Just
imagine the financial picture of a micro cap company operating in capital goods
sector which exclusively
manufacturing products for sectors like Power,Refinery,Cement,Fertilizer
..etc. On the background of prolonged recession in user industries the company in your mind may be characterised by a bleeding balance sheet ,heavy promoter pledge or even a company referred
to BIFR .Accepting , many companies in this sector going through such situations
or worse . But let us look into a different story which is showing strong
resilience in this tough time . Patels Airtemp (PAT) is the company which is doing exceptionally
well in many parameters .Company is one of the leading producer of Heat exchangers,Pressure
Vessels,Refrigeration and air conditioning equipments.PAT now mastered in the
production of Air Cooled heat exchangers ,the product which is expected to
replace the widely used water based heat exchangers in future.Company producing
standard and custom made products and also offering turnkey solutions for large
clients from the above mentioned industries.
The most attracting points of PAT is the resilience it showing in this
tough times. Company’s close rival GEI Industrial Systems reported pathetic performance in recent times and going through
a very difficult situation and even now it is not clear whether they can sail
through the current recessionary period.GEI reported a huge loss in last FY
where PAT survived due to better
financial management,clean balance sheet and reasonably good order book
position.In FY 2012-13 PAT reported a top-line of Rs.90 Cr ,net profit of Rs.5
Cr and an EPS of Rs.9.75 .Company never skipped dividend in last 7 year but
steadily increasing the same over this period.At a time most of the small size
companies operating in capital goods sector are struggling to service their
debt ,PAT’s debt is very minimum which is below Rs.15 Cr.
Changes in promoters share holding is always taken as a benchmark for
their confidence in their own company.Promoters of many small size companies - including
its rival GEI Industrial Systems – pledged their shares in past few years due
to various reasons like collateral for working capital availability ..etc .Many
promoters are not in a position to pay
back the amount and lost their shares due to pledge invocation .Here the
story is different in the case of Patels Airtemp.Not a single share of this
company is pledged and more than that promoters are very aggressively hiking
their stake. As per rules, any promoter can hike only up to 5 % stake in any
financial year through creeping acquisition route without making open offer.
Promoters of PAT bought the entire 5 % in last financial year which increased
their stake from 40 % to 45 % during 2013-14 .After completing the maximum
permitted stake hike in last financial year ,promoters are again started buying
from open market frequently when new financial year (2014-15) started. ( Verify Promoter Purchase details HERE) This clearly
indicating their increasing confidence in the company even during this worst period for any company
operating in capital goods space. In the 9 month period of ongoing FY ,company
already reported an EPS over Rs.7 .
I believe ,the worst is over for this
company and the credibility it kept even this tough period will surely increase
its goodwill .Those who believe in a revival in India’s industrial growth ,this
Gujarat based company is a risk-less proxy which is trading around half of its
book value @ CMP of Rs.55.Stock listed only in BSE
Link to Company Website HERE
Disc: It is safe to assume that I have vested interest in PAT
sir,
ReplyDeleteyour take on Godawari Power which is in same field as VBC, Sarda but
not participating in this bull run whereas other stocks are..
what could be the reasons?
thnx
I don't think VBC and Godavari are strictly comparable .There another company owned by the same promoters of Godavari is there - Hira Ferro Alloy ,which is in similar business of VBC .
DeleteAre you saying VBC participated in this bull run ?
sir,
ReplyDeleteyour view on supreme petro for long term.
Sir
ReplyDeleteOnce again at top of the market u research on of the best low priced company ....
One of the best is that stock price has not run up with market so we can invest easily. Gem pick by gem picker.
God bless u
Thanks.
Sir, what are your views on Aditya Birla Chemicals post their current results?
ReplyDeleteABCIL recommended @ Rs.89 which is currently trading around Rs.163.Last quarter profit declined sharply mainly on account of deferred tax provisioning .
