Saturday 25 April 2015

VALUE PICK - PALRED TECHNOLOGIES LTD - GTS 2 ANSWER


About The Company & Business
Palred Technologies Ltd formerly known as Four Soft Ltd is headquartered in Hyderabad.
The company is promoted by Mr Palem Srikanth Reddy (PSR) a former TDP politician who later formed his own party named Janapalana Party. PSR is also a well known social worker.
PSR was lauded by the local media for fighting against Reliance and the govt. in KG Basin allotment case where he was a petitioner.
 
The company basically into IT Services has last year ventured into Business of E-Commerce via its subsidiary.

The company's E-commerce venture is branded LatestOne.com, company also owns the domain named Deals15.com which it acquired earlier. In IT Services the company is providing E-Commerce website and software solutions.

The Ace Investor - Value Pick
PALRED TECHNOLOGIES LTD.
  NSE: PALRED - BSE: 532521
Company listed on both NSE and BSE was trading at 21 on GTS day and now trading around 24 with a market cap of around 100 crores, Stock went down after touching 52 week high of 29.40 on Friday (24 Apr) due to bad results by Infosys.
 
Promoters hold 46.96% stake in the company, increased from 23.92% in Jun quarter.
 FIIs have increased their stake to 1.89% from 0.44 in Jun quarter. Noted investor Ashish Dhawan owns about 3.44% stake in the company.
 The company is debt and pledge free.
 
LatestOne.com is a portal mainly for smart-phone, mobile and tablet accessories such as Covers and Sleeves. The company has recently added a new section where all type of cables such as (HDMI, VGA, DVI, USB, Adapter, Charger and many more wide-range of cables can be purchased online by the tech-savvy Indians.
 
LatestOne.com has updated the website and recently added more categories such as Mobiles,Tablets,Computers,Laptops and more stuff like computing hardware etc.
This appears to be in the works as new products have not been added yet and the company looks aggressive about its plans which is a positive factor.

Major unlisted players like Flipkart Snapdeal have been cashing on the E-commerce boom in the country by raising huge sums of money from private equity investors. However these companies have been reporting losses due to the wide product portfolio they posses and the marketing and promotion cost they are incuring.
 
As Palred has reported to the exchange, LatestOne.com on April 15th confirmed to sell more than one lakh mobile covers which should be enough to give us an idea about the company's and the website's prospects. Point to note is that LatestOne.com went on air only on Nov/Dec 2014 and selling more than one lakh Mobile Covers in just under 5 months is a great achievement.
 
 LatestOne.com has last week announced a tie-up with IndiaPost for pan-India cash on delivery services which will expand its reach to even rural India.

Almost everyday a new smart-phone is being launched, according to the data by International Data Corporation almost 81 million smartphones were shipped in the year 2014 and smart-phone sales are expected to touch 150 million units mark in 2015. The future growth of the smart-phone market is expected to be huge since there is a large base of mobile services users already and the smart-phone adaption is increasing. There are no IFs and BUTs in the fact that the future of smart-phones and it's proxy product Mobile Accessories which actually is a high-margin business is extremely bright.
 
The company's promoter are good and have been investor friendly. There is a share capital reduction planned up by the company which proposes to reduce the share-capital by 60% which means if you buy 1000 shares of Palred only 400 will remain in your account and the rest will be purchased back by the company at 16.50 and the funds will be credited to your bank account and the market will adjust the price accordingly. I think it should not be a big issue for the investors since there is more into the company's fundamentals than what meets the eye from reported results.
 
Palred Technologies which via its subsidiary is into E-Commerce has not reported its consolidated results for this FY after its E-Commerce venture started. Which is why you see ordinary financial performance and a P/E of 38. The company has responded positively to all our queries and have clarified that they will announce the full year consolidated results this quarter which means great revenue and earnings of unreported e-commerce to be reported all of a sudden? This is quite similar to how Intrasoft suddenly reported a sales boom in Dec quarter and the share prices shot up from Rs 40 to Rs 310 to trade at a P/E of almost 70.

E-Commerce is a sector where there are not too many investment opportunities and that is why they all are trading at rich valuations. Be it the 70 P/E of Intrasoft or the 70 P/E of Info-Edge (Naukri.com/Zomato.com/99Acres.com).
 
