tag:blogger.com,1999:blog-735209523627178736.post5458538511644154318..comments2024-01-22T16:29:52.183+05:30Comments on Value Investing: An Intutive Approach to Investing: A Year into Value Investment Blogging: Time to Do Reality Check!Dhwanilhttp://www.blogger.com/profile/02537043667425952923noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-735209523627178736.post-65929064396537309122013-03-30T20:41:07.687+05:302013-03-30T20:41:07.687+05:30I think investment consultant will likely be good....I think <a href="http://www.normanmeier.com/" rel="nofollow">investment consultant</a> will likely be good.<br />Anonymoushttps://www.blogger.com/profile/02755986074465284383noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-58979818042135211332012-11-08T20:06:06.693+05:302012-11-08T20:06:06.693+05:30Hi Vikas,
Thanks for your appreciation and kind w...Hi Vikas,<br /><br />Thanks for your appreciation and kind words. It is such feedback that keeps me going. <br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-10585189314226383042012-11-07T16:58:25.975+05:302012-11-07T16:58:25.975+05:30Hi Avadhut,
Sorry for late reply. I will surely d...Hi Avadhut,<br /><br />Sorry for late reply. I will surely do that post Diwali. <br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-24272814750177934652012-11-07T15:38:23.839+05:302012-11-07T15:38:23.839+05:30Hi Dhwanil,
I have been reading your posts with g...Hi Dhwanil,<br /><br />I have been reading your posts with great interest for a while now.<br /><br />I really like your thought process and the temperament. Out of many value investor's work in India, I like yours and Rohit's the best.<br /><br />You have got great future and your blog is an excellent piece of work, keep it up. You're bound to become wealthy in this process of learning and sharing.<br /><br />Thanks,<br /><br />Vikas RanaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-82385016537705530312012-10-31T21:49:14.554+05:302012-10-31T21:49:14.554+05:30Hi Dhwanil,
That's a great performance for th...Hi Dhwanil,<br /><br />That's a great performance for the first year itself and I must congratulate you for taking this route and inspiring all of us.<br /><br />I would like to know your steps in analyzing a company. Write from the first step to the last one. <br /><br />I would request you to write this process in simple and clear language,if possible. <br /><br />Thanks in advance :)<br /><br />Regards,<br />Avadhut<br />Avadhuthttps://www.blogger.com/profile/10779707103209128649noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-35347140705718658772012-10-29T18:35:25.099+05:302012-10-29T18:35:25.099+05:30Hi Abhishek,
Sure we can meet up. I am slightly p...Hi Abhishek,<br /><br />Sure we can meet up. I am slightly preoccupied this week. May be we can meet sometime next week.<br /><br />Please suggest suitable day/time, ideally late in the evening.<br /><br />you can mail me @ desaidhwanil@hotmail.comDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-85816726815238817692012-10-29T18:33:14.631+05:302012-10-29T18:33:14.631+05:30Hi Kushal,
Thanks for being regular reader of the...Hi Kushal,<br /><br />Thanks for being regular reader of the blog. Keep sharing your views/questions/critique.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-4160665090121076262012-10-29T18:32:18.477+05:302012-10-29T18:32:18.477+05:30Hi Anil,
I understand that very well. I just want...Hi Anil,<br /><br />I understand that very well. I just wanted to bring more clarity from my side hence small disclosure in reply. To be very honest, it is this process of questioning/critique is so valuable and precisely the objective for starting this blog as I know all of suffer from psychological biases and hence other point of views which are more neutral/object will help keep things balanced.<br /><br />Hope to keep interacting.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-26131622362648815702012-10-28T19:02:17.477+05:302012-10-28T19:02:17.477+05:30Hi Dhwanil,
Good to see a Value Investor beating ...Hi Dhwanil,<br /><br />Good to see a Value Investor beating the market by a considerable margin.<br /><br />Since, I am also in Ahmedabad, I would like to meet you and get some better insight on investing. Let me know how we can meet up.<br /><br />My e-mail id is "chaturvedi.abhishek@gmail.com". Looking forward to hear from you !Tony Stark (CEO-Stark Capital)https://www.blogger.com/profile/05384536627205166440noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-55656376889381827532012-10-27T17:45:56.903+05:302012-10-27T17:45:56.903+05:30Thanks for your reply. I had no intention to raise...Thanks for your reply. I had no intention to raise any question about your performance analysis. Just wanted to know you view on OCCL. Thanks again.Anil Kumar Tulsiramhttps://www.blogger.com/profile/08957135865779188117noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-37985849910971178542012-10-27T15:59:06.192+05:302012-10-27T15:59:06.192+05:30Hi Tony,
I have adjusted buying price in both th...Hi Tony, <br /><br />I have adjusted buying price in both the cases. I should have mentioned it separately to avoid confusion. Thanks for pointing out though.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-23563552887550846652012-10-27T15:56:57.692+05:302012-10-27T15:56:57.692+05:30Hi Anil,
