April 2018 - Stocksbaazigar

Is Sintex Plastics really a Multibagger stock?

3rd February 20194th April 2018 by stocksbaazigar

In 2017 Diwali, Sintex Plastics Technology Ltd (SPTL) stock was recommended by many experts in their ‘Muhurat Picks’. It was trading above 90 that time. One year target in SPTL was given in the range of 120-180 by different analysts. Retail Investors invested in it hoping it will become a ‘Multibagger Stock’ in a year. Nifty started correcting from 10200 and consensus selling triggered great fall in Midcap companies. Sintex Plastics Technology Ltd. share price too corrected in this fall. SPTL was recently demerged from the Sintex Industries Ltd that year and therefore no Technical Data was available to predict the extent of fall in Share Price of SPTL. This made people think that 70-75 is the right level to accumulate more stocks of SPTL, which resulted in ‘good money following the bad money‘. SPTL formed temporary bottom near 56 and now trading near 61. The question remains the same – Is Sintex Plastics Technology Ltd. really a Multibagger Or is it just a ‘black hole’ sucking money of Investors? In this post we will try to find it out. Company Info: Sintex Industries was incorporated as Bharat Vijay Mills Ltd. in 1931. It started its composite textile business in Kalol, Gujarat same year. In 1995, it was renamed as Sintex Industries Ltd. It was listed on BSE in 2000. In September 2016, Board of Sintex Industries approved demerger of its ‘custom moulding business’ and ‘prefab business’ from Sintex Industries to Sintex-BAPL and Sintex-Infra Projects, respectively as wholly owned subsidiaries of Sintex Plastics Technology Ltd. In May 2017, Sintex Industries Ltd. started trading ex-scheme as purely Textile business while all its non-textile businesses were listed under Sintex Plastics Technology Ltd. SPTL is India’s largest water tanks manufacturer. Apart from providing water management solutions, SPTL provides Structural, Electrical, Environmental, Energy, Interior, Material handling, Telecom and Industrial solutions. Sintex Plastics has strong presence in Asia, Africa, Europe and America. Fundamentals of SPTL: Let’s discuss these numbers one by one. Market Capital of Sintex Plastics Technology Ltd. (SPTL) decreased significantly after this fall in Share Price. Current Market Capital is 3736.33 Cr. Management is expecting that once the newly listed business gets settled properly and starts making positive cash-flows, it will improve their debt structure too. As company is operating in India and abroad, it has to deal with different loan interest rates and therefore company will take two more quarters to streamline it’s Cash Flow Structure. Management is targeting for Market Capitalization of 10 Cr within 4 yrs. Sales Turnover last quarter was 0.42 Cr. Sintex Plastics Technologies Ltd. reported muted results as there was de-growth of 7% QoQ in revenues. 33% decline in Pre-Fab and Monolithic business affected company performance. If you will see the Second table properly, you will come to know that total income from operations and net sales is increasing quarter to quarter. Then why there is decline in net Profit? Yes, you guessed it right. Taxes, Interests and Depreciation has been adjusted on quarterly basis to streamline the newly listed company which is hardly 1 yr old now (demerged entity). Taxes of 13.3 Cr paid after this quarter. If you remember, one-time legal expenses of demerger process were paid last quarter. Total de-merger cost of 45 Cr reduced net profit last quarter. This quarter GST amount will affect the final calculations again. Company already faced 15 non-working days thanks to GST. Total Assets of the company is 414.20 Cr while net debt is 3330 Cr. Company has reduced debt of Rs. 82 Cr this quarter. Please note, the FCCBs which they converted in equities to reduce the debt has added additional equities of 1.5 Cr in Market. This lead to heavy supply in Market which resulted in profit booking by FIIs who hedged their positions. This was the prime reason behind the share price fall from October. We can say company has managing it’s debt very well which is good news for Investors. No doubt promoters have confidence in company and so they are aiming to increase their stake by more 10% gradually to reach 40% Book Value of the company is 50.80. Current Market Price is 60.80. Share is fairly valued and available at cheap valuations. Downside is limited and upside is 100% considering 1 yr conservative target of 120 given by expert analysts. So clearly, it is attractive opportunity for short to long-term investors. Industry P/E is 36.96. Peers of SPTL are trading at very higher P/Es. This is one more reason why it is the right time to start accumulating the stock. Face value is 1. Company is not giving any dividends to investors as it is recently de-merged entity. F.V is low, so those who invest only for Dividend income should look for better opportunities in Market. Company is not only reducing the debt but also reducing the cost of borrowing, which is good thing. SPTL is not getting any new order from Government but it has 6 months of Govt. projects in their pipeline. SPTL is expecting that before elections of 2019, Govt. will definitely try to do something for Rural population. Govt. Expenditure on affordable housing, Swachcha Bharat (hygiene/plastic toilets), irrigation, water storage and rain water harvesting etc projects will increase, which means more business to SPTL. Company is not relying completely on Govt. projects. It is focusing more on retail segment. Instead of reaching customers directly, it will focus on creating strong network of agents and distributors. SPTL will focus on CSR related activities to support Govt. in it’s missions. Good for its Prefab business. Foreign business of SPTL is doing good. European business is on strong footing. SPTL is gaining good market in Africa. In Asia it is among the leaders of the Plastic Industry. So clearly future looks bright too. SPTL has great reputation of providing accurately calibrated water tanks. The quality of Water tanks is so good that one tank can last longer than life of the buyer. … Read more

What to do in ICICI Bank now?

