Wednesday 3 December 2014

VALUE PICK - MINDTECK (INDIA) LTD.


About The Company
  Mindteck (India) Ltd. is a Bengaluru based IT company headed by Mr Yusuf Lanewala who has vast experience of over 35 years in the IT industry.
 
About Business
The company is mainly into Product Engineering and IT services.
Product Engineering refers to the process of designing and developing a device/assembly or system while in IT Services the company offers services such as Cloud Computing, App Management & Support, Data Analytics, Business Intelligence, Enterprise Information Portals for back-end, Mobility, SAP Services & Software Testing, All their IT Services including Data Bank have a 24/7 Helpdesk.
 
The Ace Investor – Value Pick
(BSE:517344) MINDTECK (INDIA) Ltd.
The stock is currently trading around Rs 67 with a market cap of about 160 crores.
Current P/E is around 8 and Promoter Holding is strong at 64.63%.
The company seems to be turning around, i.e. the Total Sales for FY13 were at 264 crores and Net Profit was at 1 crore while for FY14 sales rose to 328 crores and Net Profit rose to 18 crores, OPM improved from 1% to 8.81%

  Mindteck actually was unstable right from FY08 to FY13 due to management change, lot of merger and acquisitions, As of date things look settled for the company financially but of course there is no guarantee that in future too the management will remain the same.
One thing to note here is that entire 64.63% of the promoter holding is held by one single entity called "Embtech Holdings Ltd" which was an subsidiary of Taib Bank (Bahrain) and has now been sold to The Vanguard Group (US) which is an Investment Management company, An IT company owned by an Investment Management company definitely raises a lot of eyebrows but as we feel that the performance of MindTeck now is going to be stable then there are lot of possibilities of a probable takeover, Recently Cyrus Mistry of TCS told the press that Data, Cloud Computing & Mobility is going to be in focus as TCS continues to eye acquisitions in this field to increase their role in Digital World.

At far as the business prospects are concerned for Product Engineering, As published on (Economic Times) Recently ADI (global chip major) helped MindTeck grab 2 projects worth $1 Million each, 1 Project was to connect over a million mirrors in the Nevada desert for solar energy to drive power generation projects and the other is to develop a smart meter that can wirelessly transmit data, It is noted that global semiconductor companies to push their own revenue are playing matchmaker by helping small Indian companies bag orders from international clients, the new trend is that the small companies get early access to products and solutions developed by the multinational majors, even before they hit the market, giving the small IT companies a first mover advantage.

Now coming to the IT Services, Stuff like cloud computing have huge prospects and have already been covered in all leading business dailies, There is something specific with MindTeck which should not be missed. The company since 1999 has experience of working with US Govt. and State Govts helping them implement some key policies and projects in the field of health, education, constituency policies and public safety etc. in states of Pennsylvania, Texas, Michigan, Massachusetts, Oregon, Columbia, Wisconsin, California, West Virginia, New York, New Hampshire & Florida.

At current P/E of 8, MINDTECK is not extremely cheap but there are also not any cheaper option to play in IT especially with an eye on E-Governance & Smart Cities, As MODI's plan of 100 new smart cities & e-governance require more IT Services, These small companies like Mindteck & Cybertech do tend to gain a lot from it, Cybertech though has a larger range of services & products has already start bagging orders from civic bodies in Thane, Bengaluru and is trading at a P/E of 14.

Right now for MindTeck the financials look stable as quarterly results for this FY too suggest that the company has been able to sustain the FY14 heroics. The zero debt on the books of MindTeck is another great positive factor along with their reserves which have swollen over the years.
After digging deep into its holding company etc. we have decided that we are buying the business and not the stock (Remember Mr Buffet saying "If a business does well, the stock eventually follows"
At current market price of around Rs 67, Go ahead and buy this stock for mid to long-term for target 150+ in  mid-term and probable atleast 350+ in the long-term, Will update on the blog when to book profits in this stock, So all Value Investors go for it!

