Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Result Season

with 43 comments

What we learn from history is that we don’t learn from history. It reaffirms the short term institutional derby, the way some stocks lost 50% ground in 10 trading days.

Some of the stocks that I have mentioned, and obligated to update on.

Relaxo: Doubly horrible results, only 13% growth in topline, bottoline was expected. Final product prices have not been raised and cost not passed on. This should decimate the huge unorganised market in north India, good for long term, but who cares about long term. Wont add right now.

Photoquip: Raw materials / Oil seems to have eaten into all the good companies this quarter including Hawkins Cooker and Gillette. Nice topline growth though atleast. Still a Buy, can be added.

Cera Sanitaryware: Came out unscathed with 30%+ growth in revenues and PAT. I am not exactly sure how raw materials did not affect it, possibly they had inventory or prior contracts. Interest rate rise, degrowth of new housing starts can affect it in short run.

PSU Banks offering 3-4% yields with low NPAs can be considered for safety. Some commodity stocks showing high growth this quarter both topline and bottomline can be bought for opportunistic trade for next 3-6 months of upwards commodity price cycle. This year looks more like sideways for investors from index perspective. There can be excellent trading opportunities though.

I am positive on India story as always and where there is growth, crowd must come.

Brilliant analogy to extrapolation on Page 8 of this PDF

How one bad quarter or great quarter is projected far into future in minds and hearts of investors and reflected in prices.

Written by amitdipsite

January 31, 2011 at 9:02 am

Posted in Uncategorized

43 Responses

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  1. Relaxo results was really disappointing ..need to wait and see what cravatex result will show up


    January 31, 2011 at 10:13 am

  2. One wont lose money in Relaxo even if one bought it at 514 Rs, thats the good part. Once prices are raised and network continues to expand. Not all companies can manage every quarter a positive one esp those having circa 50% input as raw materials. Long term story is intact but one can find better short term bargains.

    Amit Arora

    January 31, 2011 at 10:24 am

  3. Hi Amit,

    Just a doubt clarification..why there is so large fluctuation(up and down) in Cravatex stock price for last two months when there is no change in fundamental and also traded volume is low..

    Thanks in advance


    January 31, 2011 at 11:14 am

  4. Hi Umang,

    I looked at last two months prices. Average volume is only 400 shares per day, only on 5 days did the volume cross 2000 shares, and on none of the trading days volume crossed 5000 shares.


    – Genuine demand supply mismatch, if someone wants to shed 2000 shares on a single day

    – Manipulation of price by anyone or institution who has a couple of crores

    For around 1 year the price was stuck at 200 prior to October, there are only few market makers in this script.


    Amit Arora

    January 31, 2011 at 7:19 pm

  5. Cravatex:

    Manish B.G. informed me about Licence Fee for Cravatex, that is actually a rental income of 4.6 Crore annually. I have confirmed this from management.

    This implies Cravatex was in operational losses until 2009.

    Volatility: If a shareholder buys 2000 Shares of Cravatex, then there can be only 150 possible public shareholders give 3 Lac floating stock. Likely to stay like that unless an institution goes long.

    Amit Arora

    January 31, 2011 at 8:17 pm

  6. Photoquip:

    I have got a satisfactory response from management regarding their new business. I am copy + pasting it here.

    My Question:
    I understand as per the Advertisement below that company has ventured into dye sublimation printing business.

    I could not find answer to it at BSE website or any other medium. My question is:

    Is Photoquip Ltd acting as in trading or in manufacturing capacity. I understand Photoquip to be primarily a manufacturing company. My doubt is that bigwigs like HP and Samsung are into manufacturing sublimaiton equipment, so how can a relatively smaller company have an edge. If trading, then if you please share the brand you intend to trade in.

    Management Reply:
    As of now we are not into the actual manufacturing of the printer itself, we source it from international OEMs who also manufacture for the “big wigs”.
    We get the printers, add customized hardware to it, load it with our software and offer it as complete photo finishing micro-lab. Currently we are focusing on the Indian market.

    We distinguish ourselves from the competition by our after sales service, our pricing and our quality at the given price, hence managing to thrive in the competition.
    HP and Samsung are not in the dye-sub printer business at all. There are only a handful of companies in the dye-sub business in India, PQ being one of them.
    I hope this answers your questions regarding our dye-sub business.