DeleteSir,
ReplyDeleteI have been reading your blog from past 6 months. I have really learnt many things from your way of stock selection and I am very passionate about stock market. Since I am 17 now and most probably I will open my demat account next year, I would like to hear something valuable from you.
Thank You Sir
Dear Shiv Kumar
ReplyDeleteI don't think I am the perfect person to advice you in this matter .But since you are a beginner sharing few points from my experience :
First of all ,as an amateur , never trade in stocks .Trading is for professionals
Never invest in " Market" ,but invest in businesses where you have confidence and conviction
Never invest with loaned funds or funds kept for another purpose .If you have only Rs.1000 just use that and not borrow another Rs.10000 and invest.This will hep you to avoid panic even if there is any crash in market.
Invest in stocks only after gaining enough conviction by own home work .Never blindly believe any analysts/media ( including me) who never compensate your losses (if any occurs)
For beginners ,it is a strict 'NO' to F&O ,It can be used only for hedging purpose
Trading Terminals are only for executing our orders .As an Investor, no need to sit in front of it 24 X 7 . Spend more time to gather information about companies/businesses you are looking into ,this will help you to take informed decisions.
Promoter quality is very important ,so track promoters closely and their actions in response to each situations affecting company's business and their stand on minority share holder related issues.
Never try to make money overnight ,it may possible once or twice but ultimately in 99 out of 100 cases people loosing entire earned money and even capital in such attempts .Only slow and steady will win the race.
Don't pay much attention to the crowd .act on your conviction
Never hesitate to book loss .If you find fault in any of your investment decisions ,don't hesitate to book loss and exit.EGO should not be a constraint in taking investment decision.Nobody is 100% correct in stock market ,but who correct at the earliest will win.
This is my two cents,Happy Investing
Thx vp
Deletethis post should be marked as "sticky". its undoubtedly "pearls of wisdom". great stuff sir - salutations.
DeleteEverybody who are new to stock market should read this...nobody would be able to put it better...Thank you so much...I am definitely one of your fans.
DeleteVery good and honest investing tip for everyone. I have burned my hands one too many times. Now i only go the slow way as there is no other according to me. I would like to thank you for the recommendations that you make here. I had a decently strong portfolio and it shrunk to the size of a peanut but the only stock that held my folio together was a stock recommended by you. ( kaveri seed) I have just liquidated most shares and am holding little qty. Please share your opinion on KAVSED.
DeletePlease Name some good NSE stocks,
ReplyDeletealso share your views on Sintex
I don't think ,in which exchange a stock is listed is important for an 'INVESTOR'
Deletevery nice, VP.
ReplyDeleteI am going to show this to my SON.
This reply reaffirms my conviction in you.
Thanks & regards
ajit
Dear Sir
ReplyDeleteI was reading Shiv Kumar query and your sincere reply. I don't want you to post this. But thought of sharing my concern. He has mentioned that he is 17 years old. Assuming his age we should understand that he is a student who is a dependent. Hence as an elderly person we should concern about his age and well being too. It is time for him to concentrate his studies. Many time youngsters fall as a prey by someone's advice just to make easy money (they believe stock market is a money making machine). In the end they ruin their life since they are not matured enough to understand or go thru the rigmarole of the market. You should have mentioned this too which will help the kid to think twice and take their parents or elders concern. I know in kerala children are indulge in all kinds of crime to make easy money. They can ruin one generation if we don't guide them properly. thanks. Suleka
Accepting your concern in good spirit.But frankly speaking I can't seconds your opinion to any one .Because I started my stock market career at the same age of Shiv Kumar Where he is now and I have no regret in it till this moment . I don't think it is an inferior profession compared with many others and it will only spoil any one's future. In each and every profession there is different ways ,success depends on how we choose it and utilising it. I don't think only a Doctor or Engineer,IAS,IPS ..etc can find happiness in life .In the eyes of an outsider it may be so but in reality it may be just opposite too. Sometimes a beggar may be more happier than a doctor or an IAS . The only thing is we must understand the limit of everything and control accordingly .I don't believe any profession is superior or inferior but how one positioned in each profession is more important .Hard working is the only way to success ,and definitely it will happen if one is ready to work hard in any profession. I don't think there is any speciality for Kerala children in case of Crimes and the same story is almost happening in any state.But due to higher literacy percentage more cases are reported and when data collection happened Kerala may be at the top .Nothing more than that.
