Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Samrat Pharmachem – A Microcap in Commodity Industry

with 42 comments

At the start I would like to insist that I am neither recommending a buy nor sell for this microcap, nor am I invested in it as yet. I would briefly mention this commodity stock for your later research.

Fortunes turn about-face as the change of weather on shore side with commodities. I have never believed in any metal including Gold, its utility to me is only in times of war, to carry something precious in pockets when a country is ravaged. Despite out performance of this metal in past decade the odds are completely stacked against this non-thinking, nor productive asset, last two hundred year of results stand up for even TIPS and vouch the superiority of equities.

Just one of the many possibilities of finding more Gold
http://youtu.be/Mv8vERKNViY

Essentially there is no shortage of material in Universe

http://news.bbc.co.uk/2/hi/3492919.stm

A commodity nevertheless, backed by able men has distinct advantage over bare metal. Hence the openness to invest in commodity miners and manufacturers. A microcap such as this, or Sandur Manganese, SELAN etc are infinitely superior investments to investing in rarest of rarest metals like Platinum, Rhodium etc. I firmly believe there will be no money left to make in coming decades in any commodity, only technology will be the saviour. Majority of resources including metals, iron, crude oil etc. will all be over in any case by the end of the century at humble 1-2% growth rate assumption. Iodine is a 15,000 tonne industry globally out of which 2.5 – 3% of Global output is contributed by Samrat Pharmachem. Recent out performance is a consequence of global turnaround. Other players that produce Iodine and its derivatives in India are:

G. Amphray Laboratories, Calibre Chemicals Pvt Limited, Salvi Chemical Industries,      Vishal Laboratories, Champa Purie-Chem Industries, Shree Bhavani Iodates, Adani Pharmachem Pvt Limited, Canton Laboratories Pvt Limited, Micron Laboratories,     Prachi Pharmaceuticals Pvt Limited, Omkar Speciality Chemicals Pvt Limited, Samrat Remedies Limited, Triveni Chemicals and IRIS Pharmachem – quite a few one would say.
Global Leaders in this domain include:
Ajay-SQM
Deepwater Chemical Inc
IodiTech
Troy Corporation
Cosayach – Chile
Atacama – Chile
Ise Chemicals – Japan
Godo Shigen Sangyo – Japan
World reserves exceed 15 million tonnes, i.e 1000 years worth of supply, hence there is no shortfall. In addition to above reserves, Iodine can be extracted from sea weeds which contain 0.05 PPM or at current sea weed stockpile 34 million tonnes. Recent demand of Iodine was propelled by LCD display and X-Ray contrast media. Like any cyclical stock, this will reward or misbehave with your money, hinges on how correctly cycle is timed.

Written by amitdipsite

January 2, 2012 at 8:51 pm

Posted in Uncategorized

42 Responses

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  1. Knowledge vs Wisdom:

    Knowledge is knowing that tomato is a fruit but wisdom is in not adding it to fruit salad.

    Knowledge is knowing Larsen and Toubro, ONGC are great companies, wisdom is knowing they are not good investments.

    Paraprosdokian:

    I used to be indecisive – but nowadays I am not so sure.

    Amit Arora

    January 2, 2012 at 10:53 pm

  2. Hi Amit..

    Have you had a look at KDDL. It seems to be a good pick for long-term holding. Would be glad if you check and analyse the company's potential and outlook

    sandeep maddali

    January 3, 2012 at 12:52 pm

  3. Hi Amit,

    I'm also tracking this co and own some shares due to the huge change in earnings and undervaluation. But haven't been able to dig out much details.

    As per an interaction, the co deals in iodine and its derivatives and the first half was exceptionally good due to shortage in Japan and hence spiking of end prices.

    What is your view on the sustainability of earnings?

    Ayush

    January 4, 2012 at 11:30 am

  4. Dear Ayush,

    I do not feel it will sustain in second half of this year.

    http://www.japanretailnews.com/2/post/2011/3/radiation-fears-spark-rush-for-iodine-pills.html

    Amit Arora

    January 4, 2012 at 10:53 pm

  5. Consensus of Economic Pain in West

    http://www.readability.com/articles/76rezt98

    http://www.readability.com/articles/gsdhp2p7

    I feel select Indian equities are a great place to be, barring the dismal dividend yield, lack of transparency, fiscal deficit and budgest deficit.

    Here is a company euphoric Indians would kill for !