    Amit Arora

    January 31, 2011 at 8:24 pm

  7. Hi Amit,

    Wht is your take on Bajaj Corp ?
    I think this the cheapest FMCG stock trading around currently



    February 1, 2011 at 2:18 am

  8. Hey Vikas,

    Its a decent one. Market leader in its segment. Good recall. I am not sure about future of hair oil really. Its very Indian cultural thing which is positive for an investor coz of absence of global competition.

    But I prefer Page Industries and TTK Prestige for the current year relatively speaking. Or any company with strong tailwinds growing topline over 30%+ without undercutting for grabbing market share.


    Amit Arora

    February 1, 2011 at 2:47 am

  9. hi amit

    did you check my mail i mailed you certain stock i didnt get a reply from you?


    February 1, 2011 at 6:54 am

  10. Hi Amit
    I am following your blog from last 3 months.
    You are the best equity analyst I have come across till date. Your last year pick Ador Fontech was really good. I am very bullish on Edserv Softsystems Ltd. Can you please tell me your view on this ?

    Thanks & Regards


    February 1, 2011 at 3:38 pm

  11. Hi Manjunatha,

    Thanks for your words but nobody is best / worst, we just have our moments. Lots of people have asked me about Edserv because of Suresh Kalpathi.

    I am not following education space now.

    CSLA report for Indian Eduction Industry is very good on this web link


    Amit Arora

    February 1, 2011 at 8:28 pm

  12. Thanks for the upadate and management response from Photoquip.


    February 2, 2011 at 2:53 am

  13. I did a brief study on Minilab industry. Its been a ghost town, Gretag, Agfa, Fuji, Konika all dead. I read annual report of Noritsu, it is making machines / hardware for Fuji and itself but both use separate software.

    Just 2-3 manufacturers are left on a global scale. Billions of MP3 sitting on hard drives led to iPod, trillions of photographs sitting on hard drives is leading to photo printing now.

    Amit Arora

    February 2, 2011 at 4:12 am


    Definition from Wikipedia

    A minilab is a small photographic developing and printing system, as opposed to large centralized photo developing labs. Many retail stores use minilabs (or digital minilabs) to provide on-site photo finishing services.

    Industry changes:

    By the end of 2005, two manufacturers, Agfa and Konica went out of business. Minilab Factory GmbH took over the renowned minilab branch of Agfa in 2006. Gretag Imaging, not to be confused with former Gretag Macbeth, went bankrupt in December, 2002. Subsequently, the minilab related assets were sold to the newly formed San Marco Imaging. The wholesale lab related assets were sold to KIS Photo Me Group. In 2006, Noritsu and Fuji announced a strategic alliance. Noritsu now manufactures all of Fuji's minilab equipment.

    Noritsu on the face of it appears strongest player right ? Given its global reach and brand name, one would believe so.

    Read its latest investor update:

    Its in agony and losses.

    San Marco Imaging is another contender does not look promising either.

    While Noritsu and San Marco Imaging have a biggest userbase installed, they are both in bad shape.

    That leaves us with only a couple Chinese players (perhaps not making printers themselves), HP and DNP, Noritsu. In India HP isn't present in minilab nor is DNP, so the field is open for grabs to recovery in printing business. This field got wiped out during transition phase from analog to digital. Self use kiosks are another form factor in retail segment.

    Companies listed in this page have either dead or bleeding minilab *manufacturing* operations.

    This article from 2010 points to a few last standing companies left on the scene in US


    Sony has also raised hands and surrendered in photo printing business to DNP

    Very few players are left in this field globally. There remains a room to innovate on top of printers and make money, for example has done lots of innovation.

    FUJI though big has been on decline


    If home based printer become cheap enough, it would not require a customer to visit retailer. Going by the cost of printing cartridges, it does not seem that *all* consumers would want home based dye-sub printer.

    I am still thinking more about it..before arriving at any opinion. Someone that can offer cheap prints will obviously win ultimately with consumables if not the actual hardware.

    PQ makes me think, bummer. If all else fails atleast we have Elinchrom.

