tag:blogger.com,1999:blog-7004453.post5039982571684285697..comments2023-09-02T19:53:06.144+05:30Comments on Understanding and applying value investing principles: A case of ignored liabilitiesRohit Chauhanhttp://www.blogger.com/profile/00356455735241398199noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-7004453.post-8833216281608477872011-11-17T19:06:45.530+05:302011-11-17T19:06:45.530+05:30Hi Rohit,
Nice post. However, even if we assume ...Hi Rohit, <br /><br />Nice post. However, even if we assume that the value of European business is zero, the stock is undervalued. I have some analysis done from my side at <br />http://the-value-stock.blogspot.com/<br /><br />would be great, if you can tell where am i going wrong ..<br /><br />thanks ...Manpreethttps://www.blogger.com/profile/02984430301831893033noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-90892530233843077282011-10-26T09:43:30.861+05:302011-10-26T09:43:30.861+05:30Happy Diwali to you Rohit and all the readers !!!
...Happy Diwali to you Rohit and all the readers !!!<br /><br />Sachinsachin8778noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-80031757104016203052011-10-26T02:02:06.315+05:302011-10-26T02:02:06.315+05:30hi rohit,
i ve been an avid amateur market enthusi...hi rohit,<br />i ve been an avid amateur market enthusiast since 2007. so far my experience has been pretty dissappointing.i however, still am interested in learning and since i ve heard a lot about u from my nephew i felt it prudent to ask you about my few holdings-<br />1)IDFC<br />2)IDBI<br />3)UNITECH(HEAVILY INVESTED HERE)<br />4)STERLITE(PRETTY BULLISH ON THIS 1 AS WELL)<br /><br />TRUST IT WONT BE A PROBLEM<br />EAGERLY AWAITING YOUR RESPONSE,<br />SHEKHAR ARORASHEKHARnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-11970320733757679592011-10-23T12:58:25.579+05:302011-10-23T12:58:25.579+05:30Rohit, you are absolutely correct that General Mot...Rohit, you are absolutely correct that General Motors provides a cautionary tale to the perils of giving lots of entitlements to employees. Back in the day when we did not have much competition, General Motors in fact pioneered the ‘social contract’ between corporations and workers by which workers enjoyed excellent job security and other benefits like pensions and firms got maximum loyalty and productivity in return. Many companies in other industries followed suit and it was a very happy period indeed for both workers and the companies they worked for. Unfortunately, in the wake of deregulation, increased competition, outsourcing, and plummeting productivity, firms had to scrap the much-hailed ‘social contract’ in the 1980s and 1990s and today, as you must be aware, times are quite tough for American workers. I am sure though we will persevere and overcome these difficult times like we have so many times in the past. I am glad to see though firms like Tata doing very well in emerging nations.H.R.https://www.blogger.com/profile/03139937964059566987noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-6604077488157309452011-10-22T17:55:47.116+05:302011-10-22T17:55:47.116+05:30Hi Rohit
your review technique is great. i am inv...Hi Rohit<br /><br />your review technique is great. i am invested in Tata Steel and keep checking their parameters like P/E, P/B, EPS, ROE but never looked at this parameter which is interesting. By all other parameters, it has been a consistent performer. Operationally agree they have the best margins and well tied up for raw materials as well as fuel.<br />Will research more on this aspect and look forward to your as well as others advice.<br /><br />regards..AmitAVGhttps://www.blogger.com/profile/04491523559236517900noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-75450007744572496382011-10-22T04:48:57.893+05:302011-10-22T04:48:57.893+05:30Hi ashok
on pensions ..you are spot on. US and eur...Hi ashok<br />on pensions ..you are spot on. US and europe has a ticking bomb on pensions and all such entitelements - both in public and private sector. look at what happend to General motors in the US. the company got swallowed by the pension liabilities - the equity holders got wiped out<br /><br />on tata steel, late 90s was a tough time, due to slow down and high cost strcuture. since then they cleaned up the balance sheet and became efficient. the corus accquisition i think was a bad move ..the management of corus dressed it up and stuck it to the tata who swallowed it. now they will have the mess to clean up for years to come<br /><br />if the equity and debt market hold up - a big if with the low interest rates - then it may turn out better. but if that doesnt happen, then we have trouble<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-81266243871721000452011-10-22T04:45:04.790+05:302011-10-22T04:45:04.790+05:30Hi yogesh
