Sunday, 1 July 2018

Matrimony.com Ltd - Value Pick - GTS 7



Received 125 answers to the Guess The Stock 7 and only 5 got it right: Prashant G, Harsha, Ankush, Aadesh Chajjed, Animesh Chanchani, I guess this time the clues were very tough.


Matrimony.com Ltd
Market Cap: 1600 Odd Crores.
CMP: Around 730
Current P/E: Around 21against FY18 EPS.
POSITIVE: B2C business, Recession Proof, Under tapped market, Mayawati Proof.
NEGATIVE: No entry barriers, Competition.

Matrimony.com (MCL) incorporated in 2001 is an online matrimony venture headed by Murugavel Janakiraman.

The company is operating a wide portfolio of websites, mobile apps etc. providing match-making services to Indians living in India and abroad.

The company operates flagship brand (BharatMatrimony.com), EliteMatrimony.com, SecondShaadi.com, religion wise (Jain Matrimony.com) etc and Community wise (GujaratiMatrimony.com etc), The company also has websites like ManglikMatrimony.com.

The company has now also ventured into total marriage services offering a solution from wedding venues, photographers, apparel to honeymoon packages etc.

MCL is currently the market leader in online match making services in India with a market share of north to 60%.

According to an analytics firm comSCORE's report in 2017, MCL's online properties registered far more visitor traffic and a lot more of time was spent on its portals compared to Shaadi.com or JeevanSaathi.com.

India as we all know is a Young Country, as per an UN report backed by Census data released back in 2014, The average age of an Indian would be 29 in 2020.

We have been seeing a shift from offline services to online services across industries, backed by swelling penetration of mobile & internet technologies and availability of low cost data services.

Right now, the Indian match-making market is largely ruled by the unorganized sector, From social contacts, news paper ads to brokers (Yes brokers charge a certain % of fees of the total wedding budget from both the parties in many regions).

About 1-1.2 crores wedding take place in India annually and only 6% of the population go online to find a match. With changing dynamics the online matrimony option is bound to find a more influential place in our match-making system.

An area of concern for MCL would be a rise in popularity of dating applications such as Tinder and Facebook offering dating services. However, people have used Orkut, Facebook, HI5 etc to date since years and now Tinder has taken all the limelight but the fact is Dating is a lot different from the concept of Matrimony. More indian parents would want their children on MCL websites, create the profile on their behalf, see other profiles rather than browsing through a lot of I am looking for FUN profiles on Tinder.

One of the key reasons for MCL's success in recent times has been their venture CommunityMatrimony.com today be it the Gujarati Matrimony.com or Tamil Matrimony.com the brands have established their leadership with community specific individual apps and websites. No.2 competitor Shaadi.com was late to launch their equivalent apps such as Gujarati Shaadi. Shaadi.com today leads in the Hindi Belt (Uttar Pradesh and Bihar sort of states) they are also the most populous states of India.

To topple the competition in Hindi Belt, MCL has launched HindiMatrimony.com and are making conscious efforts to establish itself as the leading brand even in the Hindi Belt.
Even though this move involving aggressive pricing in Hindi Belt can result in some margin contraction from these regions it can also aid growth in a large manner because of the large population base.

To do a Scuttle Butt i made my profile on Shaadi.com (GujaratiShaadi) and Gujarati Matrimony.com, while both the apps had good design, accessibility etc. GujaratiMatrimony had far more matches for me.

Another important aspect was the tele-calling, while Shaadi.com did not bother about my registration except a few text messages, GujaratiMatrimony got Gujarati girls and boys to call me and speak to me in gujarati language letting me know about the advantages of the subscription and how the relationship manager allotted to me will help me find a suitable match.

Coming to the pricing, Shaadi.com's paid upgrade costs about Rs 2450 for 1 month while the 3 months package is offered at Rs 4550.

MCL's app on the other hand has no monthly package and it has a 3 months package priced at Rs 4500. However when the telecaller called me up she offered me a flat 30% discount leading to a 3 months package cost of Rs 3150.