    Amit Arora

    February 2, 2011 at 6:33 am

  15. Hi Amit,

    For Relaxo with raw material cost not looking to come down in near future along with debt burden ,do you see any significant change bound to happen in there bottomline performance in nearby future ..stock has already gone down drastically and whether its good time to average ones position at this stock by buying @current level if someone has bought it at a very high level.



    February 2, 2011 at 1:22 pm

  16. Hi Umang,

    Relaxo was all about destroying unorganised sector to moving thrifty ( like value investors) and lower income profile into branded products. 13% topline is not acceptable especially if it repeats two more times.

    For me, its not a buy and not an add either, just yet. There is no rule that one has to make money from the same stock one has lost money in. I like rubber, commodity companies better for trading for short term.


    Amit Arora

    February 2, 2011 at 8:58 pm

  17. Cravatex results are satisfactory, could have been better, Sales for Q3 up over 25%. Employee expense for 9M over 50% up, ad expenses yet to be reflected in growth of sales.

    Also an icing on cake – Cravatex to market FILA in Bangladesh, Sri Lanka and Pakistan

    Amit Arora

    February 3, 2011 at 9:33 am

  18. Can Cravatex lose FILA Licence ?

    Batra Group owns FILA and did an MBO in 2007, therefore they own it for perpetuity. Cravatex Ltd is Batra group entity and licence is given for free, I am not sure about gimmickry of why licence is extended only 5 years at a time and whether BSE announcement has any significance other than promoters attempt at increasing stock price. FILA licence is a negotiation between brothers over a dinner table. For the record Relaxo Footwear Ltd also does not own the brand name “Relaxo” and it given to listed company for free by group concern of promoters.

    I wrote about this licence matter earlier here:

    The only news was Pakistan, Bangladesh and Srilankan market is assigned to Cravatex Ltd


    Amit Arora

    February 3, 2011 at 7:22 pm

  19. Hi Amit,
    Infact i had the same doubt w.r.t to timeline extension announced and spoke to cravatex secretary about it but no proper response received for the same.He has asked me to write a mail on .



    February 4, 2011 at 4:24 am

  20. FILA are trying to revive their golf business globally. Also introduced kids wear and innner wear.

    Amit Arora

    February 4, 2011 at 10:12 am

  21. Photoquip

    There have been quite a few companies offering online photo printing services in India. A good analysis of these websites can be found at:

    On further analysis it appears that they use dye-sub printers especially for priniting T-shirts etc.

    Question: Has anyone ordered prints from these websites and is this an emerging trend? If so then dye sub diversification could see growth. However saying that there has been a global decline of minilabs however in the US and UK websites and department stores such as Walgreens, Tesco etc have seen growth in the online photo printing business.

    Is there a future in India for this business?


    February 4, 2011 at 12:13 pm

  22. @Investor

    Online Photo Print

    Thanks for those links. Three leaders in the US are shutterfly, snapfish and kodak.

    Shutterfly is making losses in other three quarters and making hefty profits in December quarter. That is here to stay and will become 3D in future like Microsoft's Photosynth meshing


    Inks and printers are required for printing so minilabs business is now taking off again after a decade more so in consumables.

    What happened was that for 10 years people stopped getting prints developed from negative to paper, or slowed down and digitised everything. Now they are again trying to get some prints from huge cache.

    Dye-Sub business

    Its not just photos and T shirts. Printer can be used for imprinting on everything, mugs, laptop, lunch box, key chain, bags, pillow, table tops, bed spreads, greeting cards, list goes on..

    I have seen a couple of electronic supermakets here with their dye sub printing business busy like crazy. They had one FUJI minilab and unbelievable crowd to collect photos. All self use kiosks here are by Kodak. Industry is growing thats why the PE interest too.

    Bright future prospects for this industry is the reason why Shutterfly has become a darling at Nasdaq at an incredible 83 times PE multiple – 1.2 Billion USD market cap

    Amit Arora

    February 7, 2011 at 9:14 am

  23. One more potential market for photo “printing” is tourist places/theme parks. As tourism grows in India, many such places will have camera's capturing the action and offering prints/frames/souvenirs to visitors on the spot. Not a big market in itself, but just reinforces the fact that people are slowly moving back to prints.