thanks for the comment. will have a look...Hi yogesh<br />thanks for the comment. will have a look at the blog you mentioned<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-43412165369953896652011-10-22T04:44:26.213+05:302011-10-22T04:44:26.213+05:30Hi kaho pyare
i have not invested in NCD ..so cann...Hi kaho pyare<br />i have not invested in NCD ..so cannot be much help<br /><br />in case of NCD ..the most important criteria is credit risk and you also need to see the senority of this NCD in the capital strcuture. is the NCD secured ..what are the coverage ratios etc. if possible, you should read the offer document for the NCD before investing<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-18515573660763094522011-10-22T04:41:50.169+05:302011-10-22T04:41:50.169+05:30kaho pyare
ofcourse i check for all companies. i r...kaho pyare<br />ofcourse i check for all companies. i read the annual reports cover to cover, but then for 99% of indian companies pension liabilities are small ..less than 5% of networth or profit<br /><br />for example in apaints it was 10% of networth and less than 10% of annual profit. lets say instead of the 130 Cr as stated in the annual report, it turns out to be 200 Crs in 3 yrs ...what difference will 80-90 crs make in a 800 crs + annual profit. its like a small pinch<br /><br />but if the liability was 10000 crs ..then a 20% difference would have meant a hit of 2 yrs profit. that will be a different matter. so its all a matter of context<br /><br />if you invest in US or europe or in companies which are accquiring, then pension liabilities become critical. in purely indian companies it is not a worry yet<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-64883484418079995242011-10-22T04:36:05.741+05:302011-10-22T04:36:05.741+05:30Hi gopal
that would be a long topic ..but to keep ...Hi gopal<br />that would be a long topic ..but to keep it crisp<br /><br />- are liability covered by assets<br />- what are the assumptions for both<br />- and finally how much is the liability as a portion of networth/ annual profit. if it is small...around 5% as it is for most companies , i will not worry about it much<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-39991977789909423692011-10-22T04:34:16.231+05:302011-10-22T04:34:16.231+05:30Hi sachin
i should get some carrots :)
i had look...Hi sachin<br />i should get some carrots :)<br /><br />i had looked at tata sponge earlier and havent looked at it for some time..you are right .with the bellary scam, companies with ore mines will definitely benefit. that said , tata sponge is 43% held by tata steel. i hope they are doing a clean transfer pricing as 30% is purchased by tata steel itself.<br /><br />it is cheap ..but then it is a commodity and cyclical biz. so there may not be too much pe expansion, but if the earnings expand and so does volume, then there may be a good upside<br /><br />frankly i am finding decent companies and hence have not look as much at commodity plays lately<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-49615907886850201222011-10-22T04:28:24.481+05:302011-10-22T04:28:24.481+05:30Hi vikas
havent looked at bajaj holding. i am curr...Hi vikas<br />havent looked at bajaj holding. i am currently analysing oriental carbon. it was analysed by my good friend ayush and i have been digging into it since then. you can read the analysis on his blog - dalaal street<br /><br />i am still trying figure out oriental<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-57294685947856289722011-10-22T03:04:55.714+05:302011-10-22T03:04:55.714+05:30Hi Rohit
your thorough analysis is really inspiri...Hi Rohit<br /><br />your thorough analysis is really inspiring. <br /><br />As I live in UK, I know couple of things regarding pension system here. <br /><br />After recent change any yearly increase in pension pot(employer + employee's contribution) and pension pay-out are now linked to CPI(consumer price) rather than RPI(retail price inflation which on average is highter by 1%)<br /><br />Although current CPI in UK is 5% historical average is around 3% and BOE expect CPI it to come down to 2% by next year!<br /><br />So, I assume as long as long term investments return are more than 5% it could meet liabilities(long string of monthly payments though as life expectancy here is much higher(in decades) than in India.<br /><br />Many times I come across in UK newspaper re ticking timebomb of pension liabilities both for private and public sector but don't really have much insight into this. <br /><br />Investing in commodity companies: doesn't it require prediction of macro-economic issues and if I remember rightly Tata Steel was bleeding heavily in nineties and about to wipe out it's equity. SAIL was available at 50 paise/share!<br />Corus at one time was trading at 4 pence/share while Tata bought is for 600 pence/share.