The company's Marriage Service business has not yet turned into net profits, while there is a small amount of cash burn there, I feel it is a great opportunity for MCL to diversify from just match-making to total marriage solutions. The company can play the effective role of an aggregator by providing total marriage solutions in the long run with patience and right strategy.

As for Financials for have a look at the table below :-












Financials: The company that has listed last year, went through a downturn and has reversed recently to start making profits at healthy margins. The company also declared its dividend.

MCL faced law suit from one of its investor Mr Desai of Real Soft from USA staking a claim on 10% of the company's equity. Litigation cost over the years have said to impact the financial performance and business performance of the company.

However, as of today the litigation has been settled as the company shelled out a settlement amount of 50 odd crores.

Negatives: Increasing competition, and no entry barrier remain a key concern for the company.

Positives: The company is operating in an extremely under tapped sector with very high growth potentials. The promoter in a recent interview has highlighted these facts backed by various research reports on overall industry picture. Being in a B2C business political instability, trade wars etc. has no direct material impact on business and financial performance of the company. With the ever growing population this also becomes a sort of recession proof business if the management does the right things that are needed.

There is an interesting thing in the shareholding pattern of the company, While promoters hold 50.34% stake, 45.96% stake is with FIIs, VCs, MFs, DIIs, AIFs etc.
Another 0.42% is with Corporate Bodies, 0.48% with NRIs, 0.22% with director relatives, 0.66% with ESOP/ESOS/ESPS.

That means a total of 98.08% is in strong hands (including 0.42% of corp bodies, and 0.48% of NRIs)

That leaves a float of just 1.92% for general retail investors which equals to just 4.36 Lac shares.

Another important positive point is that as we head to states and general elections the market will be full of talks about political instability, in such a scenario MCL is a Mayawati Proof business, irrespective of who comes into power, Matchmaking and Marriages should continue to take place right?

Valuations: The stock is available at 21x its earnings on the P/E front against FY18 and at 4.88 Mcap/Sales. The company has no listed peer except Info-Edge (Naukri.com) which is trading at valuations of 56x to its earnings and at a Mcap/Sales of 15.77. (However Info-edge has various portals across industries from job market (Naukri.com) to 99acres in property it also has a 10% stake in Zomato). Another peer Justdial which has been punished heavily by the markets in last 3-4 years due to deteriorating margins, topping out of growth and google's venture into locals rendering Justdial with little utility left still trades at a valuation of 27x to its earnings.

Internet businesses in general are rated at far higher valuations, such as INFIBEAM today is trading at a P/E of more than 100 and Mcap/Sales of about 13+.

Astronomical valuation for Internet companies is a global trend.

All in All, The stock seems to be in the under-valued territory and multiplication from CMP should not be ruled out.

::LINKS::

Corp Website
Community
Management Interview
Annual Result FY18
KPMG Report on Digital Classifieds business



Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.


Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Matrimony.com LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

Friday, 29 June 2018

Guess This Stock 7



It is the series of "Guess This Stock", this is GTS 7. Try to identify the stock from the given clues and send the answers to my email id- theaceinvestor@gmail.com. The stock along with detailed summary and name of readers who guessed right will be announced on the blog this Sunday (1st July 2018).

:CLUES:
1) Current Market Cap is under 2000 crores
2) Current Stock Price is under 1025.
3) Promoters Hold more than 45%.
4) FY18 Net Profit Margin is in double digits
5) FY18 Sales growth in double digit YOY
6) Company is listed on both NSE & BSE.
7) P/E is under 30.


Email your answers on theaceinvestor@gmail.com. Right answer with a write-up along with your name will be posted on the blog on 1st July 2018, Sunday afternoon.


Thursday, 21 June 2018

Take Solutions up 90% while other midcaps correct



TAKE SOLUTIONS LTD.
TAKE SOLUTIONS posted on the blog at Rs 162 on 29th October 2017.
 The stock touched a high of 308+.
In just 8 months the stock has moved up by 90%+.
This was a simple core portfolio company operating a very niche business.
Can hold free shares from hereon for further up move.
What is interesting is,Take Solutions has totally out performed the overall bearish sentiment playing in rest of the midcaps & smallcaps space.
Hope all the readers enjoyed!!!

