Investment Education

PROZONINTU – Big Move Ahead

Posted on by Hiren Kamani

Old Post on 7-9-2017 (http://www.freestockanalysis.in/prozonintu-positional-buy/) Recommended @ 43.6 Now 50.5 Rs

Radhakishan S Damani has bought 19.7 lakh equity shares (representing 1.29 percent stake) of the company during July-September quarter.

Rakesh Jhunjhunwala also held 2.06 percent stake in the Mumbai-based real estate development and leasing company, as per the latest shareholding pattern available on the exchange.

Big institutions like Acacia Partners, Cavendish Asset Management, Nailsfield etc have 8.37 percent shareholding in the company that currently has zero debt and cash of Rs 50-60 crore on its books.

Promoters and UK-based Intu Properties Plc held 33.46 percent and 32.38 percent stake in the company.

Prozone Intu Properties, formerly known as Prozone Capital Shopping Center, has strategic partnership with Intu Properties UK Plc, the largest retail real estate developer in UK.

The company owns land banks aggregating 169 acres spread across 6 cities in India. Accordingly, it has 6 special purpose vehicles. It has two shopping malls at Coimbatore & Aurangabad and is planning to have another mall in Nagpur that will be completed in next two years.

Its business strategy is to acquire and develop large land parcels, with a focus on mixed-use development. It utilizes one-third of the land parcel to build retail centre, which is primarily a 'build and long term lease asset' and the rest two-third to develop mixed use developments such as residential townships or commercial office blocks.

The company registered a 48 percent revenue growth and 48 percent EBITDA growth in FY16 compared with FY16. It recorded profit of Rs 7.4 crore during the year ended 2015-16 against a loss of Rs 6.5 crore in the previous financial year.

World will be running on Electric Vehicles by 2030

Posted on by Hiren Kamani

We all know that the world will be running on Electric Vehicles by 2030.

Being in the stock market, we can all sense that electric vehicle car part makers will benefit heavily and considering that India’s first vehicles will roll out by 2020, it makes infinite sense to spot multibaggers in this space.

Typically, the following parts make up an electric vehicle:

Body Battery Regenerative Braking Drive System Microcontroller Of course, tyres and other routine auto parts too.

We’ll do the batteries in this first installment.

About Electric Vehicle Batteries 

If electric vehicles are to succeed, the batteries should help the car run longer miles long and be cost-effective.

Such batteries must power the car for a reasonable number of miles. There is already talk about developing Aluminum air batteries that will last 1,000 miles and cost the consumer about INR 3 per mile.

As technology advances, these costs will come down.

But before we experience Aluminum air batteries, we have to work with Lithium Ion batteries.

Lithium ion batteries, the first to get off the block, contain liquids, and this makes make them heavy. Sooner or later these will have to be replaced but we have to make do with them in the present.

On a side note, IBM is working on Lithium Air and other research labs are working on Aluminum air batteries that will use their respective metals as fuel. After a certain number of miles (One Aluminum Air battery lasts 1,000 miles), the batteries will have to be replaced.

So, while picking stocks, let’s focus on 2 prominent materials that will be used to manufacture EV batteries — Lithium (for the immediate future) and Aluminum (for the distant future).

Know that lithium and graphite (for the anodes) are used in Lithium Ion batteries.

Electric Vehicle Battery Stocks that can become Multibaggers

MOIL — supplies manganese which is used to make aluminum, steel and also will be a key ingredient in EV batteries.

HBL Power Systems — makes batteries for the defence and industrial sectors. Has presence in USA, Middle East and Europe. Can easily handle lithium batteries and changes in technology. Everything looks cool about it except for the fact that its price is a bloody laggard.

Hindustan Copper — mines copper and nickel, which are used in batteries

Graphite India — Graphite is used in EV batteries, but this stock has appreciated way too much

Ashok Leyland — will make electric buses and batteries in collaboration with SUN Mobility. Maybe it will take over Sun Mobility and start making batteries

Other quality battery makers like Everready, Amara Raja and Panasonic too will jump in the fray.

Eon Electric, a small company, also makes Lithium Ion batteries along with mobile parts and optic fibre cable stuff. Please study it in depth before  making any decision.

Hindalco, Vedanta, National Aluminum stocks have massive potential going forward irrespective of the fact whether Aluminum Batteries are made or not because aluminum is lightweight and will be used to make the car’s body.