The E-Commerce boom is much talked about and it is good to find a opportunity to make a investment in this booming sector. Remember this company which directly is into E-Commerce is also indirectly into E-Commerce by selling web development, interface and softwares to companies which are looking to tap the E-Commerce.
 
There are some rumors too that MTR Foods (Giant in it's field) is planning to launch an online store and has purchased the software and services of Palred Technologies Ltd.
 
Technically too the stock is looking extremely bullish.
 
All in All i feel, this is one great opportunity for everyone who missed Intrasoft rally (40 to 310) and at 24 or even at 40 i would not hesitate to buy Palred Technologies and hold it maybe for some multibagger returns?
 
Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Palred Technologies Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
  
Name of the winners for Guess This Stock - 2 is posted below as "comment" on this post.

Thursday 23 April 2015

GUESS THIS STOCK - 2

It is the series of "Guess This Stock", this is GTS 2. Try to identify the stock from the given clues and send the answers to my email id- theaceinvestor@gmail.com. The stock along with detailed summary and name of the winners will be announced on the blog this Saturday (25th April 2015).

:CLUES:
#1 - The company is listed in more than one stock exchange.

#2 - The market capitalization of the company is under 1000 crore.

#3 - The company via its subsidiary is operating in a sector which is witnessing a huge "BOOM".

#4 - The booming sector has witnessed some large private equity investments, mostly in companies which are not listed.

#5 - There are not many companies available in this sector.

#6 - The promoters holding is pledge-free and above 30%.

#7 - One of the company's promoter has a political history. 

#8 - The company is not a loss making one.

#9 - The company changed its name in calendar year: 2014.

#10 - The current price of the stock is under 300.

I think the above clues are sufficient to guess this stock, Let us see how many of you can do it.

I hope this GTS will help test the research capabilities of all readers and also make them do proper due diligence before entering the stock.

Do not expect confirmations on whether the guess is right or wrong and it will be good if the answer is not revealed on any web portal.


Wednesday 22 April 2015

ATTENTION: GUESS THIS STOCK 2

The second GTS will be posted with clues tomorrow Thursday (23rd April 2015)
 
Readers have to identify the stock from the given clues and send the answers to my email id- theaceinvestor@blogspot.com. The stock along with detailed summary and name of the winners will be announced on the blog this Saturday (25th April 2015).
 
Don't forget to read the blog tomorrow morning.
 
Happy Investing!

Saturday 11 April 2015

VALUE PICK - SUNTECK REALTY LTD - GTS 1 ANSWER


About The Company & Business
Sunteck Realty Ltd (SRL) is a ultra-luxury real estate company headquartered in Mumbai.
The company is promoted by Mr Kamal Khaitan and is listed on both NSE and BSE.
The company boasts of a city centric development portfolio of about 25 million square-feet spread across 24 projects at various stages of development and 4 rented assets. Of the said portfolio, the company within a span of four years has completed six projects with a developed area of about 2 million square feet comprising of residential and commercial developments.

SRL which has attracted investment from Ajay Piramal led (Akshar Fincom) is also into a joint-venture with Piramal Enterprises, the JV is named Piramal Sunteck Realty Pvt Ltd.
Kotak Private Equity too has earlier partnered with SRL for some of the projects.
 
Coming to the projects, SRL has a Mumbai and city centric portfolio.
In Bandra-Kurla Complex (BKC) one of Mumbai's leading CBD it is only Sunteck which is developing three residential projects including a landmark project named Signature Island which has only started attracting the uber rich Indians.
 
The company's customer list for its BKC duplexes has names like: Gautam Adani of Adani Group, Vikram Pandit (ex-Citigroup head), Harsh Mariwala of Marico, Jalaj Dani of Asian Paints, Kishore Lulla of Eros, Ashok Wadhwa of Ambit Holdings, Gunit Chadha of Deutsche Bank, Nimesh Kampani of JM Financials, Pramit Jhaveri CEO of Citi India, Mickey Doshi country head of Credit Suisse and Surat based diamond-merchant Hitesh Patel who became popular after being the highest bidder for PM Narendra Modi's suit.
 
SRL has launched four new projects in Mumbai this quarter along with one in Nagpur, SRL has tied up with The Charcoal Project (Interior designing firm owned by Sussanne ex-wife of Hrithik Roshan) for its luxury project in Nagpur.

