July 20, 2009

Quarterly results review – VST india, Novartis, Concor

VST
I wrote about VST a
month back and got it perfectly wrong. The company has come out with a 60%+ topline growth and doubling of bottom line. I have not been find more details on the results, but need to figure out how the company has been able to increase topline so rapidly in a business with such a low growth.

Container corporation
The company reported a 10% topline growth and a flat bottom line. The bottom line is flat due to the 20% rise in the rail expenses. Although I don’t have the exact details, the rail charge hikes cannot be passed on the customers immediately and there is a lag in getting the price increase.
The overall results are good in view of the slowdown in the exim markets. Concor has been a long term holding for me and is a very profitable logistics company with a cash rich balance sheet, attractive margins and substantial competitive advantage.

Novartis
I wrote on Novartis earlier
here. I have not completely exited the stock as I felt the buyback price was too low. The company has been able to increase the holding to 76.4% now. The company increased the topline by 7% and bottom line by around the same amount.
The performance is nothing out of the ordinary. The stock continues to be undervalued and will most likely remain so. The only upside is a possible buyback and delisting by the parent. However as there is no fixed timetable, it may not make sense to hold the stock for the long term. In my case, I will exit my position when I can find a better idea.

So how is your portfolio doing ?
I often get this question by email. The short answer is – as expected (around 10% in excess of the index returns). I started buying last year from march and went all in by Q4 of 2008. I have not been very active since the beginning of the year due to various reasons ranging from shortage of cash to lack of time.

I have been lucky that my wins generally end up more than compensating for my goof-ups. It is however difficult to know beforehand which idea would be a winner or a clunker. In the final analysis, though it is the portfolio performance rather than individual stock performance, which matters more.

9 comments:

karthik said...

Hi Rohit,

What's ur opinion on CRISIL's performance ( I hold a small position on the stock ..the stock zoomed up before I finished my analysis and went way above my Saftey margin :( )

How much will our railway ministers policies may screw up Concor in long term?

VISHNU said...

Hi,

I will not put too much into VST result, as the company engaged in lot of litigation (Income Tax , Luxury Tax , Misclassification of Plain cigarrets)...May be litigation results are in favour of the company...Or the company assumes it is...

Regards
Vishnu

Daniel M. Ryan said...

You've described the fate of a successful value investor. Sweat over the mistakes, only to find that the gainers more than make up for them.

Rohit Chauhan said...

Hi karthik
crisil is likely to be a long term holding for me and i am likely to hold it even if it exceeds intrinsic value. unless the stock sells at very high valuations, i am unlikely to sell my holdings

it is diffcult to say how government will mess with concor. the government is doing is less and less these days ..but then you can never predict what a mamta banerjee or a paswan will do :)

regards
rohit

Rohit Chauhan said...

Hi vishnu
litigation or any such benefit should show up under other income . typically sales have to be topline growth unless the company has started some creative classifications

Rohit Chauhan said...
This comment has been removed by the author.
Rohit Chauhan said...

agree with your comment daniel. also important to study these mistakes as they are a good learning experience

sbali1 said...

I have exited the Concor stock since my IV shows 700-770 and the CAP in my opinion is down to 4 years. They have been sitting on 1200 Cr of cash for many years and not deploying it fast enough into profitable ideas (incremental ROIC is 80% of historical ROIC and their costs are determined by the Railways Minister while Margins are determined by customers).

There are now alternate ideas like Gateway and All Cargo which I plan to evaluate.

Rohit Chauhan said...

hi sbali1
my estimate are much higher and the CAP according to me is much higher. i think the company has been sensible in deploying cash and cash holding is not excessive.
the cost may be decided by railways, but the company has been able to pass the cost to the customer.
the same holds true for all other logistics company using railways for transport.