What is SMA - 0, 1, 2 and NPA? a small🧵

If you invest in banking stocks or companies that are into the business of lending, this might be important for you

We have all come across terms like NPA, GNPA, NNPA, etc

But do you know about SMA?

(1/n) SMA - Special Mention Accounts

SMA classification was introduced by RBI in 2014 to identify accounts that have the potential to become NPA

The logic of such a classification is because some accounts may turn NPA soon and can be tackled better through early identification

(2/n)

# Molecular Diagnostics...small 🧵

Recently, we came across some stock ideas which provide Molecular diagnostics kits

Diagnostic labs are the customers of such cos.

We tried to find out more about the kits industry and also came to understand a bit about RT PCR

(1/n) What is Diagnosis?

It's the process of determining the nature of disease or disorder and distinguishing it from other possible conditions

Around 70% of the medical decisions related to disease diagnosis, management, and prevention are based on diagnostics

(2/n)

Weekly wrap 🧵

Let's look at the industries and the stock ideas we discussed this week

(1/n) # Poultry industry

Last year was bad for poultry stocks because of steep rise in feed prices

Stocks are down 40% + from peak

There're handful of poultry industry listed stocks and now might be a good time to understand the industry - click here katalystwealth.com/2022/10/14/sto…

(2/n)

# Poultry industry...a small 🧵

Last year was bad for poultry stocks because of exorbitant rice in feed prices

Stocks are down 40% + from the peak

There are a handful of poultry industry related listed stocks and now might be a good time to understand the industry a bit

(1/n) Poultry refers to rearing, hatching, breeding, and processing domesticated birds or broilers

India poultry market size reached a value of Rs 1,74,990 Crores in 2021

Consumption growth in meat and eggs was 5% and 4% at 4.3 lakh tonne and 120 billion in FY 22

(2/n)

Building products industry has created immense wealth for investors

In fact, one of our best recos. came from this space - Cera which went up 11x before we closed it

Let's just briefly look at some data points w.r.t. sanitaryware, faucets, tiles...🧵

(1/n) Indian tiles, sanitary ware and bathroom fittings market reached a value of ₹ 60,128 Crore in 2021

IMARC Group expects the market to reach ₹ 96,048 by 2027 at a CAGR of 8.39%

(2/n)

Weekly wrap 🧵

As they say, it takes a prepared mind to capitalize on the opportunities

Let's look at stocks and topics we discussed this week

[Portfolio Stock] - Vadilal Industries

It's a leading exporter of ice-cream

Read detailed report @ katalystwealth.com/2022/01/31/vad…

(1/n) [Stock idea]: Apex Frozen

Since last few years the Shrimps industry hasn't done very well and the stocks are down 50-60% from their 2017 highs

Is the industry reviving now?

To know about Apex, it's capacity, guidance, etc, click @ katalystwealth.com/2022/09/02/sto…

(2/n)

Here are some notes from the latest presentation of Asahi Songwon Colors 🧵

Remember, this is neither a recommendation or any analysis, nor our RA @EkanshMittal_KW has any holding

We make these notes for our understanding and future reference and sharing here

(1/n) General details:

- one of the leading manufacturers of blue (Phthalocyanine) pigments for ink, plastics, paint, textile and paper industry
- company has also ventured into manufacturing of yellow, red and orange (AZO) pigments

(2/n)

In this short 🧵, let's look at the Sea food industry or more specifically the Shrimps Industry

There are a few Shrimps industry based listed stocks and after a lull of 2-3 years, they seem to be making a comeback

(1/n) Classification of Sea food:

Capture - Comprises aquatic species taken from natural water bodies (Sea, lakes, ponds etc.)

Aquaculture - Comprises species cultivated in aquaculture farms

(2/n)

Weekly wrap 🧵

As they say, it takes a prepared mind to capitalize on the opportunities

Let's look at stocks and topics we discussed this week
(1/n) New stock reco. for members

How often does one get a High growth stock, Market leader with 50% market share, Minimal debt at Cheap valuations?

Not often, right?

We think we have found one and recommended it to members...click here for details - katalystwealth.com/2022/08/01/new…

(2/n)

What's common between a lot of stocks that went up 5, 10, 20x over the last few years

- In general rising sales year on year
- Depressed margins and earnings at one point of time
- Depressed valuations during periods of low margins

A small 🧵discussing each point

(1/n) So, in general, how does a stock deliver good returns?