    It owns franchise network for PIZZA HUT, STARBUCKS, KFC and also recently won CARL's JUNIOR but has a dividend yield of 10% !

    http://www.restaurantbrands.co.nz

    Amit Arora

    January 8, 2012 at 7:18 am

  6. i remember u writing about , how a nice amount of money can be made in cyclical stocks, if the business cycle is timed correctly..are u trying to do that in certain industries ?

    ABC

    January 8, 2012 at 11:14 am

  7. Hi Ya Amit,
    Last year EPS for the company was Rs 4.45 but the EPS for Sep '11 quarter itself was Rs 4.40. So I am not sure how sustainable this growth would be.

    The good thing I have noticed is that the equity base is just 3.3 crores , so if there is good growth , I see some corporate action in this share.

    Let me know your thoughts.

    Regards
    Srinath
    http://smartinvestments-srinath.blogspot.com/

    Srinath R

    January 8, 2012 at 12:44 pm

  8. Dear Ayush Kddl has posted negetive cash flow for last 3 years…compare to TITAN is way below in all statistical parameter…

    kkd

    January 8, 2012 at 1:12 pm

  9. Hi ABC

    Lots of money can be made in cyclical stocks. While construction industry has net negative cash flows but small bets (0.5%) can be made on lots of names have debt equity no worse than 1.5 and little equity dilution in last 5 years. Or any other company with debt, next year benign interest rates mean their profits will triple and myopic investors will reward them – you can count on greater fool theory, always !

    Regards

    Amit Arora

    January 8, 2012 at 9:41 pm

  10. thought provoking portfolio allocation i must say …

    ABC

    January 8, 2012 at 10:23 pm

  11. Hi amit,
    Have a look at this company 8K Miles software services. Interesting business model & upcoming technology i.e cloud computing.,with strong future growth. Recently company moved into the hands of foreign promoters. From then its showing robust Q'ly results.Wht is ur point of view?

    Sudhir

    January 10, 2012 at 6:54 pm

  12. Batra Group website updated.
    Rohan handling IT implementation !!
    http://www.batragroup.com/companies/cravatex

    Jatin

    January 13, 2012 at 2:38 pm

  13. Thanks, that's why you bought 4k shares yesterday🙂

    Prospects for specialty retail shops (brick) look grim for whole world including India like @HOME by Nilkamal or Shoppers Stop. Online is only 5% of revenues can go upto 50% of overall

    Read this Harvard article

    http://www.readability.com/articles/kwm8f5kt

    Amit Arora

    January 13, 2012 at 9:04 pm

  14. oh no, not me , its rocky j😉

    Jatin

    January 14, 2012 at 5:21 am

  15. Wow! Cravatex site looks so nice, Thanks Jatin.
    Nice to read about the group and next generation leaders.
    I agree with you Amit, Online is future of retail. I myself doing so for Books, Mobile, t Shirts etc..3G and internet access will change the picture dramatic..

    Future is going to be FULL of CHANGES.

    Rahul Paliwal

    January 14, 2012 at 9:42 am

  16. Indeed and we are under estimating it by 100s of factors, I can tell you confidently that many people will be actually marrying Robots in future and spending time in virtual reality more than in physical reality, seems absurd and hilarious today but will happen in our lifetime if we live a few more decades.

    http://asimo.honda.com/asimotv/ opens only in internet explorer only. Think of Asimo as early 20th century 8 digit calculator compared to weather predicting computer due to come in next decade. iRobot (http://www.imdb.com/title/tt0343818/) would look neanderthals in couple of decades.

    Meanwhile you can enjoy the clocky today for 50$

    I believe the biggest market cap globally will be of a Robotic company in near future

    Amit Arora

    January 15, 2012 at 12:09 am

  17. Talking about Robots for 500$ you can get Roomba for home

    http://resources.irobot.com/index.php/video/US/11305111

    For 800 Million USD, very strong balance sheet without debt, diverse products, world leadership in home cleaning robotics, and presence in Govt. & Industrial segment it can be a part of portfolio.

    http://www.irobot.com

    Amit Arora

    January 15, 2012 at 1:51 am

  18. This Fellow say:
    WealthWisdom: Is online retail the next bubble waiting to pop? – http://goo.gl/8aevr

    Rahul Paliwal

    January 15, 2012 at 4:06 am

  19. Robotics is future for Human labor, that I know sure for. My younger who is farming feels the heat of MNREGA and now food security in India.
    But knowing that, It would replace relations, emotions, human touch, is surprising n shocking.
    I do not find any such visionary company in India. Even Cash King like RIL also trying to run behind consumerism business.

