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Generic Boi Profile picture
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4 Jan, 4 tweets, 2 min read
#Siemens valuation : 🧵

History :
Profit trends suggest that it has been in a 10Y stagnation

Any breakout from here will start a multi-year rally.
Raw materials constitute 70% of its operating costs.

Any breakout/breakdown depends more on raw material price cycle rather than sales/demand growth.

If copper becomes cheaper, Siemens will capitalize on it. Conversely, if Copper becomes costly, the consolidation will continue.
Not giving any price targets for 2030 as the organic profit growth of this company is only 3.5% CAGR. Its fortunes depend on raw material prices so take a calculated view based on how you think commodity prices will behave.

Personal opinion : Best avoided.

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More from @techlunatic

Generic Boi Profile picture
4 Jan
Heavy Electrical Equipment sector, bird's eye view :

Quantitative view : Top 5 companies take away 90% of the market capitalization of the entire sector.

We'll have to narrow down our qualitative search to these 5 companies and ignore the rest.
Return ratios and company health (debt burden) shows that despite Adani having highest market cap, it has poor ICR, indicating heavy debt.

Siemens has 0 debt and an ICR of 150. This is indicative of a very healthy balance sheet.

Siemens : 1
Rest : 0
Inferences :

Adani has highest market cap but :

BHEL has the highest sales
Siemens has second highest sales
BHEL and Siemens has highest profit

Adani's profit, compared to the rich valuation is too LOW, signaling an overvaluation bubble in Adani.
Read 7 tweets
Generic Boi Profile picture
29 Dec 20
#PolyCab valuation

Pre-Corona quarterly sales : 2200
Corona dip : 50%
Current quarterly sales : 2200

It has healed from the lockdown slump. NPM has improved from 8.64% to 10.48%
85% revenues come from wires. Leading market share in wires segment.
EPS has virtually doubled in 18 months, from 25rs/share in 2019 to 50rs/share now.

ROCE 29%. This is a high growth company.

2030 projected EPS (DCF discount rate 20.12%) : 326rs/share
2030 CMP= 6520 (Median PE (20) x 326)
Read 6 tweets
Generic Boi Profile picture
28 Dec 20
#VGuard valuation.

Pre-Covid quarter sales : 620
Corona quarter sales : 405
Current quarter sales : 620

NPM improved from 7.5% to 8.11%

Sales are back to previous glory, NPM has improved. Potential turnaround story.
DCF valuation :

2030 EPS projection (discounting rate of 17.2%) = 24.3rs/share

2030 CMP = Median PE (30) x 2030's EPS
2030 CMP = 729

4X growth (~14% CAGR) expected in a decade if bought at current price.
51% monopoly in electric stabilizers and UPS backups.
Read 6 tweets
Generic Boi Profile picture
28 Dec 20
#Schaeffler valuation

2018 quarterly sales (1100/ QTR)
2020 Corona quarter (430/ QTR)
Current quarter (1100/ QTR)

Sales, profit margin, EPS, all have recovered to previous glory. CMP's languishing because the crowd is busy chasing momentum in Pharma. Potential turnaround story.
DCF valuation.

2030 projected EPS at 14.6% discount rate= 960rs/share

2030 CMP= 960 x median PE(20): 19,200
Potential risks: Revenues (B2B) come from industrials & automobile sector. Both are cyclical in nature and rely on other cyclical factors like steel prices and interest rates.

All alpha comes from buying at the bottom & riding till tailwinds last. Keep <3% exposure in portfolio.
Read 5 tweets
Generic Boi Profile picture
28 Dec 20
Don't let the crowd's madness clout your judgment.

At any point, 40% up/down is speculative froth from momentum chasers. On the first -10% correction, the speculators all jump off the ship and the stock falls another 30%. 1-2-3 provides cleaner entry point for real investors.
@Goldsmithgunner

Fundamentals aside, #3MIndia was available at 15.8k & 23k in a short time span. 46% price difference due to crowd behavior.

21k is still a good price. This will become apparent at 26k. THEN brokerages will invite people giving 29k target celebrating 10% upside.
Some big institutional buyer has punched in a massive buy volume of 55,000 stocks on Dec 1,2, at 21k. He also knows that PE is 144, still he's buying with confidence. And retail investors are busy trying to outsmart destiny by buying cheap stocks because Warren chacha said so.
Read 5 tweets
Generic Boi Profile picture
27 Dec 20
#Nestle valuation

History :
Sales trend :
Profit trend :
Read 5 tweets

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