As I see good value emerging in markets, will be actively writing out about exciting value stocks.
Like Take Solutions will be updating new set of clues for Guess This Stock 7 on Friday, 29th June 2018 morning.

Friday, 8 June 2018

VALUE EMERGING

VALUE EMERGING

Friends, On 7th November, when Nifty was around 10500 I wrote this article on blog "Be Value Sensitive" advising people to be cautious and not to buy stocks at high valuations. I remarked on the bottom of the article "This gyaan might seem pointless right now, Remember it when the fall starts :)"

Today, Nifty is at 10700 but look at select midcap and smallcap stocks. Post 31st January announcement of Long Term Capital Gain Tax, most of the stocks have made sure that no one pays any long-term capital-gain tax. Of-course there have been exceptions that have gone up sharply such as the Graphite Twins (Heg, Graphite) or our Take Solutions (Read: Discussed at 162 now at 260).

While many experts say P/Es are useless to look at, I feel for a layman it is an important tool.
The bad thing about looking at P/E is we can miss out on wealth generation in stocks like Avenue Supermarts (Dmart) but the good thing is we also miss out on Manpasand Beverages and Vakrangees of the world. It's good to make less wealth than burn a lot of wealth you know.

However, Don't decide anything by looking at the P/Es, we made that mistake in Narmada Gelatines and the stock never performed. Because minus the growth in earnings businesses enter a degrowth phase and once that happens your stock prices correct, irrespective of P/Es.

Coming to the current market scenario, Nifty is at 10700 right now.

As I had remarked in the BE VALUE SENSITIVE post :-
"Lot of  small,mid & even large cap stocks having completed their cycles of over-valuations in the past were in the undervalued territory in 2013-2014. From there they rallied sharply. As of date, Lot of them are in the fairly valued or over valued territory. That is when Analysts start estimating earnings of 2020 and justifying the valuations or over-valuations. But, A stock can fall to the under-valued territory again as well."

Today, I feel a lot of large caps are in the over-valued territory. There can be corrections in the large-caps soon now. But index might or might not even fall, Index looks to be really well managed, You can see select stocks leading a rally as the rest of the stocks go through corrections. So Index might show you 10700 or 11000, But re-balancing can certainly take place.

But, for us Retail Investors. I feel there are good opportunities now emerging in midcaps & smallcaps space.
There has been a sharp correction from highs, Some of the chased stocks that actually have good fundamentals and had become over-valued went through a correction and have come back close to the value territory. Though not highly under-valued yet.

So what I mean by all this is, Time for "Value Investing" or rather "Value Hunting" is back.
Maybe we can have another wave of correction, But like the valuations got stretched on the upside in Jan 2018, Now there are chances the valuations can get stretched in the lower side now meaning that there isn't a lot of room left for Huge Corrections in select stocks.

If everything goes well, some of the good stocks will not show these prices in next three years.

Looking forward to write more about stocks going ahead,
Prem Doshi (The Ace Investor)
ACE Equities

Monday, 26 February 2018

ESS DEE ALUMINIUM LTD - Interesting Stock

INTERESTING STOCK TO WATCH:
ESS DEE ALUMINIUM LTD.
MCAP: 200 Crores.
CMP: Around 64-


The stock has crashed from close to 800 in February 2014 to near 30 in 2017.
Now it is hovering at 60.





ESS DEE was major aluminium foil player for the pharma industry till 2014-2015.
They were doing really well 2015 I reckon looking at the numbers.
Near FY14-15 they had turnover of 700-800+ crores,EBIDTA margins of 20% + and a net profit close to 50 crores.
The company became NPA for its bankers, The business got shut and the stock nosedived.
Debt is nearly 800 crores now.

The company in its results note has remarked that through their Singapore based entity they are restructuring the debt to restart operations :-



So as the results note clearly states, they are looking for a turnaround, the ARC SSG Capital which recently bought a part of Bhushan Steel's debt as well is active and working to resolve the working capital issues.

Even though the results note remarks expectations of resolution within another 10-12 weeks. Lets take that with a pinch of salt.

