Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Poddar Developers – India – Micro Cap

with 13 comments

I admonished to keep at less than 1% for large portfolio (20 INR Crore+) and < 2% portfolio weight for small portfolio ( < 1 crore INR)  for this micro cap.

There is some information received through grapevine and other market channels, which to be fair should be in the market to keep symmetry, even though it means short term stupidity.

– The company results are always chequered with profits booked only on actual sale and project completion
– It appears that there will not be sale of buildings and houses over the next couple of months as multiple projects are mid way construction, March 2015 could be a better quarter
– I wished the company to continue in low cost housing < 25 Lacs INR apartment and scale out to other states, but the company is acquiring land for mid income housing in Maharashtra – 60 Lac – 1 Crore INR range of apartments

So expanding out the low income model in other states is also looking unlikely in short term. Becoming a stronger regional player is a bigger focus than becoming a low cost housing specialist pan India in the short term

– I also wished the company to get into NBFC space in low cost housing as Gruh and Repco, given that Dipak Poddar is one of co-founders of Bajaj Finance (first cousin of Rahul Bajaj), co-promoter of Bajaj Auto, and also the promoter of Poddar Developers Ltd

http://www.bajajfinserv.in/wealth/board-of-directors.aspx

The company has long term plans to get into it but NBFC business is looking unlikely in short term as company has hands full with housing projects.

 – One the positive side company has taken in well the Corporate Governance message and expects to improve it in subsequent year.
– We have also learnt that in real estate sector, company provides highest levels of transparency to purchasers/end users of apartment by publishing prices on the website. This is unmatched.


 Couple more links:

http://www.moneycontrol.com/news/business/when-realty-takeslow-income-high-growth-turn_992886.html

http://forbesindia.com/article/big-bet/poddar-developers-rides-high-on-lowcost-housing/36459/0

http://www.moneycontrol.com/news/cnbc-tv18-comments/cluster-redevelopment-is-mumbais-skylinefor-change_1020557.html

“We don’t sell more than one flat for a single buyer. We have a 75:25 mix of actual homebuyers and investors,” said Rohit Poddar.

http://www.livemint.com/Companies/7PHk9NJVwnkZqw6qqwtbuJ/The-future-of-affordable-housing.html

http://www.livemint.com/Politics/xL0Jza9zW2jw3S8Ua1nrxI/Affordable-homes-turn-into-investment-option.html

“Poddar Developers launches Rs 825 crore project in Shahapur”

http://articles.economictimes.indiatimes.com/2013-04-29/news/38904483_1_300-crore-first-phase-phase-ii

“Poddar Developers eyes Rs 500-cr revenues by FY’17” 

http://articles.economictimes.indiatimes.com/2013-06-30/news/40286852_1_rs-500-crore-affordable-housing-housing-finance-companies


I had spotted Atul Auto 20 Rs and invested for myself and partnership in 2012 @ 35 Rs and @45Rs  respectively, based on advance from customers (CMP 377 Rs). I see similar strength in Poddar Housing product.



“Besides, we will fund the expansion through internal accruals. We are not keen on raising funds through debt or equity, mainly because of high interest rate and higher cost of valuation.”


http://articles.economictimes.indiatimes.com/2013-06-30/news/40286852_1_rs-500-crore-affordable-housing-housing-finance-companies


– Remains a developing story and likely to stay sideways for next 6-9 months. A product that customer pays for in advance is typically a Bajaj Auto scooter in monopolistic India of 1970s.



Disclosure: Invested. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital.


http://www.elevendimension-funds.com

Written by amitdipsite

September 20, 2014 at 10:46 pm

Posted in Uncategorized

13 Responses

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  1. I disagree, look at Ashiana housing, its up 4 times though reported earnings are lumpy.

    Jatin

    September 21, 2014 at 4:42 pm

  2. We can live with that ourcome🙂

    Market size is quite big, 100,000 Crores per annum. Market cap of the sector isn't even 1/1000th.

    But active and pasisonate investors generally do not get to hold stocks for long term. A relative of mine who relies on me for investments, I got that person Astral Poly Technik in 2010 at
    20 Rs (pre split) and is still holding it, but I am not (CMP 830).

    What is the story with Ashiana?