    Rahul Paliwal

    January 15, 2012 at 4:09 am

  20. All this robot talk..will businessmen pay these robots(salary) & will robots have to buy electricity(food) from other robots(food traders)…..???

    MS

    January 15, 2012 at 5:17 pm

  21. FILA Skeletoes by next month !!!
    ……HI JATIN,

    Thanks for your query for FILA SKELTOES.

    You will surely get FILA SKELETOES as we will be launching this product from Next month from our RETAIL stores as well as from MYTRA ONLINE channel.

    Thanks & Regards,
    Irfan Rizvi
    Sr.Manager-Product development-Footwear

    FILA

    Jatin

    January 16, 2012 at 6:02 am

  22. There will be no difference known to us between human and robot unless one cuts them in half by knife. Biological skin and same intelligence, in fact they will have to slow down to our pace. They can be judges, policemen, programmers etc.

    Problem starts if Robots can create next generation of further advanced machinery, which again creates another improved ad infinitum. Or if computers are able to discover new laws of physics not known to man without our help and apply them in their projects. There is debate around it which is called technological singularity, they can get out of control http://en.wikipedia.org/wiki/Technological_singularity

    Amit Arora

    January 16, 2012 at 7:53 am

  23. Thanks, I have noticed on ( http://www.myntra.com/fila ) they have started selling backpacks, bags, caps, tshirts, jackets, socks, tracks, sweatshirts and the whole paraphernalia etc.

    Is that you Jatin on Fila Patiala facebook page asking for skeletoes ?

    http://www.facebook.com/pages/Fila-Patiala/185334068231250

    Amit Arora

    January 16, 2012 at 8:15 am

  24. Yes amit.

    Jatin

    January 16, 2012 at 11:44 am

  25. I agree that online retail will grow. but in my opinion, it will ultimately turn out to be a flop industry. Reason: My wife would still like to buy groceries/clothes/jewellery after touching and feeling them. We Indians explore online channels for only those things that are otherwise banned for sale freely

    Anmol

    ads

    January 18, 2012 at 12:55 pm

  26. Dear Amit i am quite impressed by your study on companies and their business model.CAn you throw some light on Cronimet alloys?
    Pradeep Kapoor

    pradeep

    January 18, 2012 at 2:51 pm

  27. Amazon has 34 Billion USD in revenues and 1.5 Billion $ in net profits after tax, so 90% players can flop but not the sector.

    Amit Arora

    January 19, 2012 at 12:43 am

  28. Dear Sudhir,

    8K Miles is interesting company not even top 10 in India though in Cloud Computing in size, so we need to wait more

    Amit Arora

    January 19, 2012 at 7:53 am

  29. please amit atleast mail me the answer if you dont want it to be on your blog. Please let me know whether a partnership firm is exempt from long term capital gains tax?
    my email address alberteinsteinc@gmail.com

    Unknown

    January 20, 2012 at 11:33 am

  30. Hi Unknown,

    Limited Liability Partnership is not exempt nor is Pvt Ltd. entity, only individual is exempt. Read here for more info http://capitalmind.in/2011/06/creating-a-hedge-fund-in-india/

    Amit Arora

    January 20, 2012 at 8:38 pm

  31. I had written briefly about derivatives and the fact, they should be banned (I know they won't until Charlie Munger becomes India's Finance Minister) here

    http://multibaggersindia.blogspot.com/2010/12/derivatives-epidemic-for-society-and.html

    I highly recommend reading The Big Short for those interested in 2008 crisis
    http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393072231

    Majority of American and non-American Wall St. professionals are rotten to the core. If left unchecked any human slips to folly.

    I'd try to explain in layman terms credit default swap:
    Assume you have a 50 lacs Rs house and you pay 2000 Rs insurance again earthquake and flood per month, makes sense if you own the house. Financial engineers (not required at all by society) inciting the juices of speculation invent a new instrument earthquake default insurance which can be taken by any tom dick without owning the house. Thus, without owning a house one can buy insurance on a 50 lacs Rs house. Thus, on a single house you can take 1, 30, 100 or even a million insurance. This implies if the earthquake really hit this house and there were 100 insurance contacts bought on same house, 1 by the rightful owner living in it, and 99 by speculators, insurance company will have to make good 50 Lacs * 100 = 50 Crore Rs. but there was no upper limit of 100 insurance contracts. The agent get commission for each contract and insurance company sells premium the they want to peddle millions of insurance contracts, mere insects owning the house exist because their life can be gambled upon. Thus if a single house goes down by flood and there are outstanding billions of insurance contracts outstanding on it, any insurance company can collapse.