44 comments:

  1. Thanks for the report in MKT hours ;) got few

    ReplyDelete
  2. Great call. Was able to grab few.. Thanks Ace...

    ReplyDelete
  3. amazing report sir, today i did not check your blog so missed.
    i personally went through all the financial data and etc for the company and i feel its a compelling buy.
    will buy at upper circuit tomorrow as i fully agree this can multiply!

    ReplyDelete
  4. This comment has been removed by a blog administrator.

    ReplyDelete
    Replies
    1. Not sure about cybertech, but Mindteck's p/e is 110% sure at 8.5!

      Delete
  5. Sir,
    Why Prime Property falling?Can i add more @20-21 level?

    ReplyDelete
    Replies
    1. We have posted prime property on the blog at around 23, now trading around 21-22... It has not crashed much from our levels, Safe to hold for long-term!

      Delete
  6. Sirrrrrr.......... Tu C great ho G, Big Fan of URS as U always report timely ur recommendation "whn to enter n whn to exit" , following U from last 2 yrs and all results are superrr awsm ... just lika Ybrant-NGL-Dynemic Prod-SKM (gr8 value pick by U)

    Waiting for ur Future updation in coming days "hope so"

    GOD Bless U Dear .. wd d help of U ... mny mny others are gaining from this GOLD MINE ( NSE-BSE)

    mkt is always giving opportunities to everybody ... bt we d people\investors just gone blindly only routine shares .......... but U gives us the way n shares which dnt known by mny investors n we get a massive returns in a days (40-100%) in a couple of 2-3 mths

    once again ........

    mny mny thanks to U

    :) :)


    SACHIN

    ReplyDelete
  7. sir holding 500 shares of skm at 100, need ur valuable suggestion to buy more, appreciated ur valuable advice, thanks

    ReplyDelete
    Replies
    1. long-term investors hold it peacefully forget it for a while, wait for it to give multibagger returns :)

      Delete
  8. Sir,
    Thanks for ur good efforts in helping othrs to grt extent.
    I have selected the below stocks mentioned, for a long term perspective. The count comes to big number. so can u pls help me out to remove/add few of them to get a reasonable number,so that I can start with SIP in remaining stocks fr a long term. Thanks in advance.
    STOCKS:
    NIIT
    TV Today
    Gati Ltd
    Transport Corporation of India
    State Bank of India
    Pidilite Industries
    TATA Elxsi
    Balmer Lawrie and Company
    Asian Paints
    AmaraRaja Batteries
    Motherson Sumi
    Capital First
    ITC
    Suven Life Sciences
    Godrej Industries
    Atul auto
    Airtel
    Kitex Garments
    Selan Exploration Technology
    Thomas Cook
    Axis Bank

    Regards,
    Sudarsan.

    ReplyDelete
    Replies
    1. Your choice of portfolio depends totally on your goals, I being an value-investor only like to pick stocks available at cheap valuations.

      Among these i like Selan which will double soon, TV Today too will double, Others i do not like.

      Delete
    2. Thanks a lot for the immediate response sir..

      Delete
  9. I am new to your blog. You're calls are excellent. I will be following your blog regularly now. I can't see any post before October or was that the first post.
    Thanks,
    Dippi singh

    ReplyDelete
    Replies
    1. Thanks dippi, our old website is deleted and this is our new blog!

      Delete
  10. your view mindtech near term I have a 400 at 74

    ReplyDelete
  11. This comment has been removed by a blog administrator.

    ReplyDelete
  12. Sir, What is your view on JBMA? It is falling like a ton of bricks, and the worst thing about it is that there is no bad news to warrant this kind of fall. Its sept quarters results were disappointing but not bad. Where do you think is its bottom? My average buy price is 250. It is around 177 :-( should i hold/average/booklosses ? Please advice

    ReplyDelete
    Replies
    1. Today i studied the stock a bit for u, and i agree its a good stock, Stay Invested can add more around cmp, I think 158-160 will be good support.

      Don't be disheartened by such moves in good stocks, always hold for the long term journey.

