Saturday, 25 April 2015

VALUE PICK - PALRED TECHNOLOGIES LTD - GTS 2 ANSWER


About The Company & Business
Palred Technologies Ltd formerly known as Four Soft Ltd is headquartered in Hyderabad.
The company is promoted by Mr Palem Srikanth Reddy (PSR) a former TDP politician who later formed his own party named Janapalana Party. PSR is also a well known social worker.
PSR was lauded by the local media for fighting against Reliance and the govt. in KG Basin allotment case where he was a petitioner.
 
The company basically into IT Services has last year ventured into Business of E-Commerce via its subsidiary.

The company's E-commerce venture is branded LatestOne.com, company also owns the domain named Deals15.com which it acquired earlier. In IT Services the company is providing E-Commerce website and software solutions.

The Ace Investor - Value Pick
PALRED TECHNOLOGIES LTD.
  NSE: PALRED - BSE: 532521
Company listed on both NSE and BSE was trading at 21 on GTS day and now trading around 24 with a market cap of around 100 crores, Stock went down after touching 52 week high of 29.40 on Friday (24 Apr) due to bad results by Infosys.
 
Promoters hold 46.96% stake in the company, increased from 23.92% in Jun quarter.
 FIIs have increased their stake to 1.89% from 0.44 in Jun quarter. Noted investor Ashish Dhawan owns about 3.44% stake in the company.
 The company is debt and pledge free.
 
LatestOne.com is a portal mainly for smart-phone, mobile and tablet accessories such as Covers and Sleeves. The company has recently added a new section where all type of cables such as (HDMI, VGA, DVI, USB, Adapter, Charger and many more wide-range of cables can be purchased online by the tech-savvy Indians.
 
LatestOne.com has updated the website and recently added more categories such as Mobiles,Tablets,Computers,Laptops and more stuff like computing hardware etc.
This appears to be in the works as new products have not been added yet and the company looks aggressive about its plans which is a positive factor.

Major unlisted players like Flipkart Snapdeal have been cashing on the E-commerce boom in the country by raising huge sums of money from private equity investors. However these companies have been reporting losses due to the wide product portfolio they posses and the marketing and promotion cost they are incuring.
 
As Palred has reported to the exchange, LatestOne.com on April 15th confirmed to sell more than one lakh mobile covers which should be enough to give us an idea about the company's and the website's prospects. Point to note is that LatestOne.com went on air only on Nov/Dec 2014 and selling more than one lakh Mobile Covers in just under 5 months is a great achievement.
 
 LatestOne.com has last week announced a tie-up with IndiaPost for pan-India cash on delivery services which will expand its reach to even rural India.

Almost everyday a new smart-phone is being launched, according to the data by International Data Corporation almost 81 million smartphones were shipped in the year 2014 and smart-phone sales are expected to touch 150 million units mark in 2015. The future growth of the smart-phone market is expected to be huge since there is a large base of mobile services users already and the smart-phone adaption is increasing. There are no IFs and BUTs in the fact that the future of smart-phones and it's proxy product Mobile Accessories which actually is a high-margin business is extremely bright.
 
The company's promoter are good and have been investor friendly. There is a share capital reduction planned up by the company which proposes to reduce the share-capital by 60% which means if you buy 1000 shares of Palred only 400 will remain in your account and the rest will be purchased back by the company at 16.50 and the funds will be credited to your bank account and the market will adjust the price accordingly. I think it should not be a big issue for the investors since there is more into the company's fundamentals than what meets the eye from reported results.
 
Palred Technologies which via its subsidiary is into E-Commerce has not reported its consolidated results for this FY after its E-Commerce venture started. Which is why you see ordinary financial performance and a P/E of 38. The company has responded positively to all our queries and have clarified that they will announce the full year consolidated results this quarter which means great revenue and earnings of unreported e-commerce to be reported all of a sudden? This is quite similar to how Intrasoft suddenly reported a sales boom in Dec quarter and the share prices shot up from Rs 40 to Rs 310 to trade at a P/E of almost 70.

E-Commerce is a sector where there are not too many investment opportunities and that is why they all are trading at rich valuations. Be it the 70 P/E of Intrasoft or the 70 P/E of Info-Edge (Naukri.com/Zomato.com/99Acres.com).
 
The E-Commerce boom is much talked about and it is good to find a opportunity to make a investment in this booming sector. Remember this company which directly is into E-Commerce is also indirectly into E-Commerce by selling web development, interface and softwares to companies which are looking to tap the E-Commerce.
 
There are some rumors too that MTR Foods (Giant in it's field) is planning to launch an online store and has purchased the software and services of Palred Technologies Ltd.
 
Technically too the stock is looking extremely bullish.
 
