BASICS FOR BEGINNERS ....

DIFFERENCE BETWEEN EPS,DILUTED EPS AND CASH EPS 

Courtesy : Investopedia

Basic Earnings Per Share ( EPS)

A rough measurement of the amount of a company's profit that can be allocated to one share of its stock. Basic earnings per share (EPS) do not factor in the dilutive effects on convertible securities. Basic EPS is calculated as follows:
Basic EPS = (net income – preferred dividends) / weighted average number of common shares outstanding
If a company has a simple capital structure, meaning that it has not issued any potential dilutive securities, basic EPS can be a useful metric on its own.

Diluted EPS

Diluted Earnings Per Share (diluted EPS) is a company's earnings per share (EPS) calculated using fully diluted shares outstanding (i.e. including the impact of stock option grants and convertible bonds)


Cash EPS

 Cash EPS is operating cash flow (not EBITDA) divided by diluted shares outstanding. Generally, cash EPS is more important than other EPS numbers, because it is a "purer" number. Cash EPS is better because operating cash flow cannot be manipulated as easily as net income and represents real cash earned, calculated by including changes in key asset categories, such as receivables and inventories. For example, a company with reported EPS of 50 cents and cash EPS of $1 is preferable to a firm with reported EPS of $1 and cash EPS of 50 cents. Although there are many factors to consider in evaluating these two hypothetical stocks, the company with cash is generally in better financial shape.

CHRISTMAS WISHES .....

INDAG RUBBER- UPDATE

Indag Rubber recommended as a long term buy @ Rs.95 ( Link HERE) , Currently stock is trading around Rs.825 . Today company informed BSE  that its board will meet on  January 10, 2015  to consider sub-division/ split of equity shares of the Company. Those having high risk appetite can still hold it  and others can book profit.

ARROW COATED PRODUCTS ( GTS-3) - UPDATE

Arrow Coated product is one stock introduced to my readers through GTS-3 at Rs.12 . Today stock hits its life time high and currently locked in upper circuit @ Rs.460.55. At current price , stock multiplied by more than 38  times  in less than 1.5 years . Nowadays, receiving lot of mails from my readers seeking an opinion about the strategy on this stock after this sharp run up.As I mentioned in my posting itself , this is one unique company holding many patents and now company started to commercialize its technology through its Arrow Care  Division.Since the company declaring its consolidated numbers only on a full year basis , at present it is difficult to take a call only on the standalone numbers . Those having  below average risk appetite may sell  50 % of original holding ( Selling 50 % itself will give 20 times return at CMP) and keep the remaining for long term. Now the company decided to list in NSE too .


Link to posting HERE

Disc: Holding shares in Arrow Coated Products hence my views may be biased.

GTS - 8 ANSWER --- SALZER ELECTRONICS

 Salzer Electronics is a Coimbatore based company established in 1985 with technical collaboration of Saelzer Schaltgerate Fabrik, GmbH., Germany. Company manufacturing various products finding applications in transmission and control of power. Its product list includes Rotary Switches, Terminal Connectors,Relays,Motor Control Products, cable Ducts,Energy Savers, Toroidal Transformers, Modular Switches..etc.  Company having five manufacturing facilities – four in Tamilnadu and one in Himachal Pradesh .India’s largest infrastructure conglomerate Larsen & Toubro is the single largest share holder in this company with more than 26 % stake in it. In addition to the financial interest in Salzer  , L&T supporting  to market the  products of Salzer  and close to 35 % of total sales of Salzer is coming through L&T.Salzer is the largest producer of Rotary switches in Asia and market leader in India. Company is the only approved supplier of Rotary Switches to Nuclear Power corporation of India  and the largest supplier to Indian Railways.Company is a preferred supplier for GE India and Schneider Electric.

                                                                       Demand for company’s products are mainly linked with the growth of power and infrastructure sectors  which reported slow pace in past few years. Even during this period Salzer could continuously increase its top line as well as export income. Company now concentrating in power saving solutions for Corporations and Municipalities.After successful completion of such projects in Coimbatore and Madurai municipalities company now received an order worth Rs.106 Cr for implementing similar project at Erode and surrounding areas.Company   now planning to increase its attention in premium products like Modular Switches..etc . In order to increase its presence in overseas countries , recently Salzer formed an overseas marketing company named Salzer Global Services, LLC in USA . With a strong supporter like L&T , Salzer is in a better position to utilize emerging opportunities once there is revival in infrastructure and power  sectors.Salzer is the largest supplier of Rotary Switches to Indian Railways too . For the past few years sourcing from Railway came down due to their poor financial health, but the new government’s initiatives to revive Railway is also expected to benefit Salzer in a big way .  On expectation of revival  of demand from such  major customers , company management is confident to achieve 20 % CAGR for next few years .Recently company insiders also bought shares from open market even above Rs.200 ( Disclosure Link HERE) which may take an indication of increasing confidence .

