Sunday, July 20, 2014

Balmer Lawrie Investments ltd has lot to catch up.


Balmer Lawrie Ltd has Market capitalisation of 1640 crores as closing date 20- Jul-2014 with CMP of 578 with Face value of 10.
Balmer lawrie Investment Ltd has Market Capitalisation of 557 crore as on closing date of 20- Jul 2104 with CMP of 250 with Face value of 10.
Balmer Lawrie Investment ltd like any holding company trades at discount but offlate the discount is quite steep and represents opportunity to be considered in one's long term portfolio.

Balmer Lawrie Investment represents a good Investment opportunity for conservative Investor.
I see this as Corporate Bond which not only increases the Book value every year but also increases the Dividend payout since last 5 years.
It has soon great consistency in last 5 years & it's major verticals are directly pegged to Country's GDP.






Balmer Lawrie Investment Ratios for last 9 years.
Balmer Lawrie Investments Ltd has been solely formed with the intention of divesting its holdings in Balmer Lawrie Company Ltd.
Although i'm interested in writing about Balmer Lawrie Investment we need to first understand bit of Balmer Lawrie Company ltd's History which is as follows.
Company was started by 2 Scotsmen Stephen George Balmer & Alexander lawrie as Tea trading, Tea Blending, Shipping & Forwarding business
In Year 1937, it had setup it's first grease plant at Kolkatta.
In 1969, Balmer Lawrie lost the managing rights over 40 Tea gardens as the Managing Agency was abolished.
In 1972, Management divested their stake to Indo-Burma Petroleum Company.
Due to Nationalisation of Oil Companies in India, Company which was subsidary of IBP was transferred to Indian Oil in 2002. Balmer Lawrie Stake was transferred to Balmer Lawrie Investment Ltd .
Balmer Lawrie Investments Ltd has been solely formed with the intention of divesting its holdings in BLCL.
CSR activities under taken by Balmer Lawrie.
Short summary of all the JV's & subsidaries headed by Balmer Lawrie & Co. Ltd.
Balmer Lawrie (UK) Ltd. 100%
Balmer Lawrie (UAE) Llc. 49%
Balmer Lawrie - Van Leer Ltd. 48%
Transafe Services Ltd. 50%
Avi Oil India Private Ltd. 25%
Balmer Lawrie Hind Terminal Pvt. Ltd. 50%

Balmer Lawrie – Transafe Services ltd  history:
In FY10, BLVL had acquired a 50% stake in Transafe Services Limited (TSL) for a consideration of Rs.
18.18 crore. With TSL filing for CDR, this investment is likely to be written off."

Balmer Lawrie - Van Leer limited history:
BLVL is a joint venture between Balmer Lawrie & Company Limited and Greif Inc, manufacturing steel drum closures and plastic drum/containers. The company was incorporated on 12th February 1960 and was originally known as Indian Flange & Manufacturing Company Pvt. Ltd.
In 1993 the name was changed to Balmer Lawrie - Van Leer Limited (BNVL), Balmer Lawrie and Royal Packaging Industries Van Leer NV emerged as major shareholders.
The company went in for a public issue on 26th April 1994.
In 2007, the company decided to de-list from the stock exchange and the shares were bought back by the parent company Greif International  Holding (previously Royal Packaging Industries Van Leer NV).




Key Points of Balmer Lawrie Travel:
In Feb 2014- Balmer lawrie acquired vacation exocita for 20 crores.
Vacation exotica has started it's operation in 2007 & had staff strength of 110 members at time of acquisition.
Vacation exotica gives Balmer Lawrie access to 41 000 - Indian client base & tap network of 100 plus preferred overseas partners. This acquisition complements the nationwide Tour & travel offices setup b  Balmer & withstand the competition from Online portals.
Vacations Exotica average sales growth of 25 per cent for 3years and its tours and travel business has revenues of around Rs 120 crore in year 2013.
Vacation Exoctic earns 40% of it's revenue from Ticketing which can be a very good compliment to Balmer Lawrie's existing infrastructure on Tours & Travels.
Vacation Exoctica has rating of 3.7 in Justdial & Glassdoor3.
Indian Govt employees roughly 19 million people (3.4 Central Govt, 7.2 State Govt, 6.4 Quasi Govt 9 (Reference: https://kgovindan.wordpress.com/2009/08/)

Online Portal http://balmerlawrietravel.com.
Online Portal http://www.vacationsexotica.com.

Tours and Travel segment of Business breakup:
Balmer Lawrie has done sales of 1161 cr (after exclusion of Inter segment revenue) in FY 2014 & PBT of 24cr for FY14.
Balmer Lawrie has done sales of 1120 cr (after exclusion of Inter segment revenue) in FY 2014 & PBT of 32cr for FY13.
YoY Sales growth rate has been 4% . Capex is 122 crores in FY14, generating ROCE of 14% for the company.