All in All i feel, this is one great opportunity for everyone who missed Intrasoft rally (40 to 310) and at 24 or even at 40 i would not hesitate to buy Palred Technologies and hold it maybe for some multibagger returns?
 
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 Palred Technologies Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
  
Name of the winners for Guess This Stock - 2 is posted below as "comment" on this post.

50 comments:

  1. There was huge response to Guess This Stock - 2 but mostly people who guessed it wrong as Axiscades, Prozone Intu and Surana Solar.

    Over 400 answers were received again out of which only 9 were right.

    01 - Ravish
    02 - Himanshu
    03 - S Iyer
    04 - Michael
    05 - Vimal Kumar
    06 - Kunal Porwal
    07 - Pawan Gupta
    08 - Vijay
    09 - Vikas

    ReplyDelete
    Replies
    1. Ok so we had 10 right answers, Let us add Mr Satya too!

      Delete
    2. Thanks Mr. Prem Doshi.

      Delete
  2. In disclosure, you mentioned about Sunteck. Possibly copy - paste error. My name should also be there. I reported wrong email address. I sent at @ blogspot.com email address.

    Satya

    ReplyDelete
  3. Seeing the boom in ecommerce yes this looks a great find. Thanks for this great report and search . waiting for monday to have some exposure in it . Thanks Ace

    ReplyDelete
  4. company is in the midst of a scheme of arrangement.As per this scheme company's share capital will be reduced .Company will took back 60 % of shares and pay Rs.16.50 for each shares . If I am correct, as per this scheme ,if you have 100 shares , you will left with 40 shares + Rs.990 ( 60*16.5) which is equal to strightaway booking a loss of approx Rs.10 to CMP on each share for 60 shares out of 100 . This will increase the avarage cost of your remaining holding upto that extent . For this scheme of arrangement ,stock may even delist from exchanges for a certain period and re-listing price may depends on the market mood prevailing at that time
    I have seen a reply from one of the stock adviser What is your view on this.

    Thanks

    Amudhan

    ReplyDelete
    Replies
    1. Why should the stock must delist for this? And even the face value is not being changed here.

      Regarding the share capital reduction, It is a non-issue, The straight-away loss claimed by this advisor is non existent since the EPS will multiply due to capital reduction and the price will be adjusted accordingly by the market as it will be on the record-date.

      Someone is making mountain out of a molehill.

      Delete
  5. Update: Lot of confusion and unwanted discussion is being caused regarding the capital reduction.
    I have covered this aspect already in this post, Even the record-date hasn't come yet and it is not happening right here right now, Even if happens now.. When equity will be reduced the EPS will multiply and it is obvious that market will price it accordingly, Please see the capital reduction done in other companies in the past to check how the market adjusts the price.

    ReplyDelete
  6. The company is a black hole of money. Salesdown, no profits, negative cash flows, eps of - 8.45, and still a pe of 34!!! While the industry avg is12!! Where's the value let alone margin of safety.

    ReplyDelete
    Replies
    1. Ok then don't buy.. And i bet you didn't even read the blog post.

      Delete
  7. Sir please your view upon dish TV and Phillips carbon thanks

    ReplyDelete
  8. Dear Sir,,

    After reading the post for MTR Tie-up
    But MTR has not mentioned that is has tied up with PALRED Technologies
    infact it has not mentioned any IT companies name

    ReplyDelete
    Replies
    1. It is a market rumor, company didnt reject that when i tried to get a clarification.

      Delete
  9. Sir,
    I am new to this blog, I humbly request you to kindly express your view on SKM Egg Products. Thank you very much Sir, God bless you.

    ReplyDelete
    Replies
    1. Its a stock already posted here.. Bullish on it.

      Delete
  10. Parnax labs touched a year low @23.75 against your reco price of Rs. 41/- . Is it buy at CMP or wait for some more correction . pls advice.

    Thanks
    Amudhan

    ReplyDelete
    Replies
    1. I don't think anyone has changed fundamentally in this company, Good buy for me.
      Will update further after march quarter results are out.

      Delete
  11. Hi sir ,
    Can I buy nadan denim pls share your opinion
    Regards
    Anurag

    ReplyDelete
  12. Update: check out the screen of email rcvd from the company confirming consolidated results announcement; http://s9.postimg.org/s7zm9otvz/palred_technologies_consolidated_results.png

    ReplyDelete
  13. What is your call on dynacons tech and system?

    ReplyDelete
    Replies
    1. Not tracking these two penny stocks.. Not good choice for investment.

      Delete
  14. Thanks now please your view upon ILFS engineering

    ReplyDelete
    Replies
    1. Concerned about the debt.. bit too much debt.

      Delete
  15. Friends please note fake clone profiles on our display name is coming on Moneycontrol Message Board, Please beware...