HEG should do well too as it is into graphite electrodes (along with power and carbon), but its share price has jumped 3 times in the last 12 months.

Rain Industries, mines carbon which is used in making many electrical accessories for EVs.

Himadri Specialty Chemicals (suggested by Geordie Job Pottas, an independent equity researcher)

You may want to look at this languishing stock that has the potential to vroooom (but I’m unsure of the management) —  Orient Abrasives, which is into mining metals for creating aluminum and many components for EVs.

Original Post by Sunil Tinani

Who is your fallback..!! Wonderful..must read..

Posted on by Hiren Kamani

Who is your fallback..!! Wonderful..must read..????????????????

People help you the way they know to help you. To help you to come out of stress, one friend will ask you to drink and another will ask you to meditate.

To overcome hurt, one friend will ask you to take revenge and get even, and another will ask you to forgive and get ahead with your life. ‘Who is your fallback’ makes all the difference.

Duryodhana’s predicament, in his own words, was, “I know what is right but I am not able to indulge in it. I know what is wrong but I am not able to avoid it.” He needed a fallback. His fallback was his uncle Shakuni, and resultantly, Duryodhana moved from bad to worse.

Arjuna’s predicament was different. He was allowing his personal emotions to dominate his sense of duty, and hence wanted to escape from the responsibilities he had towards upholding righteousness. He needed a fallback. His fallback was Krishna, and resultantly, Arjuna was restored to his greatness.

Humans we are, at some point or the other, we all need a fallback. ‘Who is your fallback’ makes all the difference.

Choose Well..

Puppy Wealth or Elephant Wealth

Posted on by Hiren Kamani

An elephant and a dog became pregnant at the same time. Three months down the line the dog gave birth to six puppies.

 Six months later the dog was pregnant again, and nine months on it gave birth to another dozen puppies. 
The pattern continued.

 On the eighteenth month, the dog approached the elephant questioning, _”Are you sure that you are pregnant? 
We became pregnant on the same date, I have given birth three times to a dozen puppies and they are now grown to become big dogs, yet you are still pregnant.

 What’s going on?” 

 The elephant replied, _”There is something I want you to understand. What I am carrying is not a puppy but an elephant. 

I only give birth to one in two years. When my baby hits the ground, the earth feels it. 
When my baby crosses the road, human beings stop and watch in admiration, what I carry draws attention.

 So what I’m carrying is mighty and great.” 

Likewise, if you break your Long term growth stocks and sell them in one or two years, you will get puppy wealth and if you keep your Good companies for 10 to 15 years your make elephant wealth. 

Think before you exit great companies for short term gains..

You want to settle for puppy wealth that lives for 7 to 8 years or do you want elephant wealth that will stay for 100 years. 

*Be a good saver. Become a better and a long term value investor.*  own great companies FOREVER

A Report on Aditya Birla Capital

Posted on by Hiren Kamani

aditya birla group

 

The Market is very excited with New NBFC Aditya Birla Financial Services (New Name – Aditya Birla Capital) coming on the block By 1st Setember 2017 , with PI Opportunities fund (Affiliate of Azim Premji) buying a 2.2% stake valuing the company at post money valuation of 32,000 Crores.

Let’s understand the business of Aditya Birla Finance and our Valuation for it.

The business can be divided in 5 major categories

1) Birla Sun Life Insurance – 51% Stake Held

2) Birla Sun Life Asset Management – 51% Stake Held

3) Aditya Birla Finance – 100% Stake

4) Aditya Birla Housing Finance – 100% Stake

5) Other Business – Health Insurance, Online Money Management, Insurance brokerage, etc.

We at Stallion Asset believe an SOTP (Sum of total Parts) Valuation is the right way to value this company. Let’s Understand the Business and Valuation of these 5 verticals.

Birla Sun Life Insurance – We at Stallion Asset believe that Insurance Business is set to be disrupted and LIC’s Supply chain moat will be destroyed as people turn toward buying Insurance Policies online. LIC is losing market share and this trend is expected to continue for the foreseeable future. The horse which is leading this trade is HDFC Life and ICICI Prudential Life. Max Life Insurance acquisition deal with HDFC Life happened at 4.3x embedded value whereas ICICI Prudential trades at 4.10x FY2017 Embedded value. Birla Sun Life Insurance has been an under-performer in the Insurance space and is losing market share, the total premium collected stands at 5700 crores in 2017 v/s 5200 crores in FY2013, whereas Profit before tax has fallen from 540 crores in 2013 to just 120 crores in FY2017. Birla Sun Life has embedded value of 3400 Crores in FY2017, and we value this business at 3x FY2017 Embedded value, a discount of 30% from its peers due to slower growth and small player discount. Aditya Birla Capital has 51% Stake and we value its 51% Stake at 5200 Crores.