      Delete
    2. JBM made bottom around 148 on 23rd December and now above 200+ hope you are holding Namita.

      Delete
  13. It is EXTREMELY kind of you to reply so promptly. Thank You. Thank you. And a big GOD BLESS!

    ReplyDelete
  14. Are we likely to see a significant correction in late December early Jan? Will it be advisable to book some profits and wait to enter during the correction?

    ReplyDelete
    Replies
    1. We don't expect any "significant" correction but small correction is a part of bull run.

      Regarding booking profits, If you are talking about stocks discussed by us then answer is no, Please be part of the long-term journey.

      Delete
    2. Thanks for the reply. Will heed the advice and stay put.

      Delete
  15. Please if you could tell us about your views on sunil hi tech, patels airtemp, Mindteck and Gulshan Polyols for fresh investment at current levels? They all have had lot of news recently so please if you could take a look and advise.

    ReplyDelete
  16. Sir, one more query on JBMA. Although you have said it has strong support at 158-160, what is its fair value? At 160 will it be below, near, or still above its fair value?

    ReplyDelete
    Replies
    1. At around 158 the p/e for JBM will be at 8.94 which when compared to industry average of 33 is very undervalued.

      Delete
  17. Sir, thanks for the info. Your replies are a source of strength for me on this stock in the current scenario. I have two more queries on two other stocks please. (1) last week there was a news report in TOI that the Govt of Norway Pension fund is planning to invest in GS Auto International. Can you take a look at the stock? (2) I hold 5000 shares of SKM egg which forms about 20% of my portfolio at current value. I have 2 lacs which I can invest. Should i buy more of SKM since it has corrected from 131 to 105, or buy more of JBMA (20% of portfolio at current value), or put it in GS Auto if you do indeed look at it and find it good. (The rest of my portfolio is spread across Ajanta Pharma, alembic pharma, auro pharma, dynemic products, granules, vidhi dyestuff, haldyn glass in descending percentages).

    ReplyDelete
    Replies
    1. (1) i have not tracked the piece of news, i am unaware of the facts.

      (2) 20% is enough allocation to SKM at current levels.

      As said JBM auto can do well so you can pick on dips.

      Delete
    2. for such long queries kindly mail to theaceinvestor@gmail.com

      Delete
  18. sir pl send me link where it is mention about change of promoter

    ReplyDelete
    Replies
    1. Management Change :-

      P A Ananathanarayanan > K V Aiyappan > Mg Ved > >Satish Menon > Pankaj Agarwal > Wayne Berkowitz > Yusuf Lanewala

      This is the history from Year 2006, You can see it here:

      http://www.bseindia.com/corporates/ann.aspx?curpg=1&annflag=1&dt=&dur=A&dtto=&cat=&scrip=517344%20&anntype=A

      Keep clicking next to see older announcements.

      Delete
  19. Sir, between vidhi dyestuff and dynemic products which is a better buy at present?

    ReplyDelete
    Replies
    1. Ask any girl, Have two precious rare diamonds both at cheap prices.
      Will she take one or both?

      Delete
    2. Being a girl myself that question was easily answered. Thanks! DP is correcting and giving a great chance to get it at even better valuations but Vidhi has become very hard to get even in this falling market. Is it ok to chase so many UCs?

      Delete
    3. Only if your goal is long-term investments, keep trying for Vidhi and also Buy DP

      Delete
  20. sir,
    what about JVL agro industries? hold or sell?

    ReplyDelete
  21. sir should i average mindtek by purchasing another 500 @ 60 .i have already purchased @72

    ReplyDelete
  22. dear sir..
    mindteck india ltd management is strong positive growth....avneet gupta joined...gupta ji having track record of revenue growth......company is having clear growth path......waiting for 6th feb result...if it comes positive then i'll add more ace sir....
    thank you sir..

    ReplyDelete
    Replies
    1. i am also waiting for the results, will post an update after that!

      Delete
  23. what is your view on gee cee ventures i had bought 1000 at 53.80

    ReplyDelete