Key Points of Balmer Lawrie Lubricants
Balmer Lawrie sells grease under the Brand name Balmerol.
It has 3% of the Market share & underwent some re-branding exercise in the year 2012.
It has 4 blending plants in Kolkatta, Chennai , Mumbai (Sewri) & Silvassa.
Govt of India can consolidate all lubricant business under one roof and compete with MNC's such as Shell & Castrol.
Servo is brand from HPCL, Tide Water Oil ltd sells under Bran Vedol is another company from PSU sector competing with each other.
Balmer Lawrie sells grease mainly to Industrial sectors such as Steel, Mining , Railway , Automobile & Defence which accounts for 70% of it's Lubricant Sales.
Company added 20000 tpa in it's Silvassa plant in Year 2013 at cost of 35crores.
Company's Sewri (Mumbai) plant of   6000 tpa will be shut down due to Environmental issues.
G&L operates mainly in two wings - Automotive grades, which constitute about 60% of the market and Industrial & Marine Grades, which represent the balance
Balmer Lawrie has only captured 2% of market share in Lubricant & 24% in Grease segment.
Balmer lawrie lacks the marketing skills and Distributor network has to be improvised.
Reference:
http://www.slideshare.net/saturnchallenger/balmer-lawrie-lubricants-and-greases-distributorship-review?qid=9ea89b4a-8a23-4497-aed2-8a00dbdab840&v=default&b=&from_search=2

The Lubricant industry in India has been pegged around Rs. 15,000 crore annually with consumption estimated at around 1.50 million tonnes in 2012-13. (Balmer's Lawrie's management Insights for 2012-2013)
 Financials of Balmer Lawrie Ltd by Segment for year 2013 & 2014



Net profit TO Market Cap: 9.53% 
TAX %: 26.85% 
Operating Cash flow for Year 2013:  Rs 70.59 
DEBT PER SHARE:  Rs 79.82 
Net Current Asset PER SHARE: Rs  259.63 
Net Block PER SHARE: Rs 201.57 
Working Captial PER SHARE:  Rs 259.63
SALES PERSHARE:  1347.45 
CONTINGENT LIABILITY PERSHARE:  92.11 
CMPTODEBTPERSHARE: 7.25 
CMPTOCONTILIABPERSHARE: 6.28 
CMPTONETBLOCKPERSHARE: 2.87 
CMPTONCAPERSHARE: 2.23 
CMPTOWCAPPERSHARE: 2.23 

Working Capital Days: 20.52 
Net profit:  166.07Cr. 
EVEBITDA: 4.89 
Altman Z Score: 4 plus

5 Year Growth rate in Business is what I observe for Industrial companies.




Key Risk for Investments in Balmer Lawrie Investment:
Upward revision in Dividend Distribution Tax.
Any Reduction in dividend payments by the subsidiary will impact the Price of the Company.
Dividends paid by a domestic company are subject to the dividend distribution tax (DDT) at an effective rate of 16.995%.

Comparision of Valution for peers in the Industry

.


Conclusion:
I don't want to leave a Target Price or BUY recommendation.
One has to read and decide what he intends to do with this beautiful company.

Saturday, September 7, 2013

FDC ltd & Strides Arcolab ltd some good sipping candidates.




I have put some comparison n strengths of FDC ltd.
Wockhardt clear  AVOID for next 1 year.
However companies such as Strides Arcolabs n FDC ltd is worth a good SIP candidates.

Saturday, August 17, 2013

INDIAN BANKING RECENT QTR PERFORMANCE INDICATORS STUDY PART 2


 This part contains
1. Income Earning, 
2. Operating Expense inclusive Provision ,
3. Net Profit, 
4. Net NPA 

I'm presenting you actual dataset n best n worst performance in Banking Industry.
Also trying to capture figures in Per share to standardise dataset & further for easy comparison among peers i'm trying to measure each of them with their Current Market Price.











INDIAN BANKING RECENT QTR PERFORMANCE INDICATORS STUDY PART1


INDIAN BANKING RECENT QTR PERFORMANCE INDICATORS STUDY PART 1 .

TO KEEP LIFE SIMPLE I HAVE USED COLOR AS INDICATOR.
GREEN OR BLUE  MEANS BEST IN INDUSTRY N RED MEANS WORST.
ORDER SHOULD BE .

1. PBIDTM% -
2. PBDTM%
3. PATM%
4. Gross Non Performing Assets %
5. Net Non Performing Assets %. (Most critical Indicator of deteriorating Credit Quality)

This table below contains the actual numbers for the above 5 Fundamental indicators and change over period of time such as Previous Qtr, Previous Qtr last year & Last to last Year.











