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Stocks To Capture Rural Prosperity

October 7, 2013 Leave a comment

A short drive out of our cities will show you that prosperity and modernity are reaching our villages too.If you wish to benefit by this increase in prosperity in rural areas you could accumulate the stocks of the following companies:

1. Hero Motocorp : Hero is the strongest 2 wheeler brand in rural areas and has 5000 distribution points in rural India,the highest in the industry,It derives nearly half of its sales from rural areas.

2. Emami : In the consumer industry,Emami has one of the highest exposures to rural markets.Around 60% of its sales and 50% of its profits come from here.

3. Maruti :1/3rd of its sales comes from rural areas where it has a strong brand and network.

4. Mahindra & Mahindra : The farm equipment segment (tractors) represents 40% of the topline.

5. M&M Fin Services : One of the largest vehicle finance companies,M&M Financial Services focuses on the rural and semi-rural areas with a majority of its 675 branches being located in such areas.A rise in rural incomes leads to greater demand for tractors and passanger vehicles.

6. ITC : The company makes 35-49% of its sales from the rural market.It is witnessing the rural consumers moving up the value chain in cigarette category.

Filed under Paper Assets, Tool Kit Tagged with Emami, Hero Motocorp, ITC, M&M Fin Services, Mahindra & Mahindra, Maruti, postaday, rising rural incomes, rising rural prosperity, share investing, stock investing

Avoid Stocks Of Holding Companies

August 1, 2013 Leave a comment

Historical data shows that holding company shares might not be good for minority shareholders as the market traditionally values holding companies — an entity that controls a clutch of businesses — at a discount to their book value.

ET looked at valuations of nine holding companies listed on Indian stock exchanges. Specifically, they looked at one metric: the price-to-book value ratio. Book value is the total value of a company’s assets less intangible assets (like trademark or intellectual property) and liabilities. For seven of these nine holding companies, this ratio was less than 1, indicating under-valuation. The average discount-to-book value was 40%, and ranged from 4% (EID Parry) to 93% (UB Holdings). Aditya Birla Nuvo and Tata Investment Corporation were the two exceptions (See table). Read more of this post

Filed under Paper Assets Tagged with ACC, acquisition of cash flow, Aditya Birla Nuvo, Ambuja Cements, Bajaj Holdings, Book Value, discount to book value, dividend distribution tax, double incidence of dividend tax, EID Parry, Holcim India, Holcim-Ambuja Cements deal, holding company stocks, JSW Holdings, McDowell Holdings, mergers and demergers, mezzanine structure, minority shareholder interests, minority shareholders, postaday, price to book value P/BV, Rane Holdings, selective acquisition of cash flow, share investing, shift profits, stock investing, Sundaram Clayton, Tata invest Corp, UB Holdings, valuations

Gone Fishing With Buffett

July 5, 2013 2 Comments

Warren Buffet follows his own investment method and has stuck to it through thick and thin to made a lot of money. The key principles of this investment method, as described by Sean Seah in his book Gone Fishing with Buffett are as follows:

1. Investment Rule Number 1: Never Lose Money
Investment Rule Number 2: Never Forget Rule Number 1.

2. Risk comes from ignorance.

3. Buy businesses with good and exceptional economics and buy them at a sensible price. Repeat until wealthy.

4. The stock market is the only place where people who drive BMWs take advice from people who take the train.

5. If you need complicated maths for investing, Buffett would probably be distributing newspapers today. Read more of this post

Filed under Paper Assets Tagged with book on investing, book review, Book Value, competitive adavntage, debt/equity ratio, EPS, free cash flow, Gone Fishing With Buffett, investing in IPOs, operating cash flow, postaday, reputation and integrity, Risk, Sean Seah, share investing, STEP Analysis, stock investing, value investing, Warren Buffett's investing method, when to sell stocks

Safer Bets

September 21, 2012 2 Comments

The return of capital is more important than the return on capital.So it is important to avoid the pump and dump operations of promoters and market operators. Here is a list of safer promoters compiled by jigs of BSE India Market View