Delete;)
sulekha madam - i dont think "age" should be the criteria to venture for learning. its the fire in the heart and desire to be ahead of the game that determines path of life. i tasted stock market when i was preparing for my Xth board exams. it has never hampered my academics achievements. i took stock market as my hobby and can safely say, its a feather to my cap. God bless.
Deleteps: i second the reposonse by valuepick - God bless all.
On a more serious and practical note for the prejudice ...... "Warren Buffet bought his first stock at the age of 11"
DeleteSir,
ReplyDeleteReally Awesome......... Yes that is what I wish to learn from you. Requested to share such knowledge from time to time. Moreover, in your earlier post you mentioned the book "How Buffett does it" which I have read entirely. I really like the book a lot. If possible also suggest such more books on how to do value investing.
Regards,
Avani Dhruv
wonderful thoughts for all starter... Thank you very much.
ReplyDeleteYes sir I have finished that book also , pls suggest some more of ur favour books .
ReplyDeleteDear Sir
ReplyDeleteI will not say that u h opened this blog just for welfare of small investors But I realy like ur thinking, ur approach towords stock market . I was never able to understand STOP LOSS , Target type advice by experts . and NEVER believe in technical charts . I h learned a lot from u, about how to invest in share market.
Thanks
It was a pleaure to read today's conversations......there is life beyond money.....and he who has his intentions right are always the winners...good thoughts...and....great going all the guyz who wrote in the posts above.......Shiv....stick to these posts....you are in resposible hands....
ReplyDeleteWith such high valuations for Wonder La, what is your view of Nicco parks which is a much older brand in the amusement park business?
ReplyDeleteDear VP, I really need your advice on a concern. Though your recommendations are outstanding, offlate I have seen that as soon as you recommend a stock, it starts hitting upper circuit for a couple of days and follows a reverse trend later. This makes it extremely difficult for us to make any buying decision. This clearly seems to be work of some operators often resulting in loss to genuine investors. I'd appreciate your advice. Thanks for your continuing efforts.
ReplyDeleteDear friend
DeleteHow I can't say someone should not buy any stock recommended in my blog. ? .
As said by VP earlier ... 'Never invest in " Market" ,but invest in businesses where you have confidence and conviction' ... You can consider to move in when all the dust settles ...
DeleteDear VP
ReplyDeletei loved every word you wrote to shiv kumar.these are the common mistakes i still make so i can relate to them better. i t will be nice to have fundamental basics outlined every now and then.
thank you once again.
DO you think sintex is on road to recovery or is it better to avoid it?
La opala reports on Tuesday.your comments please.as we are late entrants ..
pankaj
Hi VP,
ReplyDeleteI am following this blog from few days back, I have noticed that your analysis for last 3 companies are from Gujarat!
You believe that there is any MODI effect, on recommending these companies?
And you are doing a great!
It is only coincidence .
DeleteRespected Sirjee,
ReplyDeleteInteresting ,keep it going for common investor.
Sir ones upon a time i was employee of the patels airtemp. I want to convey that the owner founder himself had the 20 yrs chemical engineer experience before making this company. He himself is always coming to office and very very kind nature too.
ReplyDeleteSir What is your view on wonderla Holidays?
ReplyDeleteGood assets ,good cash flow buy @ good price.:)
DeleteI have an inquiry. I applied for shares of Wonderla - I applied for 300 shares, after allotment most of my amount was credited to my a/c but only Rs.2500 is blocked for IPO. I am using Icicidirect. Does it mean I have been allotted just 20 shares!! When will these shares show in my a/c?