Tuesday, June 11, 2013

Delisting has fizzed off in Indian Capital market hope to see more realistic P/E, P/S & P/B multiples for this companies.

It was very evident then during Sept2012 that Market had overvalued some of the scripts in Indian market were promoter holdings was greater than 75%
Promoters also let the suspense built up as it helped them in fetching a better price via  Offer for sale .
It’s common man who ended up burning his fingers  and may take some time may next 5years to get his cost price back .
In Sept'12 I had taken this companies past five years of Balance sheet, Income statement cash flows & tried to compute how much Promoters will have to shell out from their pockets to buy back.
Do they have sufficient capital to do so.
Are their earnings strong enough to support such an buyback.

If you guys need detailed working do email me I shall share maths behind each field.

 


Oracle Financial Services:
Oracle went for dilution of Stake in open market

Novartis India Ltd:
 Novartis India went for  dilution of Stake in open market
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Novartis_India_Ltd_290513.pdf

Timken India
Company also diluted stake by issuing shares.
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Timken_India_Ltd_090413.pdf

Honeywell Automation:
Company also diluted stake
http://www.bseindia.com/xml-Data/corpfiling/AttachHis/Honeywell_Automation_India_Ltd1_131212.pdf

GMM Pfaudler:
Here is the Offer price was Rs. 88.55 per share.

Company sincerely made an Delisting offer to general public,
Outcome of Board Meeting (Delisting Offer)18 Apr 2013
With reference to earlier announcement dated April 17, 2013, the Fresenius Kabi Oncology Ltd had informed BSE that the Company has received a letter dated April 16, 2013 ("Letter") from Fresenius Kabi (Singapore) Pte Ltd, the promoter shareholder of the Company ("FKSL") notifying the Company of its intention to make a voluntary delisting offer to the public shareholders of the Company ("Delisting Offer") to acquire the entire public shareholding of the Company (i.e. 3,00,63,255 equity shares of Re. 1 each, representing 19% of the share capital of the Company) and delist the equity shares of the Company from the stock exchanges on which the equity shares of the Company are presently listed, i.e., BSE Limited and the National Stock Exchange of India Limited in accordance with the SEBI (Delisting of Equity Shares) Regulations, 2009 ("Delisting Regulations"). FKSL has expressed its intention to pay an indicative price of up to Rs. 130 per share to acquire the shares offered to it in the Delisting Offer, subject to FKSL's right under the Delisting Regulations to accept or reject any price discovered under the reverse book building process set forth therein.

 ANDREW YULE Ltd:
No news on delisting from the Govt for this company.

Company decided to dilute the promoters stake n not to go for open offer.


Kennametal India:
Company  decide to dilute the promoters stake and not to go for open offer.
Share price has dropped from 1140 June 2012 to CMP of 487/-.

Fairfield Atlas:
Fairfield Atlas has Post offer price of Rs245/ for public based on price discovery.



BOC india (Linde India)
Company also decided to dilute it’s stake via Offer for sale.

 This analysis is based on Last Sep'12 when I posted the  findings.
CMP here refers to price as on 3rd Sept'12.

Here is my full analysis which I didn’t share last time based on which I wrote last time.
I also feel that some of this stocks would further correct when NIFTY corrects to more realistic P/E & P/B & P/S multiples.

Cheers…..








Saturday, April 27, 2013

CASE study3, were Indian Housing sector will correct by atleast 30% in next 1year and gradually rise only by 20% in next 20 years.

Hi Friends,
Indian housing market is in Bubble phase for sure when measured based on Affordability Index , Price to Income basis, Mortgage as percentage of Income, House to Income Ratio & Price to Rent ratio basis.
It's also for sure lot of Black money is been parked into this sector & Govt itself is in least interested to cool of sector by taking relative measures.
Real Estate Sector is not targeting poor common man in streets as it's beyond their reach, it's targeting the NRI's residing abroad.
NRI's hardly know what would be best use of their money, they don't want to bet in Equities market and yet what something steady in their portfolio.
NRI's have been happy with the Rupee depreciation in last 6 years of close to 35%.
They fail to realise that Real Estate investments are not very liquid and would take time to sell when they step into the market.
Indian Real Estate comes up with property show in major cities across the world where rosy picture of new Township is sold to NRI pockets.
When they sign up the agreement they fail to realise that the agreement is totally one sided favouring builders and nothing is in their favour.
Builders are delaying projects by 3 to 4 years this is Indication of  oversupply and cash trapped builders.
One should be cautious of big township projects if water table of that region is depleting and weak.
NRI's are over leveraging in some cases by making following Assumptions.

