 125 it had quoted on November 8, 2013.

The company has grown its capacity from just 1.2 mt in FY06 to 25 mt in FY16, placing it among the top four cement firms in the country.

The company has achieved this scale through both inorganic and organic routes. Industry watchers expect the company to report much higher volume growth and increase market share over the next few years.

Read More Meet the Delhi lawyer who has a knack for picking winning stocks on D-Street

Over the past six years, the company’s sales have grown at a CAGR of 27 per cent from Rs 1,745 crore in FY11 to Rs 7,394 crore in FY17. Net profit for the year ended March 31, 2017 jumped to Rs 344 crore from Rs 49.77 crore in FY11.

Dalmia Bharat boasts of significantly lower operating costs, which help it generate one of the highest Ebitda per tonne among peers, Nirmal Bang Securities said in a recent research report.

The company has reduced operating costs by 24 per cent over the past few years on higher blending, increased usage of alternate fuel and higher production from new and modern plants.

In September quarter earnings, it reported 233 per cent year-on-year rise in consolidated profit at Rs 103.69 crore against Rs 31.10 crore reported for the corresponding quarter last year.

Dalmia Bharat used low-cost inventory of pet coke and slag, which has helped it consume pet coke and slag purchased at old prices, and therefore the increased prices of pet coke and slag did not get reflected properly in Q2 numbers.

A reduction in lead distance from 295 km to 270 km has also helped the company reduce freight costs.

GST implementation and reduction in lead distance helped the firm cut freight costs during the quarter gone by. The company expects logistics cost to come down by 3-5 per cent soon.

Analysts are positive on the stock. Nirmal Bang says the stock can touch Rs 3,423 in the coming months; Motilal Oswal sees it at Rs 3,517.

The company has also improved productivity of its kiln by 9 per cent YoY and reduced power consumption by 1 per cent. Company management says if diesel prices continue at current level, they will cut raw material costs by 3-4 per cent.

These measures helped the firm control operating costs during the July-September quarter. During the quarter, Dalmia Bharat repaid loans worth Rs 180 crore. The cost of debt has come down from 8.3 per cent to 8.1 per cent.

Motilal Oswal believes net debt reduction of around Rs 750 crore and Rs 965 crore in FY17 and H1FY18 will continue into FY19 and its net debt-to-Ebitda ratio will fall below 1.5 times in FY19 from 2.8 times in FY17.

The brokerage believes operating cash flow is likely to improve strongly, led by improvement in margins on the back of its cost-efficiency programme and improvement in realisations by way of higher premium sales.

“Dalmia Bharat says cement demand in key regions like Andhra Pradesh and Telangana is likely to grow 15-18 per cent, while in Tamil Nadu a quick resolution of the sand mining problem will help increase demand. In Karnataka and Maharashtra, the company expects around 6 per cent demand growth and in north-east region 3-4 per cent,” said Nirmal Bang Securities.

There are also expectations that cement demand will rise on various government schemes such as low-cost housing, rural roads building, irrigation projects and the recently-announced Bharatmala project.

“We expect Dalmia Cement’s valuation multiple to catch up with its largecap peers, given its improving balance sheet and 43 per cent earnings growth CAGR over FY17-20,” said Motilal Oswal.

Calls for Today 10th November 2017 (Friday Day) | Intraday, Stocks, Futures & Options

Trading

Unknown November 09, 2017 0

10th November 2017

Volatility to persist; Buy around 10260-270: Nifty gapped up at open upon positive global cues but failed to hold onto gains as the index slipped lower to test its lowest level in as many as 12 trading sessions.

Selling pressure intensified after the Japanese benchmark index Nikkei witnessed close to 900 points of selloff from its intraday highs, which dampened the sentiment back here in India. The index also fell below its 21 day SMA at 10279.61 for a brief period but managed to recover thereafter to end on a flat note.

Read More::Click Below Now

Meet the Delhi lawyer who has a knack for picking winning stocks on D-Street & Earned Crs........