Thanks for sharing your views on OCCL. L...Hi Anil,<br /><br />Thanks for sharing your views on OCCL. Let me clarify here that I have done performance analysis just based on what I posted on the blog and how these ideas have performed over 1 year. So performance analysis may not reflect my portfolio positions. I too have exited the position sometime back for a different reason. When OCCL was dragged into acquiring stake in loss making Schrader Duncan which I thought was a bad decision from capital allocation/management integrity point of view. In short acquiring stake in Scharder Duncan did not make business sense, at least to minority shareholders. So I did write a post on the same and exited.<br /><br />Coming to your questions on business front, OCCL and solutia have changed their pricing mechanism to quarterly review instead of annual review to better reflect fluctuating RM cost. Till 2008-09, this pricing policy meant that margins were fluctuating depending upon how sulfur prices moved. However post new pricing structure in place, margins have improved and stabilized. If you read last few management Q&A posted on valuepickr, it is evident that management is clear on two things. One, this business has high entry barriers (technology, quality, approval from tyre manufacturers)and secondly it is moderately asset heavy business. Hence producer need to be compensated by higher margins to achieve decent ROIC. Hence they are confident that OCCL should be able to maintain margins in current range i.e.around 30%. Secondly, management clearly mentions that OCCL is a follower and things are dictated by Solutia on price/market share/ quality front. They are the only competitors for solutia in Europe and that is their major market. They do not supply to US market but wanting to do that in future. I am not sure how much of chinese market they serve as there are many players in IS market in china itself apart of Solutia and Shikoku. Even though world tyre market is growing at 6%, Indian market is likely to grow at 12-15%. Moreoever, there is clear trend in radialization of tyres which means higher consumption of IS for tyres. So, in coming years, Indian market will start contributing significantly once new tyre capacity comes online. <br /><br />In terms of ROIC, i think in years to come, ROE will be driven by EBIDTA margins and moderate debt and asset turnover around 1-1.2. Currently asset turns is the worst due to currently completed expansion and under utilization of expanded capacity. Once they start another 11,000 MTPA, lots of common cost will spread over much higher capacity and it will improve asset turns from current 0.85 to around 1.1-1.2. Having said this, in near-medium term company is facing headwind in terms of demand in Europe. <br /><br />So to summarize, I feel the business quality is pretty strong. OCCL operates in an oligopolistic market dominated by major player cornering 70-75% market. This gives market leader pricing power, which is good for other players in the market as well. Moreover there are number of barriers to entry in business so competitive landscape is not going to change drastically in medium term at least. This will ensure that business has pricing power and will be able to protect its margin. Also they are in a business where demand is going to be steadily increasing in years to come with larger portion coming from Asian market. Hence fundamentally, I think OCCL remains strong business. In terms of valuation, even after 60% appreciation in price, it is available at 5 times earning which is great if one is confident about strong ROCE/ROE and positive free cash flows from operations. What I am not confident is that how effectively management will take advantage of strong business and pass on the benefits to minority shareholders. So to me it is more of a call on jockey than horse!<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-18283404710526598822012-10-27T15:56:14.521+05:302012-10-27T15:56:14.521+05:30This comment has been removed by the author.Dhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-50277162170934097512012-10-27T15:26:45.869+05:302012-10-27T15:26:45.869+05:30Dear Dhwanil,
I think you have missed out on the b...Dear Dhwanil,<br />I think you have missed out on the bonus issues of Atul Auto, Mayur Uniquoters. Please check if these have been included in the quantity or have you adjusted in the cost?<br /><br />tonyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-57899251710930413052012-10-27T11:51:50.737+05:302012-10-27T11:51:50.737+05:30Great Dhwanil and congratulations
Despite the gene...Great Dhwanil and congratulations<br />Despite the general positive view on OCCL, I have few doubts which prevented me from taking any exposure (ofcourse I first observed the stock very recently)<br />Profits driven by price increase and not volumes: But post 2007, volumes have grown only at CAGR of 9% for 2008-11 and price by 15% and driven by price increase ROIC increased to double digit. With asset turnover around 1, ROIC is entirely driven by leverage (1.5x) and EBITA margins. So what makes us to believe margins will not fall to its historical levels. <br />Need to grow much faster from market leader: Solutia has projected that its Technical Specialities division (which sells Insoluble sulphur and some other products) will grow at 5% CAGR between 2011-15. World tire production is expected to grow at a CAGR of 6% (China 12%) between 2011-15 (Source: Solutia pres). So if OCCL has to grow at double digits (20%+), it means either consumption in India has to increase drastically (50% +) or Solutia market share need to decrease. Both looks quite unlikely. <br />Risk from slowdown from China: China contributes around 18% to the sales of Solutia technical Specialities division (and even for other division China accounts for around 10%). Now with Solutia commanding more than 70% market share, any slow down in China will impact OCCL quite adversely (may be in terms of pricing pressure because of dumping from Solutia)<br /><br /> (I posted a longer version of this comment earlier on valuepickr.com)<br />Anil Kumar Tulsiramhttps://www.blogger.com/profile/08957135865779188117noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-59626499630127710162012-10-27T02:37:55.705+05:302012-10-27T02:37:55.705+05:30Great Track Record Dhwanil.
Thanks for sharing you...Great Track Record Dhwanil.<br />Thanks for sharing your ideas as well as guiding beginner investor.<br /><br />Kushalkushalrdalalhttps://www.blogger.com/profile/02103069829788377051noreply@blogger.com