In last FY , company  reported a  turnover of Rs.245 Cr and a net profit of Rs.8.5 Cr . In this FY , Company already reported a net profit close to Rs.6.5 Cr in the first half itself and expected to close the year with 13-14 Cr NP if there is revival in economy .

Conclusion

With the strong support of L&T and possible revival in its user industries , company is expected to report decent growth going forward . Order flow to project division in the field of energy management under PPP model is also expecting to increase and recent order of Rs.106 Cr in an indication for the potential of this  business. When I initiated this exercise ,Stock price of Salzer was around Rs.150 , but it  gained more than 80 % in last one week.I believe, the ‘Value’ factor missing at this price after the  sharp run up in such a short period and hence not suggesting any aggressive buy at current rate for new entrants . Considering its future potential, those  entered at lower level  can still hold it for long term,   and new buyers can consider fresh buy  in corrections , if any .

Link to Company website HERE

GTS - 8 UPDATE

Received more than 150  correct  answers for GTS - 8 . Below readers send correct answer on day one :

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ANGEL GRACE

ARVIND RAJ

ASHISH AGRARWAL

ASHOK OJHA _________________________ BAJU

BANDARU SRINIVAS

DARSHAN KRISHNAMURTHY

DARSHAN SRINIVASAN

DAVID PATEL

DEEPAK

DEEPAK KUMAR PRASAD

DILIP PRABHAKAR

DINESH P K

DINI DANIEL

GIRI DOMMANNAVAR

GIRISH K S

GOURAV PARASRAMPURIA

HARI BHARATHY

HARSHAD DESHPANDE

IMRAN MOMIN

JAY

JAYCHAND TATINENI

JAYESH SHAH

JAYPRAKASH CHECHANI

JITHENDRA KHUNTI

JOSEPH FERNANDES

KEERTHAN R S

KIRAN KLEMENT DSOUZA

KRISHNAIAH GATHRAM

MAGESH JOSHI

MANI SADASIVAM

MANISH REDDY GADDAM

MAYUR AGRAWAL

NAGARAJ AKKILI

NAVEEN R

NIRAV KARIA

PATEL DHIREN

PRADEEP REDDY

PRASANTH GORTI

PRASHANT BAJARIA

RAFI

RAJENDRA BHANDARI

RAMESH

RANDEEP SINGH

RAVI VAKAYIL

RAVI KHANAL

RAVINDRANATH P

RISHAV DEV

RISHI BHATIA

RITESH RAVAL

SAGAR GHETIA

SANDEEP KUMAR

SANJAY GOLCHHA

SANKAR KALYANASUNDARAM

SHABAB KHAN

SHIV

SHYAM TAPARIA

SUMEDH SHENDE

SUNDER M

SUNITHA MEKA

TANMOY ROY

TUSHAAR TALWAR

VIJAY NARAYANCD

VIKASH JAIN

VIMAL KUMAR

VISHNU VARDHAN REDDY

VIVEK SHAH

ZAHEER TIMOL

GUESS THIS STOCK - 8

    

TRY TO IDENTIFY ONE STOCK WITH FOLLOWING CHARACTERISTICS

 

1 ) Company listed only in BSE 

2) Promoters are holding less than 55 % stake in this company.

3) Another listed company is the single largest share holder in this company.

4) Company reported continuous growth in its top line for the past five years.

5) More than 20 % of company’s income coming from exports .

6) In the last ten years , company never skipped dividend

7) Company trading at less than 2 times of its book value .

8) Company’s current market cap( Full)  is less than one time  of its last year top line.

9) Company’s debt equity ratio is less than 0.5

10) For one of its products , company is the largest producer in Asia and market leader in India.

11) For one of its major products , company is the only approved supplier to a well known government organisation ( This government organisation reported more than Rs.2000 Cr profit in last year) 

12) For another main  product, Company entered into a technical collaboration with a foreign company .This foreign company is  buying  back 50 % of this company’s production ( of this particular product) 

13)  It is neither  a loss making  nor an already recommended company .

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 Notes :

Try to find out the company from the above  clues and send the answer to my mail id (valuepick100@gmail.com) with subject line ' GTS-8 ' ,within next Thursday . Name of persons sending correct answer on day -1 will be posted on Friday and correct answer with detailed report will be published  on Saturday. Please don't ask for more clues or expect any confirmation mails ( Only because of practical  difficulty to reply for thousands of mails) .