 

Aditya Birla Asset Management – Aditya Birla Asset Management has been consistently gaining market share and has reached to 10.7% of the mutual fund market managing AUM of 2.1 Lakh Crores. This Business has grown at broadly 25% CAGR for last 4 years in AUM, Revenue and Profitability; it did a pretax profit of 337 crores in FY2017. They have grown market share rapidly in Equity Mutual Fund Segment from 5.5% in 2013 to 8.5% in 2017. We believe this growth of 25% is sustainable for next 5 years and value this business at 20 Times Pretax Profit i.e. 6740 Cr There are other ways some analyst value it i.e. use 3-4% of AUM which would get the valuation of 6000-8,000 Crores. Both these valuation techniques get broadly the same results. The 51% held by Aditya Birla Capital as per our estimates is valued at 3450 Crores.

 

Aditya Birla Finance – This is the golden crowned NBFC part of the Business which is 100% owned by Aditya Birla capital, the AUM has grown at a Whopping 44% in last 4 years from 8000 Crores to 34700 Crores. 39% of the Loan book is given to large corporate, 27% to SME, 15% in mid-Corporate,  the rest is given to Promoters, Retail and Ultra-HNI’s. The loan book is diversified and 79% of the loan book is via direct marketing and only 21% via third party agents. The company has consistently maintained its ROE at 15-16% and Gross NPA was 0.47% for FY2017. The company has mind blowing asset quality. The company has a book value of 5000 Crores and did a Pre-tax Profit of 831 crores in 2017. After taking in consideration superior financial parameters and expected growth going forward, We value 100% Stake of Aditya Birla finance at 3.5x P/B or 21 times pre-tax profit at 17,500 Crores.

 

Aditya Birla Housing Finance – The Company forayed into Housing Finance in October 2014 and has grown its loan book swiftly to 4160 crores. The yields stand at 10.2% and average ticket size of the loan is 8-15 Lakhs and focus is on affordable housing segment. There was strong growth of 110% in loan book last year and we expect 40% plus growth to sustain going forward. Aspire, which is a subsidiary of Motilal Oswal has a loan book at end of FY2017 of 4100 crores which is exactly the AUM of Aditya birla finance has; Both are into retail housing finance segment with broadly the same ticket size. Aspire gets an Implied valuation of 6,000 Crores i.e. 150% of AUM, but taking aspire valuation isn’t something which we believe is fair and value the housing finance business at 4,000 Crores. (Caveat – We don’t have adequate information to value this properly and this is just estimation)

 

Other Business – The Other Business includes 75% Stake of Aditya Birla Money, Health Insurance business which just started 6 months back with MMI of South Africa with MMI investing 196 crores for a 49% Stake, Aditya Birla My Universe (fintech application) and its Insurance brokerage business. We don’t actually understand or know how to value these small businesses right now and would use them as margin of safety for valuations and give it zero valuations.

 

Valuation and Conclusion –

The SOTP valuation of the company as per our estimates is 5200 crores for its life Insurance business + 3450 crores for its Asset Management business + 17500 Crores for its amazing NBFC division + 4000 crores for its Housing Finance Division; i.e. the Fair valuation of whole company is 30,000 Crores. We have not considered valuation of other business as margin of safety, and also believe there may be some holding company discount of 10-20%, overall We believe Aditya Birla finance is a great Investment for investors looking for exposure toward the shift from hard Asset to Soft assets at the right price. The company is not listed yet and should be listed in next 2-3 months after it gets demerged from Aditya birla Nuvo.

(Source : stallionasset)

What is your Salary?

Posted on by Hiren Kamani

I am not interested in the amount but the type of salary.  

My friend, there are different types of salaries. Read till the end and you will understand.

There is no average income.

The rich are becoming richer, while the poor are getting poorer.

There is no middle class because it has completely disappeared.