They can repay loan in 30 years.
They will always have steady & Rising pay structure.
They can quickly sell back the property if in need of cash.
Like Gold property prices will always go up.

Reasons why Property prices would come down in next 5 years:
As the GDP derails jobs derail.
Politicans need to fund elections which will see pull back from Real Estates.
Pvt Equities are exiting this sector (smart Individuals are money there money out)
Banks will refuse to restructure loans further to Builders which will lead to defaults or lowering of Rates.
Slow phase of job creation in India (especially service sector)
Failure to cut down the rising influence of Chinese mfg will slow to Indian mfg industry which will again slow down jobs in country.
Cost of Cement & Steel would correct as China slows down.
Interest Rates in Banks will moderate and this will lead to lower cost of borrowing n lending .
If Govt is really people oriented emerging 2 tier & 3 tier cities which are well planned can see rising jobs and and shift of population based on availability of Basic amenities.
References from the web for your reading and inference.

Rising Unsold Inventory in Real Estate:

http://articles.economictimes.indiatimes.com/2013-02-13/news/37079528_1_unsold-inventory-knight-frank-research-market

http://www.firstpost.com/economy/why-bangalore-property-is-more-real-than-mumbais-352467.html


Also some good readings & images from the web for you.
http://en.wikipedia.org/wiki/Indian_property_bubble
http://www.zerohedge.com/news/2013-03-07/guest-post-unpopped-housing-bubbles-abound


http://www.numbeo.com/property-investment/gmaps_rankings.jsp?indexToShow=getMortgageAsPercentageOfIncome&year=2013

http://www.numbeo.com/property-investment/gmaps_rankings.jsp?indexToShow=getHousePriceToIncomeRatio&year=2013

http://www.numbeo.com/property-investment/gmaps_rankings.jsp?indexToShow=getPriceToRentRatioCityCentre&year=2013


http://www.numbeo.com/property-investment/gmaps_rankings.jsp?indexToShow=getAffordabilityIndex&year=2013

Friday, March 29, 2013

Indian Housing Simulator and why first timers should invest in atleast one house for living.

Hi Friends,
This is Case study is for people in age group of 25-30 years.
There goes a saying "cut  one's suit according to one's cloth"
Mean is simple don't over leverage our stretch to much beyond your budget.
These banks gives loan for everything and when it's disbursed you are made to feel like King.
It's only when EMI starts making dent one realises the reality.
EMI for your first house is an Assset and at any cost shouldn't be delayed.
Buying house also should be within reasonable means. One needs to save for rainy days.
Let's say one should have atleast  5 lakhs as emergency fund.
This is keeping in mind your average salary is 10 lakhs plus per annum.
Don't invest in new townships unless you plan to stay there in person. India too has ghost townships were people are finding it hard to move in.
Study the Location of your Investments.
EMI should be not more than 40% of your monthly salary.
If both partners are working still better to keep buffer as these days there is no Job surety.
 As stated earlier there is loan for everything but Loan Installment shouldn't exceed 50% of your monthly income.
Credit cards gives us feeling that we haven't spend much especially if auto payment is linked with your credit card it's even worst as you lose track of your Investments.
Life Insurance coverage should be just sufficient to cover your mortgages payment if any.

Let's see how House Investment creates value for Individual
Case Study 1 is positive scenario.
We can get Tax benefit on HRA, We can save on Rental Income.
We can keep up with pace of rising Inflation.
We need not worry about promoters n their cunning and innovative Interventions.

If we need just 20% steady return Housing can be one of smart investments if carefully betted.
Housing will be cheaper in next 2 years once Indian housing bubble bursts (corrects by 25%) do invest and keep your fingers crossed that it does happen so Housing market comes to some sanity.
As we see a Positive NPV for all our Cash outflows we can invest with margin of safety.
Here i'm consider what if ur Intial Investment was kept in FD,
What if Rentals after paying maintaince is kept in FD
What if Rental deposits are kept in FD
What if you Repay home loan by 20 years & sell of your House by 20years at 265% higher than purchase price.
First timers can see Rental yield as savings if they Invest and they neednot pay rent as they would do if they don't own a house.
Investors can see Rental Yield as returns on their Investment






















Case Study 2 is worst scenario.
Assume house is sold after 20 years. Keeping Inflation of  3.5%.
Due to depreciation assume we can only get 100% return on Arithmetic mean basis.
Assuming Fixed Deposit Yield after tax is 6% will slow down & Rental yields will be hard to come by.
If it's your first home and NPV is positive given below anticipated scenario it's worth a buy.
In India there is nothing free and not much social security.
Even if Banks fail we can say House is our Asset ( Ignoring nature and man made calamities)