The beauty of a market place is that people compete to buy and sell.
The beauty of financial markets is that crazy people come to buy and sell securities and products of various kinds.
I was going through a screener 2 years ago and this company popped up; it was called Rain Commodities then. I said: Must be a weird, phony company.
It cant be valued at 1000 Cr and produce 300-800 Cr of CFFO.
A few months after that the front page of newspapers announces that this company is going to acquire a Belgian company for an EV of EUR 702 M.
Odd.
So, I look it up.
Interesting company.
1. Cement: 3.2 MTPA capacity, sells under the brand Priya Cement. Debt free.
2. Calcined Petroleum Coke: (What is that supposed to be!?) 2nd largest player in the world. Grew to this size after an LBO of an American company. Comparables: Oxbow Carbon, Goa Carbon
3. Coal Tar Distillation: (Huh!??) One of the largest players in the world. Comparables: Koppers Inc., Himadri Chemicals.
Problem:
1. Debt on books. High Yield debt issued by the US and European subsidiaries - USD 1.1 B odd.
2. Not enough word on the street about the company. So, could be a trashy company :|
And then, a nice man from Canada writes a beautiful report. A report that would make Mohnish Pabrai smile (he has always asked for good, detailed reports - it makes his job simpler).
Motilal Oswal comes out with a report.
And the company publishes very good annual reports. FY13 and FY12. They have a December ending.
The industry dynamics are not easy to understand, but from FY08 to FY13, PAT hasnt dropped below INR 300 Cr.
Today's market cap: ~INR 1300 Cr
The company has completed a few good buybacks in the last few years.
Investor Relations is friendly.
CEO is very low profile.
And hopefully, the company will issue shares to the public in the US within the next 2 years.
And there we have it:
An excellent earnings yield, high technical expertise based core businesses that require good relationships with customers and suppliers, a decent pricing power, access to capital in one of the largest pools of liquidity in the world AND with a massive margin of safety.
Disc: I hold equity shares in the company. Do your own research. I'm trying to fight these stupid positive biases I have developed.
The beauty of financial markets is that crazy people come to buy and sell securities and products of various kinds.
I was going through a screener 2 years ago and this company popped up; it was called Rain Commodities then. I said: Must be a weird, phony company.
It cant be valued at 1000 Cr and produce 300-800 Cr of CFFO.
A few months after that the front page of newspapers announces that this company is going to acquire a Belgian company for an EV of EUR 702 M.
Odd.
So, I look it up.
Interesting company.
1. Cement: 3.2 MTPA capacity, sells under the brand Priya Cement. Debt free.
2. Calcined Petroleum Coke: (What is that supposed to be!?) 2nd largest player in the world. Grew to this size after an LBO of an American company. Comparables: Oxbow Carbon, Goa Carbon
3. Coal Tar Distillation: (Huh!??) One of the largest players in the world. Comparables: Koppers Inc., Himadri Chemicals.
Problem:
1. Debt on books. High Yield debt issued by the US and European subsidiaries - USD 1.1 B odd.
2. Not enough word on the street about the company. So, could be a trashy company :|
And then, a nice man from Canada writes a beautiful report. A report that would make Mohnish Pabrai smile (he has always asked for good, detailed reports - it makes his job simpler).
Motilal Oswal comes out with a report.
And the company publishes very good annual reports. FY13 and FY12. They have a December ending.
The industry dynamics are not easy to understand, but from FY08 to FY13, PAT hasnt dropped below INR 300 Cr.
Today's market cap: ~INR 1300 Cr
The company has completed a few good buybacks in the last few years.
Investor Relations is friendly.
CEO is very low profile.
And hopefully, the company will issue shares to the public in the US within the next 2 years.
And there we have it:
An excellent earnings yield, high technical expertise based core businesses that require good relationships with customers and suppliers, a decent pricing power, access to capital in one of the largest pools of liquidity in the world AND with a massive margin of safety.
Disc: I hold equity shares in the company. Do your own research. I'm trying to fight these stupid positive biases I have developed.
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