Salary, is a specific amount of money that an employee is paid for work done.

The big question is Which type do you earn?

1. Onion Salary: – You grab it, you open it, and you cry.

2. Storm Salary: – You don’t know when it’s coming or going.

3. Menstrual Salary: – It comes once a month and lasts only four days.

4. Magic Salary: – You touch it and it disappears.

5. Amnesia Salary: – You can’t remember what you spent it on.

6. Time Travelling Salary: – You spend it paying various debts even before you collect it.

7. Active Salary – Once you stop working, it stops.

But there is another one called RESIDUAL INCOME

What is Residual Income?

You work once, and it keeps paying you over and over and over again even AFTER you have stopped working.

Whether it's magic salary, amnesia salary or onion salary, the moment it STOPS coming, your life becomes unbearable.

Financial LITERACY is the tool needed to TRANSFORM your salary into a RESIDUAL INCOME, so you can create financial freedom and time freedom.

ONLY YOUR INVESTMENT can keep you going even after all the onions, amnesty, traveling, active salaries have left you drenched.

Research has it that the poorest group of people in the world are Salary earners, next to beggars.

They live in a vicious cycle of poverty managed on 30 days. Salary is continuously being awaited every month and any slight delay brings about heartbreaking anxiety, pressure and disappointment. 

Salary Is a short term solution to a life time problem.

Salary alone cannot solve your money problems. You need multiple Sources of income to balance.

The tax returns form contains about 11 income streams, salary is just one.

Don't live Your Life fishing with just one hook, there are many fishes in the ocean.

Salary is the MEDICINE for managing POVERTY, not the CURE. Only your BUSINESS or INVESTMENT Cures Poverty

Most investors are not salary earners.

The difference between those beggars on the street and salary earners is one month's salary.

Truncate the flow of their salary for one month and you would realize majority belong to the lower class.

If you divide your salary by the rate of exchange, you will discover that you are poorer, relative to when you started work.

Or divide your salary per annum by 2,000 hours to know what your one hour is worth.

If you do not have 3 months salary in savings, you are already poor.

Being a salary earner is a mentality, break it!

Your worth Is far more than your salary.

Salary Is the value someone has put on your effort, How much do you value yourself?

You can't increase in value, unless you VALUE yourself differently.

Life Is a trade off between time, effort and reward. To be rewarded more, you have to become more valuable.

Most salary earners end up poor in the long and short term.

Salary is the bribe they gave you to forget your dreams. 

I therefore urge every one of us to be FINANCIALLY INTELLIGENT, FINANCIALLY LITERATE and TRAIN OUR EYES TO SEE OPPORTUNITIES IN PROBLEMS. Delve into entrepreneurship because Salary is a lifetime disappointment. 

Being a salary earner or investor is a decision. Life Will not change until you decide. Do that now.

Moving Average

Posted on by Hiren Kamani

All Discussion about Moving Average : 

Moving averages allow traders the ability to quantify trends and act as signals for entries, exits, and trailing stops. They can become support and resistance, and give the trader levels to trade around. Below are examples of the specific moving averages with time frames.

5 Day EMA: Measures the short term time frame. This is support in the strongest up trends. This line can only be used in low volatility trends.

10 day EMA: “The 10 day exponential moving average (EMA) is my favorite indicator to determine the major trend. I call this ‘red light, green light’ because it is imperative in trading to remain on the correct side of a moving average to give yourself the best probability of success. When you are trading above the 10 day, you have the green light, and you should be thinking buy. Conversely, trading below the average is a red light. The market is in a negative mode, and you should be thinking sell.” – Marty Schwartz

21 day EMA: This is the intermediate term moving average. It is generally the last line of support in a volatile up trend.

50 day SMA: This is the line that strong leading stocks typically pull back to. This is usually the support level for strong up trends. Use 50 Day Average For Trading Signals

100 day SMA: This is the line that provides the support between the 50 day and the 200 day. If it does not hold as support, the 200 day generally is the next stop.

200 day SMA: Bulls like to buy dips above the 200-day moving average, while bears sell rallies short below it. Bears usually win and sell into rallies below this line as the 200 day becomes resistance, and bulls buy into deep pullbacks to the 200 day when the price is above it. This line is one of the biggest signals in the market telling you which side to be on. Bull above, Bear below. Bad things happen to stocks and markets when this line is lost.