    Amit Arora

    September 23, 2014 at 4:41 am

  3. hi amit
    I think if you are looking at poddar, you should look at ashiana too. not necessarily for investing, but just to look at a similar model and how a good management is building a similar company.
    also they are slightly further down the same road as poddar developers on the same path to becoming a regional player in mid housing segment

    Rohit Chauhan

    September 24, 2014 at 8:23 pm

  4. Thank you Rohit

    Saw a couple of posts on fundooprofessor.wordpress, still have not delved into the company.

    Last year I was searching for “retirement villages” business and Ashiana appeared to be the only “listed” company in India in that segment. Don't like the concept of retirement village/graves/cemetory but business is yummy.

    Amit Arora

    September 24, 2014 at 9:20 pm

  5. True, but does a Passive Stance lead to Insights ?🙂

    Jatin

    September 25, 2014 at 6:10 am

  6. http://www.dhakatribune.com/business/2014/sep/25/global-fund-managers-eye-bangladesh

    Bata Bangladesh is already around 1200 from 500 about 14 months back.

    Amit Arora

    September 26, 2014 at 9:58 pm

  7. MOBIL Bangladesh at 160 from 68, around 12 months back

    Amit Arora

    September 26, 2014 at 9:58 pm

  8. Munger-speak

    “Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter out buying opportunities”

    “If you took the top 15 decisions out, we’d have a pretty average record. It wasn’t hyperactivity, but a hell of a lot of patience. You stuck to your principles and when opportunities came along, you pounced on them with vigor. With all that vigor, you only made a decision every two years. We do more deals now, but it happened with a relatively few decisions and staying the course for decades and holding our fire until something came along worth doing.”

    How many of us practice buying one stock in two years ??

    Amit Arora

    September 26, 2014 at 10:16 pm

  9. Dear Amit,
    I have worked closely with this (Poddar developers) company during 2006-07 and have also met Mr. Rohit Poddar to understand his plan. Company was earlier known as “Wearology” and they had a project in Karjat in Mumbai. Company had a very big plans with their land bank. And stock rose from double digits to 200 mark in a matter of 8-10 months. Mutual funds like DSP Merill bought stakes @ 215. However, what company did was very unethical. This land bank was in a subsidiary “Gopi Resorts” and one fine day it sold of this subsidiary. Company did not had any business on standalone basis. This raised a very serious issue on its corporate governance. I would just raise a red flag here. I understand you would have done your research but still this my 2-cents. I am open to critics as well as to change my perception about the company, if you can share your thoughts in detail. Probably I would be wrong.

    HVG

    September 29, 2014 at 11:17 am

  10. Dear HVG

    Thanks for the red flag. By no means we are defending this stock with an ostrich syndrome. Feel free to raise red flags.

    We will raise it with the management.

    The company (Wearology) did get 34.5 Crores on sale of Gopi Resorts, do you think that amount was less or unfair?

    http://www.bseindia.com/corporates/anncomp.aspx?curpg=10&scripcode=523628

    http://www.bseindia.com/corporates/anndet_new.aspx?newsid=ac647211-43d2-4710-bbb2-4227aa1a8434&param1=1

    http://in.reuters.com/article/2007/12/06/wearology-gopi-idINBMB00006020071206

    Regards

    Amit Arora

    September 29, 2014 at 8:15 pm

  11. Hi Amit,
    Thanks for digging up Info – I do agree that Poddar has a sustainable FLOAT available to them in form of customer advances,I have a small write up in case you are inclined – http://wp.me/p4bScp-aR
    My question
    Can management deliver the scale with ever increasing projects in pipeline ? I have no insights to second layer at the company but is it competent to deliver 3-4 big housing projects in parallel ?

    Disc – Invested

    vivek bothra

    October 5, 2014 at 11:20 am

  12. The dream of promoters is to have 100,000 houses in pipeline from current 3000-5000.

    No insights into second layer of officers yet.

    But company is playing on building reputation and brand for the long haul similar to Ashiana without cutting corners for short term.

    Regards

    Amit Arora

    October 7, 2014 at 8:49 am

  13. Hi Amit Arora,

    I am new to stock market and i have searched in google after long hours i have found your site and it is very interesting for me and very good recommendations.I have susscribed to your site today.

    I would like to know that we will get mail to my mail box or do i need to check for the updates on the site.

    Please provide me your valuable suggestions.Thanks in Advance

    Regards,
    Parthsarathi

    Partha Sarathi

    October 19, 2014 at 3:17 pm


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