DeleteThere may be something wrong.I think ,minimum shares allotted by company is 100
DeleteDear sir
ReplyDeletei m not happy with your idea of recommending stocks on Saturdays.whatever the stocks u recommend on Saturdays locks on upper circuit on Monday.how will a investor or a trader purchase a stock recommended by you...should i assume that first you buy shares on Friday and then give ur recomendation on Saturday and when price increases on Monday u sell the shares....and normal investor like us waits for the circuit to open and then enter at a high price and gets trapped..please provide ur suggestion in this matter
Why the posting is on Saturdays explained many times here ,so I am not repeating it again.
DeleteAbout the second part ( It also explained earlier more than once) no need of any doubt .I will surely buy shares before recommending in my blog if I have funds to buy . I don't think anybody with minimum commonsense will do the opposite ( Recommending first and then buying shares) .But about the purchase timing , it is much earlier than just previous Friday .Because only with the privilege of a share holder we can directly contact with company and collect information ,otherwise they will not reveal anything .Their first question will be " Are you a share holder ? " . I don't think shares bought on Friday will serve the purpose. In case of selling ,in majority of cases I will wait at least for the result declaration of next few quarters to see whether it is going as expected and then take a decision .There may be very rare exceptions for that if something happened in between.More than that we have certain rules and regulations about front running which everyone should adhere.
If you feel what I am doing is as you mentioned above and my readers lost money in last four years due to this ,you have full freedom to avoid my blog and the stocks I recommended here.
Resp sir,I read you r blog regular ly.I learnt a lot from you.just because of you I bought 1000 shares of arrow coated at 17.and just because of you r comments haven't sold till today.I have read a book also on investing I e one up on the wall street. I think every investor must read it.thanks for all your trading ideas and valuable comments.
ReplyDeletePlease don't misunderstand - my suggestions are not trading ideas but purely for long term investment .
DeleteRespected Sir and all blog readers,
ReplyDeleteI am really touched by the concern you all have shown towards me. I would like
to make one thing clear that I am doing this not to make quick money, I am a
long term investor(having a dummy portfolio), can even hold stocks for more than
10 years. Secondly, yes this is the time to concentrate on my studies and I am
doing this as per requirement and every body is not born to become engineer,
doctor and IAS.
I am doing this with the consent of my parents. They even encourage me at many
times and I have learned a lot from them.
Believe me I am not doing and going wrong.
and Heartly thanks to (VP) sir
sir, I came across this comp while searching for yoit GTS4 ans and found very interesting and undervalued, but unfortunately i did but it thinking will do next time now its will hit UC pe UC and will be out of reach....bad luck!
ReplyDeleteThe right time to enter into share market is at the earliest as possible. By doing so, if you make any blunder you have sufficient time to recover and sufficient number of years to gain experience. In my opinion making money in share market is not a fluke; it requires lot of experience and mental stamina. A person who makes the easy money losses the same much faster than he made it. You have so many example in the history. Unfortunately in India the financial matters awareness among the common people is very low compared with other countries. That is one of the reasons, the RBI has issued the guidelines of opening and operations of a bank account independently by kids of 10 years or more. The earlier you enter the stock market the smaller the goals you can set up. The object of making 10 lacs in a period of 10 years is much much easier than making it in smaller time span of 6 months. In any field the early you enter the higher the goals you can set up in the long run. It has been proved correct by sever persons in the world. Only thing your need to have is the clarity in your mind that will do the miracles.