Please send the answers only to my mail id and do not post in blog itself as messages. 

Please  DO NOT  post your comments about answer in my facebook page .

BASICS FOR BEGINNERS ....

Difference between enterprise value and market capitalization

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  Courtesy - Investopedia

Enterprise value and market capitalization each measure a company's market value. The two calculations are not identical, and the terms are certainly not interchangeable. However, each offers a peek at a company's overall value and a way to compare similar companies. These numbers are also helpful in determining a fair price to pay for shares of a particular company.

Market capitalization is the most simplified way to calculate a company's size, value and, consequently, its growth and risk outlook. The calculation is a multiple of the stock's current share price and number of shares outstanding. For example, if XYZ stock is trading at $14 per share and has 2 million shares outstanding, its market capitalization is $28 million. Market capitalization can also give you an idea of the growth and risk to expect from a particular stock. Companies are classified according to market capitalization in many instances. The broad categories are large-, mid- and small-cap. Generally, companies that are considered large cap see slower growth but pose far less risk than small-cap stocks, which often experience accelerated growth but at the cost of higher risk.
Market capitalization provides an idea of the size of the business and makes it easy to identify peers within a sector. It also demonstrates that share price alone is not a gauge of a company's overall value. Just because a stock has a high share price does not necessarily mean the company is worth more.

Enterprise Value: A More Accurate Valuation


Market capitalization omits important factors in the overall valuation of a company. For example, if a company were to be purchased, market capitalization would only reflect the cost to acquire the outstanding equity. In reality, the new owner would also become responsible for all outstanding debt. Enterprise value calculates a more accurate value of a company, taking into consideration its debt obligations. To calculate enterprise value, add market capitalization to the company's outstanding preferred stock and all debt obligations, then subtract cash and cash equivalents.

Enterprise value is very commonly used in value investing to identify undervalued companies. A company with good earnings and possibly even a solid dividend may sound very appealing to many investors. This company might also have a large market capitalization. However, if you look further and calculate the company's enterprise value, you may find serious debt obligations that could pose a problem. If you compare the enterprise value of an equally well-earning company and find it has a higher enterprise value, purchasing the latter stock would be a better overall value.

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ACCELYA KALE SOLUTIONS LTD - BOOK PROFIT

Accelya Kale Solutions Ltd ( Formerly  Kale Consultants Ltd) recommended as a buy @ Rs.126  , hits its life time high today @ Rs.1068 . Earlier recommended to book part profit and now suggesting to sell another 50 % of your current holdings.

Link to Recommendation HERE

VIMAL OIL AND FOODS - BOOK PARTIAL PROFIT

Vimal Oil and Foods recommended from a level of Rs.60 ( Link HERE) , hits its life time high today @ Rs.260 . Recommending to take out your cost and hold the remaining as cost free.

PLEASE NOTE .......

In continuation to my previous posting , now it is learned that all existing Research Analysts have  six months time to comply with the norms  from December 1  , ie, upto 29th May 2015.Hence you can post your comments in blog itself for the time being .

29th May, 2015

29th May, 2015

29th May, 2015

SEBI GUIDELINES

Dear Friends 

By now , many of you are aware about the new restrictions implemented by SEBI ( Read it HERE) . Based on this regulations , it seems no one can express his/her opinion about a stock through any public media without taking prior registration with SEBI .Only the following are exempted from the term 'Research Report' 
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(i) Comments on general trends in the securities market

(ii) Discussions on the broad based indices

(iii) Commentaries on economic, political or market conditions

(iv) Periodic reports or other communications prepared for unit holders

of mutual fund or alternative investment fund or clients of portfolio managers and investment advisers

(v) Internal communications that are not given to current or prospective

clients

(vi) Communications that constitute offer documents or prospectus that

are circulated as per regulations made by the Board

(vii) Statistical summaries of financial data of the companies

(viii) Technical analysis relating to the demand and supply in a sector or

the index

(ix) Any other communication which the Board may specify from time to

time

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Because of this reason , I am not in a position to openly express my views ( though I am neither  a research analyst nor claiming like that )   on any company  till some clarity emerges in this issue . Hence , from next third Saturday onwards only the Statistical summary of financial data of a company  I am holding will be posting here.Never take it as a recommendation for buying/selling  and I hope you will do own due diligence and reach own conclusions after your own study . You can also refer my Moneycontrol message board id ' valuepick' ( Link ). ( I think , like many others  ,I too can post there till they continue that  service) .Because of the above reason comments on stock specific queries too in this blog will be restricted from hereon and only  general queries will be answered .You can still contact me in my mail id valuepick100@gmail.com