I started my investing with some blue chip Indian companies because that is the way to go. Just do initial analysis and buy when there is a dip you will rarely be very wrong because there are so many large investors involved and also because they already have good market share good and many number of clients. They have branding power etc.
Anyway this company was one of the first I chose to invest into but eventually this is turning out to be a quick profit and exit. Not a value investing but anyway good way to learn. My initial thoughts when I just started with my trading account was. The company has good hold on Indian market and according to Annual report they have good hold in foreign markets also. I am sure about India though didn’t do lot of research for out of India presence and their branding power their.
So first impression was Fevicol, Fevi stik, Fevi kwik, M-seal, Dr-Fxit OMG.. so good.. and their advertisement campaign are such a game changer. Known to all Indian used in daily life. It is like synonym to adhesive (Fevicol, Fevi kwik), and sealant(m-seal). They have branding power returning and happy customer base. Carpenters can’t suggest you anything other than Fevicol and you don’t even know the alternative. These products will be there even 5-6 years down the line. If you read the Annual report all this will be strengthen like how they have planned the future and how they are advertising with Indian mentality in mind which will keep their brand as selling point. Management salary okay their shares in company is not changing they believe in themselves :).
Cash flow: Company has good amount of cash decreased their debt a lot.
Hardware stores in India is recognized by these brand’s product. All this can simply tell you some very important things like: 1. Capable Management 2. Branding power and Pricing capability 3. They are not going out of business soon
Now let us come to some numbers
Market Cap. ₹ 30,206.83 Cr.
Current Price ₹ 589.20
Book Value ₹ 64.10
P/E : 35.89
Dividend Yield: 0.70%
Net profit: 755.55
Total asset : 3,928.79 cr
OMG this was expected but not this much seems very costly on first look let us do more digging. You can tell somewhat by book value and P/E.
Above figures are actual figures in near about past from the day this post is published.
Now my calculation part and what I see keeping my margin of safety
Profit Growth: 20%
Sales Growth: 13%
Return on Equity: 26%
These are my figures please do not get confuse.
Anyhow the company has huge growth I want my money to also grow like this The company has brand and future so seems secure.
But there is just one catch the company share is really costly in my calculation. In my calculation the price of stock came out to be two times. I have some investment in the company still which I will sell soon sell (not a good way to present myself stating that company is costly and I have made a wrong choice but still not selling). Anyway I have just started and learning and this is blue chip for me so no problem.
Final Verdict: No
I am very new to value investing and this is me taking random notes just for myself. Please don’t base any of your decision on these write-ups. That will be foolish.