It does so when its earnings expand or if the market perception of the stock improves, i.e., the valuation multiples expand

If we get the combination of both, that’s when the returns tend to be extremely good

(2/n)

Key performance ratios to analyse Bank Stocks 🧵

If you have been investing in stocks, it's very likely that at some point of time you must have had a banking stock like - HDFC, ICICI, SBI, etc. in you PF

Analysis of bank’s accounts differs significantly from other cos.

(1/n) In this 🧵, let's look at some ratios, which are unique for banks

Net Interest Margin (NIM) - For banks, interest expense is main cost (like cost of RMs for cos) and interest income is main revenue source

Diff. between interest income and expense is Net interest income

(2/n)

Bad earnings + volatility can deliver Great returns

Investors consider bad earnings and volatility as their worst enemies

Let's see through an example how you can befriend them and aim for 5-10x returns on cyclical stocks

(1/n) Let's first look at stock price chart of a company – Gravita India

Some observations:

- Stock is extremely cyclical and volatile
- In the last 9 years, it has reported 80% + fall from highs twice
- It has also reported 1,000% + gain from lows twice

(2/n)

Story of 0 to 10

All investors want their stocks to go up 5x, 10x, 20x or more

We have all heard stories of how a certain stock went up 50-100x for great investors like - Mr. Jhunjhunwala, Mr. Vijay Kedia, Mr. Ashish Kacholia, etc

Here's our experience of a 40x stock

(1/n) In our over 13 + years of investing and recommending stocks to clients, luckily, we have had quite a few 4-50 baggers and have come to the following realizations:

1. Identifying good companies is relatively the easiest

(2/n)

In case of Buybacks, acceptance ratio is a key factor that determines risk-reward potential

Unfortunately, neither theoretical nor actual acceptance ratio is accurately known before ex-date

Here's 1 simple hack that can help you pick buybacks with higher acceptance ratio

(1/n) Look at stock price chart of last 1-3 years of the company

If the stock has been in a downtrend and the buy-back price is such that the stock has traded largely above the same for a major period of 1-2 years, the acceptance ratio might turn out to be substantially higher

(2/n)

Did you know?

Time Technoplast got approval by PESO for Composite Type-4 CNG cylinders in the month of May'21

There's an ongoing debate between CNG vs EV penetration in India

But today we will look at Composite vs Metal cylinders that are used in the CNG space

(1/n) The CNG ecosystem is rapidly expanding in India

It is believed that the Gas contribution to India’s primary energy mix will increase from 11% in 2010 to 20% in 2030

This is leading to proliferation of CNG fueled vehicles and Gas stations across India

(2/n)

Research on stocks has improved significantly over the years; however, most of the time investors tend to ignore the most important document for research - the Annual Report of the co.

In this small 🧵we will share with you what to look for in the annual report (1/n) AR is the most important doc and also the most ignored one

AR of any co. is the report card of the financial year gone by and when you read several such reports, you get to know a lot about the business, the promoters, what they said, what they achieved, what they missed (2/n)

It's Sunday and a good day to improve your understanding of cash flows of the co.

As they say, ‘Revenue is vanity, profit is sanity and cash is reality’

In this small 🧵 we will share with you 4 cash flow ratios that every investor should look at while analyzing any co. (1/n) In our view, no fundamental analysis on any company can ever be complete without understanding the cash flows of the company

(2/n)

Real estate demand is picking up and we were recently reading about Oberoi Realty

While doing so, we came across some interesting stories about Vikas Oberoi, the man behind the company

A small thread 🧵 (1/n) Kindness can reward in different ways

In 2001, a real estate broker visited the offices of Mr Vikas without any appointment. Mr. Vikas was not pleased but still decided to meet him to respect the man’s effort (2/n)

#cyclical businesses 🧵

A detailed thread on how to invest in cyclical businesses so that

- you don’t get trapped at the very peak and
- invest when the cycle is down for good gains in subsequent periods (1/n) Look at a 10 yrs chart of a cyclical company

Same co., different outcomes for different investors

- 0 return for someone who invested at peak of 2010
- 80% loss who invested at the peak and sold in 2015-16
- 400-700% gain in 1-1.5 yrs who invested at lows of 2016, 2019-20 (2/n)

#delisting 🧵

A thread on delisting based special situation opportunities in India and how to play them in 2 ways:

- Just after the company announces delisting offer
- after the delisting fails So, making money in stock markets is about recognizing patterns

Finding the ones which work and then investing whenever an opportunity with a similar pattern emerges