ReplyDeleteDear Shiv
ReplyDeleteI am so happy to read your msg. I used to teach plenty of students in Gujarat way back in 90's. I had some bitter experience with some of the students pertaining to their stock market investing those days. Infact in Gujarat I have noticed that most of them start investing in stock market at a very young age which is really good provided if you have proper guidance and willingness to learn. I am so happy that you have a clear vision and got your parents support which is more important than anything else. Above all a person like VP who takes valuable time to advice and educate everyone is a great service. Most of the time we do hear the success stories like some of them mentiioned here like started investing at a very young age etc. But many times we never hear the sad end like plenty of people who invested in stock market without having proper information or knowledge and ruin their life. Hence i raised those concern. So happy to recieve your msg. God bless you my child!! Best wishes..Sulekha
I have seen that their sales and net profit is in decline this year compared to last year. Do you see any reasons for this? Also the sales growth is minimal over the years, and the net profit has declined. So what is the reason it is going to outperform others in the market?
ReplyDeleteThis question never arise either you look around the industry in which company is operating or at least read my above posting in full. They are already out performing other companies in the same line where it reported at least profit when others in deep loss.
ReplyDeleteSir, is it possible for a retail investor to buy before a stock hits upper circuit by giving buy order before the market opens??... Please guide me on this issue. I missed out on buying a lot of good shares u recommended due to circuit hitting.. Please reply to my query sir.
ReplyDeleteTHANK YOU
Dear Sir , PLZ PLZ see below and throw some light on this regarding Arrow Coated product. I h heavily invested in Arrow , PLz tell, are the promoters are hiding facts , or debt is more than assets. Plz reply I will be very thankfull of u.
ReplyDeletenote by Auditors in AR-2013 to be read carefully.
Basis for Qualified Opinion :
a) The company has not made provisions for overdue debts aggregating to Rs. 13720.57 (‘000) and advances aggregating to Rs 31500.92(‘000).Had this observation made by us been considered Loss after Tax would have been Rs. 28459.05(‘000) ( as against the reported figure of Profit of Rs.16322.44 (‘000)); reserves and surplus would have been surplus of Rs. 1316.90(‘00 0) ( as against the reported figure of surplus of Rs. 46098.40 (‘000)):trade receivable would have been Rs. 17755.23 (‘000) ( as against the reported figure of Rs. 31475.80 (‘000)): long term loans and advances would have been Rs.28449.01 (‘000) (as against reported figure of Rs 59949.93 (‘000)),
b) As more fully explained in note 41 to the financial statements the Company has not complied with Accounting Standard 24 Discontinuing Operations.
I don't think promoters are hiding anything in this matter .Actually they are cleaning balance sheet by writing off it periodically . Actually this overdue debts reduced from Rs.3.99 Cr to Rs 1.37 Cr in FY 2012-13 compared with 2011-12 ,on a consolidated basis . As you are aware company's product is a new one and at the stage of introducing a new product normally these type issues will be here .Now company just started to improve its business. I hope its balance sheet will be in a better shape few years down the line.
DeleteThanks A lot , for ur reply.
DeleteMay God Bless U
Dear VP,
ReplyDeleteYou are simply great. A beginner/experienced can learn many tips from you. I am always rush to read your post and comments. Only a sad thing is I only get chance to purchase your recommendation after one/two weeks because of upper circuit in first few days. But anyway your are doing great job. We always need great patience(may be for years in some cases) to become a successful person in Stock market
and I am learning it from you.
With you all success :) :) :)
With Prayers
Bigul
Dear VP Sir, What views do you hold about Prakash Industries ?
ReplyDeleteStock recommended at lower level ,still a HOLD
DeleteVery profound advice..I guess this is just not for beginners alone
ReplyDeletedear vp sir.
ReplyDeletei have 200 wockhardt at rs 500/- should i sell or hold or add more-?
thanx.
VP sir,
ReplyDeletePATELS AIRTEMP : Book value is 90 cr. So each share should be some 170/share atleast. Looks like very much undervalued. It is trading at 83 as on 23-July-2014. Is it advisable to BUY & hold for long term.? Please throw some light on it.
Good day.