I saw the following post on torrent cables on ranjit kumar’s blog. In addition, I found this analysis on amit’s blog.
The fundamentals look enticing
- RONW – 30%+
- No debt
- A 25%+ growth in topline and bottomline
- Operates in the power cable industry which seems to be doing well and is a growth industry.
- Lower valuation than all its competitors
However I am concerned about the following
- Inventory and debtors has increased in the last few years (debtor days is at 60 from almost 20-25 a few years) back. As a result the company has a very low free cash flow. Most of the cash flow has been used up by the incremental working capital
- Cannot get the annual report for the company. As a result I have no idea on how the company is planning to reduce inventory and debtors.
- The company was in BIFR from 1999-2002 (not sure on dates). Why did the company land up in BIFR and why will it not land up in a similar position in the future?
Comments welcome on the above analysis (which is very superficial as of now)
PS: An apology to all who requested me for prof bakshi’s interview. He has however posted the interview on his website. I would strongly recommend reading the interview (I have done it twice and really learnt from it)