    My only mmb profile is -
    http://mmb.moneycontrol.com/india/messageboardblog/boarders/746865616365696e766573746f72

    ReplyDelete
  16. Dear Sir,

    Richa has come down heavily from Rs.34/- to 26.7 today. I am holding 5000 share @32.50/-. can i average at the cmp. why the sudden fall comes even today smallup indices up 1.4%. pls advice.

    Thanks

    Amudhan

    ReplyDelete
  17. Palred shows 82 thousand sellers pending order today but when market depth is opened the seller orders are no where to be found anywhere near CMP, that means huge number of sell orders put at Upper Circuit Price to put pressure on the stock.

    ReplyDelete
    Replies
    1. Just for info, putting sell orders on a stock in large quantities which you don't hold with intention to cancel it later on and doing it regularly is a crime according to Securities Law in our country.

      Those who are doing in Palred better be careful.

      Delete
  18. What about Gujarat Automotive Gears? Any hopes after this quarterly results?

    ReplyDelete
  19. Sir is mic electronics a good buy and ur view upon pennar Ind. Thanks

    ReplyDelete
  20. Pls give your view in Triveni turbines at current price.

    ReplyDelete
  21. Sir your view on IFGL refractories and TV today

    ReplyDelete
  22. But one of the stock advicer recomends the company is started the second innings and also they got orders from EESL and export orders worth 65 crores. will it becomes positive to the company.

    Thanks

    Amudhan

    ReplyDelete
  23. Dear sir,
    Please provide your valuable comment on GTL infa.
    Thanks.

    ReplyDelete
  24. Dear ACE, please ur view on SHILP GRAVURES after yesterday' result.

    ReplyDelete
  25. Palred technologies has started social media campaign for its ecommerce site LatestOne.com

    Screenshot of Facebook ad:http://s2.postimg.org/kaf2sq7wp/Screenshot_2015_05_06_22_32_47.png

    ReplyDelete
  26. Palred Results Update:
    Palred consolidated results out: 7.05 Crores Sales, Net Profit 1.25 Crore. Margin at 17.73%, good results.... Hope the company grows now!

    Meanwhile another announcement made by Palred says:
    LatestOne.com carries more than 1000 different types of cables, 3,000 different designs for mobile &
    tablet cases, 50 different models of power banks in its own warehouse/store that they operate from
    Hyderabad. The “experience” of shopping on a vertical specific store provides the customers a
    wider range of products with user friendly interface to browse through a range of product with
    dedicated customer support. LatestOne.com is emerging as the largest player in India in terms of
    online e-commerce business for tech product accessories.

    “Latestone.com is all set to re-define the e-commerce business model in India. As a practice we sell
    from our own store and inventory to ensure customer satisfaction. We assure timely delivery and
    maintain high quality standards in our design, contract manufacturing and offer warranty and even
    replacement for products purchased from our site. So far, we have seen less than 2% refunds &
    replacements. ”

    Adding to this Mr. Palem Srikanth Reddy, Managing Director of Palred Technologies Limited
    said, “LatestOne.com brings to the consumers the widest variety of PC, Laptops, Mobile phone
    accessories and digital cables with assured quality and prompt delivery on one of the fastest portals
    available in the e-commerce space. It is our endeavour to delight the customer with our quality,
    technology and service by leveraging our expertise in innovative supply chain management and
    technology. In the coming months we plan to introduce innovative solutions and increase our reach
    across the country. We plan to enhance our offerings and will be building new warehouse to meet
    the increasing demand. We aim to reduce the delivery time from 3 working days to 2 working days,
    from the time the order is placed. We are confident that Latestone.com will revolutionise the ecommerce
    space by its specific offerings and product portfolio.”

    The company employs over 100 staff in Hyderabad, under full time / direct employment. It
    operates with a 12,000 sq ft. facility for store/warehouse. LatestOne holds a share capital of almost
    INR 16 Crores.

    ReplyDelete
  27. Hello,

    I bought 7500 palred tech... when is the record date for capital reduction?

    ReplyDelete
  28. Sir:
    I invest through Kotak Securities, Palred technology stock is not showing up. Please let me know how to
    invest in Palred.
    regards,
    MTS

    ReplyDelete
    Replies
    1. Actually, Palred is undergoing capital reduction and hence withdrawn for the exchange for the time-being. It will be relisting soon.

      Delete
  29. Hello sir, i got a mail from Palred technologies that it is going under capital reduction and it will take 60% of my shares that it will automatically be deducted from my account and the amount will be transferred to my bank account. So can any company do like this or is a fake mail?

    ReplyDelete
  30. Sir, after the Q1 results of palred, do you think its worth investing now?
    EPS is not very encouraging.Pls guide

    ReplyDelete