    The hole is deeper and agents more perfidious as you'd read with cherry picking immigrants earning 20,000 $ a year given keys to million $ homes. With this knowledge, I can easily predict, there will be series of 2008 collapses bigger and better than the past.

    Amit Arora

    January 20, 2012 at 10:57 pm

  32. excellent boss

    zulfiqar

    January 21, 2012 at 6:31 am

  33. “Rahul says” – FILA is now all over the place in tennis endorsements

    http://www.womenstennisblog.com/2012/01/21/australian-open-2012-fashion-the-best-of-nike-adidas-fila/

    Amit Arora

    January 21, 2012 at 7:19 pm

  34. Myntra.com, online retailers of lifestyle products in the country has registered 10 times the growth in 2011 as compared to 2010

    http://www.retailangle.com/Newsdetail.asp?Newsid=3661&Newstitle=Online_retailer_Myntra_registered_ten_times_growth_in_2011

    Amit Arora

    January 23, 2012 at 12:50 am

  35. Sometimes it makes sense to mark to market (CDOs, Options), at other times – value investing – mark to mind/ use mental account. If you believe that FILA + Johnson Health Tech + Dunlop will be a success in India and Europe and that EPS of Cravatex will grow at 30% – 40% run rate per annum or 25 Rs per annum, this year and then according to fair value from private investor perspective, it will command 20 PE multiple. Thus 500 Rs per year or 1.5 Rs per day (25 Rs * 20 PE).

    Below is the consolidate EPS of Cravatex

    Consolidated EPS of Cravatex adjusted for Bonus
    FY 2007 – 4 Rs
    FY 2008 – 5 Rs
    FY 2009 – 7 Rs
    FY 2010 – 14 Rs
    FY 2011 – 25 Rs
    FY 2012 – 21 (First Half)

    Amit Arora

    January 24, 2012 at 10:22 pm

  36. THIS 30 TO 40% PA GROWTH TILL WHEN?

    zulfiqar

    January 26, 2012 at 6:29 am

  37. Fila and Footpatrol Re-Issue Iconic 90’s Trailblazer Shoe:
    http://www.prweb.com/releases/2012/1/prweb9139942.htm

    Rahul Paliwal

    January 26, 2012 at 12:59 pm

  38. Zulfiqar Bhai,

    It need not grow for 10 or 20 years, we cant forsee that far in any case. If it grows at 30-40% for the next 4-5 years which is highly probably, you will make mind boggling wealth – 5+ bagger.

    Regards

    Amit Arora

    January 27, 2012 at 9:47 pm

  39. Thanks sir, after following your blog regularly my total thinking towards investing is changed…thanks a lot ….. continue the good work that u r doing through your blog…. cheers

    zulfiqar

    January 28, 2012 at 5:01 am

  40. Hi Amit,
    Thanks for sharing your knowledge/expertise here. it helps a lot for newbie like me.I wanted to see the share holding details of this comp. but couldn't find anywhere. can you please share how do you find the “promoter”/public shareholding details for US listed companies.
    I really tried my best even checked the SEC filling forms/ AR's from iRobot site but no luck.
    would be great if you know any of link/source where we could refer the shareholding details of these companies.

    Lalit

    April 30, 2012 at 4:21 am

  41. We had briefly discussed Robotics. That it would be one of the biggest industries. I did not know that there was already a 100 bagger in making in the US.

    This combines lollapalooza of Lynch and Munger besides other models.

    Human wants to live long

    Human wants to look beautiful

    Human will spend everything to prolong their life span.

    Robotics is at critical mass

    US gave investors a 100 bagger from 2002 – 2013.

    Intuitive Surgical.

    https://www.google.com/finance?q=NASDAQ%3AISRG&ei=7OvLUbDFN4WmlQWT4wE

    Much bigger stories yet to come in this space.

    http://www.intuitivesurgical.com

    Amit Arora

    June 27, 2013 at 7:52 am


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