Some Important minus and plus Points:-
- Business is Shut
- Management
- Resolving debt is not a cake walk
- Till turnaround actually takes place tough to believe anything.
- 10-12 weeks timeline does not look convincing enough.

+ Niche Business
+ Good Margins
+ Retaining clients should not be very difficult, They have worked with many many pharma companies.
   Many of them have shifted to importing foils from China.
   Medicine foil form a minuscule percentage of the total product cost, even if China is cheaper.
   It is a no brainier that you better get that work finished in India instead of having one extra import procedure.
+ If SSG Capital succeeds in resolving debt, Factory restart should not take Hell lot of time.

If at all the company is able to re-start. If it goes back to its glory days of 2014-15, It leaves a huge X potential of price appreciation for the stock. But this in no way is a safe investment grade stock, Totally risky and much like a gamble in disguise of a turnaround. 

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.


Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i have ESS DEE ALUMINIUM LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

Wednesday, 22 November 2017

REVIEW - BLOGGING SINCE 2014

Dear Friends,
This blog was started on 15th October 2014.
The blog has completed 3 years now.
I thought this was a good time to check how things have fared since beginning of time.

So here is the latest review of everything that has been posted on the blog.

Total of 51 stocks have been posted on the blog so far.
Average returns at peak is 134.98% (Cumulatively all stocks rallied atleast 134.98% from blog post price)
Average returns at cmp is 71.13% (Cumulatively all stocks are still up by 71.13% from blog post price)

Top gains for a stock at peak was for NGL FINE-CHEM at 561.97% (Stock went from 71 to hit 470)
Top loss for a stock at cmp is Commex Technology at -81.7% (Stock went from 3.82 to 0.50, however in the blog post of Commex it was clearly mentioned that its a gamble)

Have always said, readers should book partial profits as per their comfort and try to get maximum gains in the long-term by holding FOC shares (Free Of Cost Shares) 
I hope readers are happy with the posts/write-ups on the blog. Keep reading!!

Thanks & Regards,
The Ace Investor
Follow On: Twitter  | Facebook

Tuesday, 7 November 2017

BE VALUE SENSITIVE

BE VALUE SENSITIVE

First and foremost, This is no Doomsday forecast.
Just a view to exercise caution in markets since valuations are getting stretched.
Nifty is close to 10500 right now and;
This is no more a stock pickers market but a traders paradise.

When we say be value sensitive, a lot of people argue saying, XYZ is trading at 60 p/e because it is the market leader so it will sustain and 2025 will be great.

Understand the journey of a stock.
Lot of  small,mid & even large cap stocks having completed their cycles of over-valuations in the past were in the undervalued territory in 2013-2014. From there they rallied sharply. As of date, Lot of them are in the fairly valued or over valued territory. That is when Analysts start estimating earnings of 2020 and justifying the valuations or over-valuations. But, A stock can fall to the under-valued territory again as well, We can claim valuations are attractive considering 2025 earnings but then, Before the stock prices rallied, we had no good future? If the future was expected to be good then why the valuations were low?

Understand the cycle from Undervalued to Overvalued to Undervalued again.

So it can happen, there is nothing like, This stock won't correct because it is fairly valued, or say Asian Paints cannot correct from 60x P/E because 2020 numbers are expected to be good.

Btw: Saudi Arabia's ARAMCO the Oil major PSU is going for an IPO in 2018 and the issue size would be close to 100 billion usd, the largest ever in history and bigger than Alibaba's 25 billion usd and a Global listing on NYSE is being weighed right now. (Global Liquidity Sucker?)

This gyaan might seem pointless right now, Remember it when the fall starts :)

Prem Doshi
ACE Equities

Sunday, 29 October 2017

Take Solutions Ltd - Value Pick - GTS 6

















Received 187 answers to the Guess The Stock 6 and not one got it right, I guess this time the clues were very tough.


TAKE Solutions Ltd
Market Cap: 2100 Odd Crores.
CMP: Around 162
Current P/E: Around 16 against FY17 EPS.
POSITIVE: Niche business serving recession proof industry, Shriram Group
NEGATIVE: Low margin SCM Business sale not going through.