    February 7, 2011 at 12:29 pm

  24. Amit,
    How do you read Q3 results from Globus Spirits? Top line has grown by about 20% and bottom line 30%. It appears their earnings visibility are decent enough, but the market seems to think otherwise.


    February 7, 2011 at 1:36 pm

  25. Hi Amit,

    First I should congratulate you, bcz.. u predicted exactly top for simran and offloaded ur stake and exactly picked the stake @bottom in photoquip,which is denying to coming down with the recent market correction.Today simran posts -ve results & price is @34 , which is ur buying price of simran. srinivasa hat posts good numbers and they managed raw material price hikes well,where as simran fails in it.I think your basic trait is “sharing knowledge”.Hats of to your research for photoquip.Count me on your well wishers list.:)


    February 7, 2011 at 6:40 pm

  26. Dear Sudhir,

    I did not know that Simran Farms would post these type of disastrous results. I got afraid of the fact that a) since their expansion has been by contract farming, those farmers have no loyalties, they will switch next month with Venky's if Venky's starts offering them better rates, not same as having retail branches / bank branches. I wanted to protect downside, therefore exited. Industry is growing by 30-40% so Simran should grow. Commodity stocks have done so well in this quarter, Riddhi Siddhi, Amrit Banaspati, etc list goes on.


    Amit Arora

    February 7, 2011 at 7:25 pm

  27. Hey MG,

    I will update on Globus Spirits after speaking with mgmt. Market was expecting doubling or atleast 70-80% growth of revenues based on doubling of capacity, hence the disappointment. Will try to find out why this has not happened.


    Amit Arora

    February 7, 2011 at 7:27 pm

  28. A couple of more points on Photoquip and the online printing business.

    Social Networking Integration

    With the growth in social networking and its rapid adoption in India, Facebook is the most popular choice for sharing amongst other things: photographs. There are multiple apps that integrate with Facebook and can be used to order prints of your photographs directly from your album or from a friend’s album where you’re picture is tagged. Even Apple's joined the party with iphoto.

    e-Commerce India

    Now globally the phenomenon is big and growing, but with the disparity in internet usage between India and the rest of the world, most importantly e-commerce ($2.2 billion in India vs upwards of $150 billion in the US; online photo printing pitched to be $1 billion in the US, India still in the nascent stage, albeit growing ). More than 65% of ecommerce on some large sites comprises of gifting by NRIs to resident Indians. Which is promising although growth needs to be organic to fuel future profits.

    It is an interesting story which is still unfolding, whether this is another global phenomenon that takes time to be adopted in India, or just fizzles away, time will tell. Nevertheless Photoquip is on the right track, it’s core business is still it’s most profitable area.


    February 7, 2011 at 10:28 pm

  29. All those are valid points but they are two or three degrees away affects. Predicting growth of an industry is easier than individual winners and companies 😦

    Above all, will promoters share wealth ? One way for me to make out is that they are eating their own dog food – buying shares or increasing dividend.

    I am not ready to believe that in a blistering market like India with poultry industry growing at 40%, freakin Simran, Srinivasa and Venky's are growing at less than 20%. Not credible enough. Venky's has 13 companies in Poultry Industry, what is this ? Does is need that many ? Anil Ambani has 100+ companies I guess. How can one brain focus on so many activities ? How many group companies have Microsoft or 3M got. Just one. Indian promoters aren't sharing wealth. That brings us to the question of corporate governance, raiders, shareholder activism.

    All the good stuff is either with Private Equity or in private entities with promoters. Why isn't Godrej Agrovet listed in its gestation period, why wasn't TCS listed in growth phase. So, we have a smaller universe to play with.

    For promoters holding less than 30% holding and milking the company we need a hedge fund / cooperative of investors to kick out founding promoters.

    Amit Arora

    February 7, 2011 at 11:48 pm

  30. Elinchrom introduced new product for “lower end users”, something it has been doing now for last few years. ECO version Ring Flash introduce on the 5th Feb 2011 at around 1/3rd the cost of high end professional.

