Un-common sense Profile picture
Business Owner ; Ex - BofA Banker ; IIM Calcutta ('07Batch) Passionate about Investing; Student of History
Jun 23, 2022 5 tweets 4 min read
My take on #Relaxo Footwears (966/-) through data and charts.

Analysis from FY96 – FY22
Sales grew at ~16%
NP ~17.5% (~19% till FY21)
4-5% improvement in EBITDA / EBIT / Net Profit Margins on a rolling 10 yr ending FY22 over FY06

@dmuthuk @contrarianEPS

1/N Image 2/N

Data from @screener_in

4-5% improvement in EBITDA flowing through led to doubling of Net Profits Margins from ~4% to ~8%. Future 4-5% improvements will only improve Net Profit Margins by 50% Image
May 31, 2021 7 tweets 3 min read
#PNBHousing #PNB

Today's announcement abt proposed Caryle led 4K cr investment in the co is against minority shareholders

As a background PNB and Carlyle both owns ~1/3 of the co. and ~10% by GA. (~25% by rest of the public)

FY21 Results for co
pnbhousing.com/wp-content/upl… 2/N
Above results and management con call confirmed that there was no extraordinary stress with the co. Infact it was profitable, adequately capitalized (CRAR >20%) and expected only 75bps of credit cost in FY22
Then what was the need for co. to issue 4K crs at 25% discount to BV
Jan 9, 2021 4 tweets 2 min read

Post on #Nifty 500 valuations wrt to its own history.

Why Nifty 500 and not Nifty50?

1) Because Nifty500 represents >95% mkt cap of India

2) Doesn't suffer from historical composition bias

As of 31st Dec20, the index has following statistical data. Without adjustments the index on 31st Dec trading at PE of 43x / PB of 3.7x / Div Yield of 1.2%. Assuming a normal curve there represents following percentiles 100% (PE), 87% (PB) , 77% (Div Yield)

However earnings are depressed because of Covid. Current implied EPS is at ~265.
Jun 27, 2020 6 tweets 3 min read

Indian Investors have converted this famous WB quote to buy “quality” at any price! IMHO this is one of the costliest incidences of Chinese whisper!!!!!

However today I look at #Jubilant FoodWorks which appears to be a fair company at absurd valuations Image 2/N

My observations basis limited history of 10 yrs

•Remarkable past execution (30 mins delivery)
•Excellent historical growth
•Great Return Ratios (ROCE, ROE)
•Reasonable growth expectations going forward Image
Jun 14, 2020 5 tweets 4 min read

Truman (ex US president) famously said “The only thing new in the world is the history you do not know”

With that in mind, I look at #Nestle financial history in India since 1993 (27 yrs of History)

Period 1 - CY93-CY2003
Sales -14.8% (CAGR)
NP - 21.8%
Mkt Cap - (9.1%) 2/N

Observations - Returns between '93 and '03 were low because of 2 factors - Starting PE was very high and Ending PE was decade low

Period 2 - "CY04-CY13"

Sales - 15.5% (CAGR)
NP - 15.6%
Mkt Cap - 23.3%

Observations - High returns becasue of low starting PE
Apr 26, 2020 11 tweets 5 min read

In 1934 Ben Graham and later in 1973 Buffet said

“In the short run, the market is a voting machine but in the long run it is a weighing machine”

With that lens, my analysis on #HUL Valuations over 27 yrs

Rapid Growth (’92 to ‘01) – Sales 23%; EPS 30% Price 22% CAGR 2/N

Lost Decade (CY01-FY10) – Sales 5.4%; EPS 3.7%; Price 0.8% CAGR
Apr 25, 2020 4 tweets 2 min read
Below chart courtesy @abhishec_s

Observations (while limited data points)

1. Mcap/sales (0.5-2x)
2. Market discounts next 10 yrs. To make decent money on absurd starting P/E , 10 yrs hence , markets estimate of another 10 yrs should be rosy. Effectively 20yrs of performance. Dmart Investors - Assuming next 27 yrs is as good as walmart the returns will be 10.5% CAGR. Assuming 2x walmart CAGR is 13.4%

The best case scenario is medicore. or Head I loose, Tail I don't win much.
(This is inverted version of @MohnishPabrai saying)
Apr 8, 2020 4 tweets 2 min read

ITC Snapshot

For co's with stable cash flows (pricing power), starting PE is the biggest driver of future returns. Notice how between '92-'97 negative returns despite 25% p.a. profit Growth. Reverse was true between 2002-07. 27% p.a. returns despite 18% p.a. PAT growth 2/N

My speculation over the next 5-10 yrs

1. Cig+Hotels div profits grows 7% - 10% p.a.
2. FMCG profits to see J curve. Rev expectation of 50k - 70K with 10 -15% PAT margins (Management goal 1Lakh cr rev by '30)
3. Range of outcoumes from 25K (no FMCG J curve) - 40K profits
Apr 7, 2020 6 tweets 3 min read
The absurdly of the markets

Market cap of HUL today is at GBP57bn
Unilever today is GBP 108 bn. While Profits of Unilever is ~10x HUL

Just crazy! India's own tulip mania!

@shyamsek At 14% CAGR profit growth it will take them ~18 years to reach Unilever Profits.

At Unilever's valuation today it will yield roughly 4% p.a

At 2x - 8% p.a.

It will need 4x Unilever valuation today to generate a respectable 12% CAGR

@dmuthuk @unseenvalue