Going into today’s session, intraday traders are yet again advised to trade with caution even as the index is within touching distance from its crucial weekly support zone of 10260-10240. Slipping below the said zone, the index is likely to take its next support around 10200-10170. Whereas on the upside, immediate resistance in the Nifty can be witnessed around 10350-10370 crossing which a possible up move towards 10420-10440 cannot be ruled out.
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Positional Calls 10th November 2017

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10th November 2017

Read More::Click Below Now

Meet the Delhi lawyer who has a knack for picking winning stocks on D-Street & Earned Crs........

LATEST || North Korea Threat: Deadly radiation clouds spreading to US allies

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Meet the Delhi lawyer who has a knack for picking winning stocks on D-Street

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Unknown November 08, 2017 0

A barrister is to the stock market what ink is to computing; right? Wrong.

This gentleman is a renowned lawyer in New Delhi, but few people know he spends a lot of time picking value stocks on Dalal Street.

And 46-year-old Safir Anand firmly believes that the stock market is a great teacher, as long as you respect it and are keen to learn from it.

He talks of investing as his passion.

But that passion has taken him quite a distance: he is known to have spotted several gems on Dalal Street, which have multiplied his wealth many times over the past few years.

Some of his friends and fellow value investors describe him as a multi-talented bull.

Safir is a diehard bull by nature, says Ayush Mittal, a Lucknow-based investor, who knows him for past four years.

Anand goes by common sense to invest in stocks and has strong observations on the economy and the corporate world.

Anand claims he was an early investor in NBCCBSE, which has given him over 20 times return in last few years.

Among others, he names Premco GlobalBSE, Motilal Oswal Financial Services and Cera Sanitaryware stocks that have advanced nearly 20 times, 18 times and 10 times, respectively, in last three to five years.

He says StylamBSE, CEAT, MRF and Oriental Carbon have delivered him over 10 times returns in these years.

We could not independently verify Anand’s holdings at present or back then. His name does not figure in shareholding data of these companies, which means Anand holds less than 1 per cent in them.

Anand does not pick stocks on the basis of current earnings. “I am not obsessed with current earnings, as I am not buying the past, but hoping to earn from the future and its potential,” he clarifies.

Investment strategy
Anand calls himself a ‘growth mindset’ investor and says he looks at the opportunity cost of capital before picking a company.

“In economics, one of the first lessons I learnt was that capital is limited and has alternative uses, including satisfaction of consumption. You can do your best to find good use for its growth. As long as the search for yields and risk minimisation are in balance, you can do well,” says he.

Anand zeroes in on companies that facilitate capital growth through business expansion.

“The larger opportunity gets insured with time, and even if there are temporary setbacks to numbers or margins or the like, you can still compound,” he said.

Anand keeps hunting for gems among smallcaps and midcaps, as he finds the scalability element more attractive both in terms of upward curves in bottom line as well as top line. In many instances, even a single catalyst like a huge order or capex can change the fortune of such a company, says he.

“I am fascinated by value. Value is interpreted differently than price and each has his own value system. I also love behavioural science, and that is one big differentiator in the market,” says he.

Things to watch
Anand says before betting on a stock, the first thing he looks at is the opportunity size of the business, followed by the qualification or temperament of the management.

He zeroes in on a business model, which is unique in terms of technology, process or system, and where value is migrating from one set to a larger set.

Anand also has a different take on the traditional valuation matrix than the market community uses.

“More than price-to-earnings (P/E) ratio, I look at the market capitalisation to potential. If a company is taking leadership strides and is still small in size that may be moving from unorganised sector to organised or from an asset-heavy model to an asset-light mode or giving an edge to customers (like Apple brought in with its phones). Then I go to step two of the process to look at the credibility and governance of a company and its business model,” he says.

Investing lessons
This investor believes one should focus on identifying his own strength.

One of the core areas to focus on is to examine what went right and why, and what went wrong and why. Sometimes, our returns may be just a function of a market tide and one should not read too much talent in it. Similarly, there are costs of omission and commission, says Anand.

Sometimes one omits a good investment due to some flaws and at other times commissions some trade, including selling, too early or too late. It is also important to shut out all noise, as that is more abundant than ever, he warns.