The Ace Investor - Value Pick
SUNTECK REALTY LTD.
BSE:512179 - NSE: SUNTECK
Company listed on both BSE & NSE is trading around 280 with a market cap of about 1735 crores.
Promoter holding is at 73.49%, total debt on the books is at around 592 crores.
The current price to earning ratio is around 10 and the stock is under-valued.
 
The company is having a total inventory of about Rs 5200 crores and total unrecognized sales stands at about Rs 2200 crores. As the company is reporting numbers via project completion method these figures will add up on project completion.

The inventory of Rs 5200 crores is not from some small remote town of Gujarat but majority of it is in India's best city and financial capital: Mumbai.
 The company has landbank of approx 7 Acres in Mumbai.

The rich are becoming richer and the upper middle class is going bullish to become rich, there is a shift in corporates with Ratan Tata hanging his boots and many others to follow, Superstars getting married or aging and Cricketers too announcing retirements. All these stuff only increases the investments for usage in properties like Signature Island and other Sunteck luxury projects therefore it is clear that inventory isn't an issue here. I mean who doesn't want to be the neighbor of richest and famous Indians?

Citigroup had initiated a Buy on Sunteck focusing on the Net Asset Value (NAV) of the company staying stable on back of a city centric portfolio.

A Morgan Stanely note too made a reference to SRL as being the cheapest among its peers with a discount of 60% to its NAV compared to 18-47% discount in other companies.
 
Coming to P/E based valuations, SRL p/e of 10 is cheap compared to India's largest real-estate firm DLF which is trading at p/e of 43. Point to note is that DLF is having serious debt issues and SEBI too has issues with promoters intent.
SRL having partnership with Piramal and Kotak too is re-assuring.
Piramal is not some other guy but a honest businessman with serious business sense.
 
Coming to the Financials, Sunteck witnessed YoY topline growth of 2963% and bottomline growth of 3655% - FY14 v/s FY13 on back of some completed projects.
Company has reported healthy margins, here is a snapshot of annual results table :-

Particulars
FY09
FY10
FY11
FY12
FY13
FY14
Sales
20.60
28.40
20.39
17.00
30.21
925.56
Operating Profit
10.32
12.11
3.49
4.21
5.42
278.50
OPM
50.10%
42.64%
17.12%
24.76%
17.94%
30.09%
Other Income
10.18
2.02
9.94
13.37
19.96
12.70
EBIDT
20.50
14.13
13.43
17.58
25.38
291.20
Interest
0.05
0.50
3.66
5.09
11.01
17.00
Depreciation
1.40
1.15
1.47
1.48
1.41
1.41
Profit before tax
19.05
12.48
8.28
11.01
12.96
272.79
Tax
2.73
5.67
5.23
6.46
6.19
90.02
Net profit
16.84
6.18
3.18
3.11
4.02
150.97
EPS
2.95
1.03
0.53
0.52
0.67
25.16

As clear from the above financial statement the company has reported great numbers in FY14.
However, it is not wise to compare quarterly and annual earnings for a company which is reporting numbers as per the project completion method as they do not give the accurate picture of how the business is faring right now in a quarter due to the project being under-construction.

I have rather aggressive projections for FY17 rather than FY15/16, i expect FY17 topline around 2800 crores and EPS of around 65-70 which means that a P/E of 30 will work out to be at 2100 rs per share.
 
Some might think how does 30 P/E make sense, I explain: We are talking about FY17 and i don't expect Sensex to languish at under 30k at FY17 end. Even on this day Sunteck should trade at 30 P/E, If a Mumbai-centric low-cost housing company like Poddar can trade at a P/E of 44 why can't our rich man's poddar (Sunteck) attract such valuations specially with the projects and partnerships it has.

All in All i feel, It is wise for the retail Indian investors to buy shares of Sunteck for their portfolio before huge investments flow in: Citi has already rated a BUY and Morgan Stanely too has taken note of the cheap valuations Sunteck is trading at.
 
  Technically above 292 there is long-term breakout on the charts for a huge target of more than 90% return, That is just according to the charts, I expect this stock to turn into a multibagger in future. Ofcourse the future means long-term.
 
Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Sunteck Realty Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
 
:Links:
 
 
 
 
 
 
 
  

 Name of the winners for Guess This Stock - 1 is posted below as "comment" on this post.