<br /><br />Even if financial crisis avoided, harsh austerity measures in Europe/US are likely to cause slowdown impacting steel companies in my limited understanding from reading news paper! <br /><br />Regards,<br /><br />AshokAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-4624465081191202952011-10-21T22:41:03.205+05:302011-10-21T22:41:03.205+05:30Grt post rohit. So much to learn from your analysi...Grt post rohit. So much to learn from your analysis. Looking fwd for more....<br /><br />@ Sachin: I have come up with an article on Tata Sponge in my blog (www.fingerscrossedideas.blogspot.com), may be it might help you get a view on Tata sponge.<br /><br />Rohit would like your feedback on the same.<br /><br />RegardsYogesh N Banghttps://www.blogger.com/profile/17315916543956243832noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-25044855213365125312011-10-21T14:18:49.564+05:302011-10-21T14:18:49.564+05:30Also can you please let me know on evaluating NCDs...Also can you please let me know on evaluating NCDs.<br /><br />i see that india infoline NCDs are selling for ~957 Rs (a week back it was for 930). 11.9 is coupon rate on this.<br /><br />so wouldn't it be wise to buy them and guarantee +14% compounded pa return if i buy it for 930.<br /><br />i will get 119 every year for every 930 i.e 12.8%. additionally i will get 1000 rs back after 5 years. i.e another 1.46% return. so i will be getting 14.26<br /><br />do you see any risk more than a company FD faces.<br /><br />am i right in assuming that i will have right to receive interest from the day i bought NCD from "secondary market". <br /><br />i assume that i will also have right on whatever accrued interest on NCD. however i do not take into calculation this accrued interest. whatever it is, it is going to add to my return.<br /><br />INE866I07230 INDIA INFOLINE INVESTMENT SERVICES LTD - 11.9 NCD 18AG16 FVRS1000 Beneficiary 100 957.12 95712.00Nileshhttps://www.blogger.com/profile/09337878443723038215noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-32653586409589827002011-10-21T13:49:49.542+05:302011-10-21T13:49:49.542+05:30yes we should analyze this kind of liabilities as ...yes we should analyze this kind of liabilities as well. but not sure why you are checking this for just Tata steel.<br /><br />wouldn't that be case with all big companies including your favorites Asian paints, CRISIL etc?Nileshhttps://www.blogger.com/profile/09337878443723038215noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-65620320296077681822011-10-20T23:55:19.162+05:302011-10-20T23:55:19.162+05:30Hi Rohit,
What are the metrics you use to ...Hi Rohit,<br /> What are the metrics you use to assess pension situation ? Obviously you would want pension assets to be greater than liabilities. What else ?<br /><br />Thanks,<br />GopalAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-76619733417122629982011-10-20T12:39:55.661+05:302011-10-20T12:39:55.661+05:30This comment has been removed by a blog administrator.Sachin Purohitnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-86902469990566604692011-10-20T12:39:34.903+05:302011-10-20T12:39:34.903+05:30Woww..That's very smart analysis on pension li...Woww..That's very smart analysis on pension liabilities of Tata Steel Europe. Makes me want to say what Detective Karamchand's secretary always told him once he cracks the case - "Sir, you are a genius!"<br /><br />Talking about Tata Group, what do you think of Tata Sponge Iron, that is debt-free, having high returns on networth, good operational efficiencies and does not seem to have the kind of capital allocation issues in Tata Steel. I know you have covered it in a past article. But there have been some changes in the ground realities since then. Post-ban on iron mining in Bellary, its competitors sourcing iron ore from this belt could be facing problems while Tata Sponge has its captive mines. Doesn't that positively impact this company? What do you think?Sachin Purohitnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-24470462117596747662011-10-20T08:07:29.346+05:302011-10-20T08:07:29.346+05:30Hi Rohit,
Nice digging of Annual report, which i t...Hi Rohit,<br />Nice digging of Annual report, which i think is a must for retail investor.<br />I usually avoid asking for opinions on particular stocks, but with this excellent analysis of yours I am tempted to do it.<br />My query is on 2 stocks.<br />1- Bajaj Holdings- Whats your thinking on these holding companies.<br />2 - Oriental carbon & Chemical Ltd.<br />For details posting the another blog link<br /><br />http://purvismultibaggerstockideas.blogspot.com/2010/09/orient-carbon-and-chemicals-limited.html<br /><br />Hope you dont mind.<br /><br />Need your valuable insight on 2 of these.<br />Regards,<br />VikasVikashttps://www.blogger.com/profile/15773793906094163924noreply@blogger.com