    Elinchrom already had a higher end for long time circa 1600$

    If you think 1600 USD is expensive as a lighting accessory then checkout Broncolor or Profoto's ring flash for 3100$

    Money spending for Photogs does not end with flashes, soft boxes and reflectors. There are actually accessories of these flashes too :-/

    and accessories for softboxes, that are at times not available with original OEMs like Elinchrom, Broncolor or Profoto

    Check out this specialised company Light Tools, it makes lighting grids for *all* vendors. That's the kind of company you want to buy.

    A similar company that my mind puts in same class is Triton Valves Ltd, although it is not really a consumer brand in minds of end users, but I'd prefer it any day over Tata Motors. (I don't own it yet.) They offered bonus recently, so results are not bad as they may seem.


    Amit Arora

    February 8, 2011 at 5:55 am

  31. Amit
    Do you have insight and comments on TCI Finance, which was buzzing with news of intrinsic value on holdings it has, and had started moving up after 17 long years? IS it still a multibagger?


    February 8, 2011 at 6:42 am

  32. I checked triton valves, it regular dividend paying company.
    result also look gud.

    first look of the company is impresive.

    pls provide more detail


    February 8, 2011 at 9:37 am

  33. Hi,

    Sorry, I don't have more idea on TCI Finance.

    Not doing more digging into Triton Valves.


    Amit Arora

    February 8, 2011 at 6:41 pm

  34. Hi guys

    Globus spirits : 2 points.

    1. Management had earlier indicated that expansion will be in place by Q4.
    2. Another distillery company ( i think its allied dustilleries), will be merged with globus and approx. 32 lakh globus shares will be issued to the promoters . This allied dist. had a PAT of 6.some crore in 2009-10 and so for in 9 months of 2010-11 has made a PAT of 8.8 crores. The accounts will get consolidated after court and other approvals.


    February 8, 2011 at 7:34 pm

  35. Thanks a lot Selvan for the clarification

    The company is Associated Distilleries.

    I have been left with such a bad taste in mouth with unfavourable merger swap ratios. Leaving the brands aside, this is truly outstanding for a small cap stock and a fair merger ratio! Something Vijay Mallaya could take a lesson from.

    And, you're right the capacity expansion has been delayed by a quarter.

    Amit Arora

    February 8, 2011 at 11:59 pm

  36. Hi Amit,

    What do you think about Galaxy Entertainment? There is lot of talk about future scope of lifestyle sports bar businesses in India….



    February 10, 2011 at 2:53 pm

  37. Hi Vivek,

    Its hard to make money in it. Other than Pantaloon being a co promoter, there isn't anything to look forward to. Idea did not take off, so far. It will be difficult to run sports bar on franchising model in India, and without that restaurants are failures another example Indage Restaurants from Indage Vintners.


    Amit Arora

    February 10, 2011 at 6:48 pm

  38. Thanks Amit..

    what's your view on Agre Developers? Again a company promoted by Pantaloon… It's into Mall Management & would have about 24 malls under it's kitty by 2012

    I found an interesting article about the future of mall manageent in growing Indian retail industry, link is below:



    February 11, 2011 at 7:09 am

  39. Hi Vivek,

    Thanks for the link to report. Agre Developers in an industry with future but is likely to get commoditised. These players will eventually become real estate investment trusts type of companies. Downside seems limited to its a Mohnish Pabrai stock, can be bought.

    I am looking for a pure play cleaning story in service sector similar to Agre Developers. All the good stuff is with promoters or private equity.

    Two Indian immigrants in New Zealand turned themselves from floor cleaners to multi millionaires in India.


    Amit Arora

    February 12, 2011 at 7:42 am

  40. Hi Amit,
    Can you please look into BsTranscomm which had taken a beating in this market fall, return on equity and EPS looks attractive. Can you just comment on this stock. Is it a buy?



    February 16, 2011 at 9:11 am

  41. Hi Amit

    According to my knowledge I think that AK Capital will become atleast 10bagger in next 5 years?
    Please tell me your view on this stock ?

    Thanks & Regards


    February 16, 2011 at 3:54 pm

  42. Hi Guys,

    AK Capital has potential as the debt market will grow in India.

    No Idea about Bs Transcomm



    Amit Arora

    February 17, 2011 at 8:00 am

  43. Thanks Amit I had recently identified this link and your indepth analysis on stocks looks really great..


    February 17, 2011 at 8:50 am

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