The journey so far
Anand’s journey as a lawyer is more established with good credentials. He loved every part of the analysis and quest for best results from the task in hand.

The journey, so far, as an investor has been more for the passion for value and the strategic mindset that he has grown with his experience all these years.

Anand says he entered the market as an observer (student) in his college days. Then, with limited pocket money he started picking odd stocks, and then as a momentum investor, he got swayed by the IT boom and bought with the tide to eventually lost money.

More serious investing started around 2005 with his own savings. But the year 2008 was quite unkind him as was the case with most investors, but he says it also thought him immense lessons on greed and fear.

“I am proud to be a lawyer-investor. Both roles help in a multi-disciplinary approach to the task at hand; one specialises in problem solving, risk minimisation and optimisation through attack, defence or mediation while the other makes you an optimist and believer in compounding,” says he.

Definition of failure
Anand says failure is a friend, as it teaches you what success cannot. “Whenever I get anything wrong, I press the reset button within myself and try and assess a) what went wrong b) how I can improve,” says Anand.

Any setback is an opportunity to reinvent, re-energize and re-live, says he.

Investors he follows
Anand is a keep reader of global investment gurus such as Malcolm Gladwell, Dan Ariely, Richard Thaler, Daniel Kahneman, Daniel Pink, Adrian Slywotsky and Max Gunther, among others.

Back home, he follows some of the familiar names such as Samir Arora, Sanjoy Bhattacharya, Sanjay Bakshi and Raamdeo Agrawal.

“Each person teaches us something. My investment style may differ from them, as I don’t believe in coat-tailing, unless your thought process is aligned. But there is lot to learn from each one,” says he.

Recent picks
Some of his recent picks in the stock market have been players in graphite and electrodes segments, which he claims have delivered him returns beyond expectation.

The domestic stock market has been rising consistently for the past few months, which has helped lift stock prices across sectors.

Data shows graphite electrode majors Graphite India and HEG have risen up to 1,100 per cent so far this year. The fortunes of the graphite electrode sector have been on an uptrend.

Over the past few months, spot prices of graphite electrodes have seen a major spike. The key triggers have been consolidation of the graphite electrode market globally. Around 20 per cent of global graphite electrode capacity (excluding China) have been shut down in last three years, while an increase in steel production through the EAF route (outside China), an increase in global steel prices and closure of significant steel capacity in China have led to a drop in both steel and graphite electrode exports from the region.

Anand has bought some hospitality companies, as he believes some of the hotels can move from asset-heavy (ownership) models to asset-light (management) models.
“There are a few hotels in India where quality of service is par excellence and they have scalability to take on management contracts and enhance return ratios. The migration of customers to hotels is a function of both convenience and necessity, by business travel and utilities, including entertaining and celebrating and land locations are drying up. This sector has been plagued by capital inefficiencies due to asset-heavy models and seems to be sorting itself,” says he.

He has also added some pharma companies, as he feel the USFDA move has strengthened these companies for the future. Many companies have undertaken new drug discoveries or moved up from generics to specialised drugs.

There is too much pessimism there, says he. “I am a stern believer that the market doesn’t reward consensus over time.”

Calls for Today 9th November 2017 (Thurs Day) | Intraday, Stocks, Futures & Options

Trading

Unknown November 08, 2017 0

9th November 2017

Market likely to open in green; Buy around 10310-

10320: Cracking the whip on the bulls, the markets slipped
lower for the third consecutive session as selling pressure
intensified across most sectors. Selling pressure with
increasing volatility ruled the roost throughout yesterday’s
session as market participants chose to sell on every rise.

As a result of the selling pressure, the index closed below
its 13 day SMA for the first time in more than a month,
lower by 47 points. Going into today’s session, intraday
traders are advised to trade with caution as the index
approaches its crucial weekly support zone of 10260-
10240. Sliding below the said zone, the Nifty is likely to
witness its next meaningful support around 10200-10170.
Whereas on the upside, immediate resistance in the Nifty
can be witnessed around 10350-10370 crossing which the
index could witness some short covering towards 10420-
10440 as well.

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