29th January 20193rd April 2018 by stocksbaazigar

ICICI Bank corrected by 15% from the Peak, Is it right time to invest in ICICI Bank now? After the whopping $ 129 Bn PNB Scam in India, all the Public Sector banks shares collapsed by 20-25% in last two months. Recently, when Investors started accumulating shares of some undervalued Public Sector banks, a news of involvement of ICICI Bank and Axis Bank in PNB Fraud case broke out. ICICI tumbled by 8-10% after that. Axis bank declared that it already got rid off all the credits by Nirav Modi – Choksy and has no exposure to the giant PNB Fraud. In the preliminary inquiry, ICICI Bank too cleared it’s stand and got away safely. At that point shares of ICICI banks started to show some recovery and reached near 280 level. But then a Tweet by MP Subramanian Swamy on 2nd April demanding CBI Probe against Avista Advisory Firm in Videocon-Loan Scam, shook the market again, which resulted in biggest one day fall in ICICI Bank on 2nd April 2018 after 2015. Shares of second-largest lender of India ICICI Bank slumped by 5.9% that day. Let us understand what is this (alleged) Loan-Scam in detail. ICICI Bank has faced many controversies in past. It was accused of using goons as ‘recovery agents’ for recovery of loans from defaulters and other inhuman practices to recover money from ‘credit card’ holders in past. In the sting operation by ‘Cobrapost’, they showed how ICICI Bank is involved in ‘Money Laundering cases’ 2013? I still remember how share price tumbled from 324 level then and never crossed 300 for several years after that. But in all those cases, employees held responsible and appropriate actions were taken against them. This time MD & CEO of ICICI Bank, the most celebrated successful Woman of India Mrs. Chanda Kochhar is involved in the case. That is why we saw share falling by almost 15% from the peak in very few days. Here people may feel that Subramaniam Swamy is the Whistle-blower in this case, which is not true. Arvind Gupta, Founder, and Trustee of Indian Investors Protection Council were the first to highlight this issue in his blog post “Banking Sector NPAs from Mighty corporate cons.” In this post, he cited the connection between Venugopal Dhoot, promoter of Videocon with Deepak Kochhar, husband of Chanda Kochchar and owner of NuPower Renewables. Arvind Gupta pointed out ‘Conflict of Interest’ involved in loans sanctioned to Videocon Industries by ICICI Bank and 12 more such cases. Unfortunately, Government ignored them all till cases like Vijay Mallya, Nirav Modi started coming out in India. This loot of taxpayer’s money has the potential to replace the Government in 2019, because of which Govt. started probing into these cases one by one as a last-minute-fixing measure. ‘Quid Pro Quo’ means – a favor or advantages granted in return of something. CBI is inquiring Mrs. Chanda Kochhar in accusations that Venugopal Dhoot (Videocon Industries) provided Crores of Rupees to a firm promoted by Deepak Kochchar (NuPower Renewables) six months after Videocon got Rs. 3250 Crores loans from ICICI Bank in 2012. Deepak Kochhar, husband of Chanda Kochhar always kept a low profile. He has entrepreneurial experience of more than 20 yrs in Financial Services and Renewable Energy. He founded NuPower Renewables in 2008. In just 10 yrs, this company has renewable energy assets worth 770 MW (and in the pipeline) located in Maharashtra, Karnataka, Andhra Pradesh, TamilNadu, Rajasthan, and Madhya Pradesh. With the help of Venugopal Dhoot, Deepak Kochchar acquired around 92% stake in NuPower Renewables so far. As per Swamy’s allegations Avista Advisory firm of Rajiv Kochchar; brother of Deepak Kochhar has helped Videocon get this loans from ICICI Bank. Denying the accusations Rajiv Kochhar said that Avista Advisory has more foreign Clients than Indian. He also said his firm advised NuPower Renewables over Foreign Currency Convertible Bonds (FCCBS) and it has nothing to do with ICICI Bank. There is no relation between Avista Advisory Firm and ICICI Bank. In this case, Board of ICICI Bank is backing their CEO Chanda Kochhar. Rajiv and Deepak Kochhar and Venugopal Dhoot – all denying the allegations. Chanda Kochhar was part of the board which released loans to Videocon Industries in 2012; which has now become one of the biggest parts of NPAs of ICICI bank. After SBI started bankruptcy proceeding against Videocon in January 2018 in National Company Law Tribunal (NCLT), this case of Quid Pro Quo basis Loans surfaced again. From the preliminary observations, we can see that Venugopal Dhoot and Deepak Kochchar have scratched each other’s backs and Chanda Kochhar is aware of it. But as you all know that in India such high-profile cases never reach to their logical conclusions. After the completion of the inquiry, Chanda Kochhar will get clean-chit from CBI. ICICI Bank will get clean-chit from RBI and Investor community will forget the case completely. In my opinion, ICICI Bank is one of the largest private sector banks in India which comes under ‘too big to fall‘ category. Every dip in the share price should be utilized for accumulating stock for long term investment. The pain in the share price is temporary and won’t affect the fundamentals of the company much. Investors always see at Price to book ratio and NPAs of Banks when they take their investment decisions in Banks. Clients of Avista Advisory and Stakeholders of NuPower Renewables are not at all worried about the recent development in this case. Why should Investors in ICICI Bank worry much about it then? Negative sentiments have dragged ICICI Bank stock down by more than 15% now. The downside from this level is limited. One can wait for the formation of a temporary bottom on a technical chart and then start buying small quantities of ICICI Bank shares. Remember, in long term, Private Sector Banks gives more returns than … Read more