Take Solutions is a niche IT company which has two business divisions Life-Sciences Solutions and Supply Chain Management. Life-Sciences (LS) division form more than 75% of the company's total business.

Under the LS business Take has its subsidiary named Navitas Lifesciences which provide Healthcare software solutions to leading pharma companies. Navitas now is a company consisting of multiple acquired brands such as Navitas, Ecron Acunova, Intellent and others.
Navitas provides end to end services across the various stages of the drug development life cycle, starting right from clinical trials to filing regulatory submissions. They have helped bring 330 + Drugs in the market and has filed more than 100,000 regulatory submissions. The company has put together a strong head count consisting of Doctors, PhDs and bio-statisticians. Though spread over geographies, almost 97% of the LS business revenue comes from the US.

In Supply Chain Management (SCM) business the company caters to clients from the technology, consumer packaged goods, oil and gas and automotive sectors.

As for SCM business the company has been keen to sell SCM division since the margins are well below double digits for the same. However, the deal has not gone through yet and this has remained as an unwanted work in progress for the company.

The company started the LS business after the recession in 2008 when one of its Pharma clients asked the company to do regulatory filing on its behalf, That is when the management spotted the potential of this recession proof business.

The management in a recent interview has cited that they are working towards building the LS division and grow it to clock about half a billion dollar revenue in LS segment (3250 Crores INR) by 2021. (Approximately, 225% growth from current revenues).

As per the company's last con-call: LS business division margins are more than 22-24% and SCM business division margins are going down well below the double digit mark and the company is advanced stage to sell the SCM business but would not like to give a deadline to it.

As for Financials for FY2017: Net Revenue were 1345 crores, Net Profit was at 130.72 crores and the annual EPS was at 9.85. The company has about 230 crores debt on its books, Promoters have 63.14% pledge-free holding. Let us take a look at its financial table :-









Financials: The company has been paying dividend consistently since listing, The revenues have grown from 182 crores to 1300+ crores in the last 10 years. The net margins are below 10% due to low performance and high capital requirement of the SCM business.

Positives: The company is operating in a very niche recession proof sector with very high growth potentials. The promoter in a recent interview said that in this business TAKE is the only company in India that has managed to enter and build business, he went on to say that even in the Europe there are not many companies working in this business. The business, the promoter group, the company's plans and commentary are some of the very key positives.

Negatives: SCM business over hang is a key negative, even though deal is said to be in final stages and should meet completion soon, in the past as well the company was said to be close to completing the division sale but it did not materialize. Which hints that there no takers for SCM business at the valuation the company is seeking.

Valuations: The stock is available at 16x its earnings on the P/E front against FY17, with the kind of MOAT the company has on offer, the growth potentials, The management quality, the guidance of 3300 crores top line. 

All in All, The stock seems to be in the value territory in a market which has sharply run-up and a potential multibagger from CMP.

::LINKS::

Take Website
Navitas Website
Management Interview
Screener-Take



Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.


Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have Take Solutions LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

Thursday, 26 October 2017

Guess This Stock 6


It is the series of "Guess This Stock", this is GTS 6. Try to identify the stock from the given clues and send the answers to my email id- theaceinvestor@gmail.com. The stock along with detailed summary and name of readers who guessed right will be announced on the blog this Sunday (29th October 2017).

:CLUES:
1) Current Market Cap is under 3000 crores
2) Current Stock Price is under 350.
3) Promoters Hold more than 55%.
4) June 17 (latest) quarter top-line had double digit growth YoY (June 16)
5) Co. reported highest net profit since listing (FY17 Annual Nos)
6) Co.'s majority of product or services find application in a recession proof industry.
7) P/E is under 20.


Email your answers on theaceinvestor@gmail.com. Right answer with a small write-up along with your name will be posted on the blog on 29th October 2017, Sunday afternoon.



Thursday, 19 October 2017

HAPPY DIWALI


Wish all the readers and their loved ones a Happy Diwali and a very prosperous new year ahead.

The stock which I shortlisted to publish today has already went up by more than 15% on Friday so I will not be posting any new stock today. Inconvenience is regretted. 

Hope to write something new soon!