Dynemic Products recommended on 7th November 2014 @ 75.
Today company has announced December 2014 quarter numbers as follows.
As
seen above: Results are a bit disappointing specially after the kind of performance Vidhi has reported; Sales are flat while net profit has decreased and net profit margin (NPM) of the company has halved YoY.
One fact to be noted is that among all quarters in the recent past only Dec-13 had a NPM of 12.25% while NPM for all other quarters hovered around 7-8% and this time it has come at 6.03% against 8.55% (QoQ) so it is not such a huge disappointment as it appears after comparing YoY on the NPM front.
I tried to get in touch with the management but today being a Saturday could only manage to talk to some of the employees (including accountant and company secretary) and they conveyed that there was aggressive pricing by the company this quarter to counter some unorganized players not clearly elaborating whether we should expect a NPM of 6% in future, However as per initial information this quarter too capacity utilization was at 100% so after the Dahej Unit (said to be ready by FY16 end) the revenue of the company will improve significantly which will help them become the largest player in this business overtaking current leader Vidhi.
Before this quarterly results were announced, Dynemic has corrected significantly; After our blog-post at 75 it rallied to level of 101 and from Jan 1 it has corrected around 33% this year which makes me feel that the bad number has already been discounted by the markets, After this quarterly number at current price of 59.70 Dynemic is trading at a trailing P/E of 7 while Vidhi has been trading around a trailing P/E of 10 so by this too it is clear that Dynemic is in no way trading at expensive valuations even after this quarter's performance. The sales gap between Dynemic and Vidhi for last FY was of mere 26 crores and the NPM of Vidhi for last FY was around 4 while Dynemic's NPM was around 8.
One quarterly performance can never be enough to judge a stock, One bad quarter has been witnessed in the past for many stocks which turned into multibagger so i think Dynemic is a hold and a clear-cut buy at current valuations and investors should not panic with one bad or i think i should say lackluster quarter.
Dear ACE,
ReplyDeleteResult came after market hours so impact will be seen on Monday & coming Days.
I think it will correct to odd 40 level in coming days.
What about Exit of 1 promotor group during this quarter. Isn't it something to worry.
For medium to long term which one can 1 prefer between Dynemic Vidhi after taking into consideration their SALES, EQUITY, Ratios like P/E, D/E. etc
As clarified earlier too, promoter hasn't exited but one of the promoter was reclassified as public and he continues to hold almost the same amount of shares as earlier :-
DeleteDahyabhau Nathabhai Patel now holds 4,90,000 shares or 4.33% as public earlier he was in promoter group holding 5,00,000 shares or 4.41% as D N Patel (HUF).
Promoter selling is a myth.
My view is that Food color industry as a whole produced good results in recent times. Every year sales is greater than previous year for Dynemic in the past. Considering this it is must to look at sales and net profit Year to Year instead of q to q to have the growth perspective. I have no doubt that food color industry is going to grow larger. I think We can overlook single quarter results.
ReplyDeleteTrue
DeleteI hold a good quantity at 85..should i average or reduce exposure ? Please tell.
ReplyDeletedon't reduce; averaging can be done.
DeleteHi Ace,
ReplyDeletePlease if you could suggest whether a fresh buy can be made in the following stocks? I want to make a core portfolio buying them.
1) Asian Granito
2) Mold-Tek Packaging
3) Mindteck
4) Sunil-hi tech Engineers.
If you could also tell me about their future CAGR and growth prospects..
May I know the reason for Mr D N Patel being reclassified as PUBLIC instead of PROMOTER category ?
ReplyDeleteIs it ethical one? Please reply as I doubt the corporate governance issue in the said reclassification or unethical motive behind this.
Seriously? It can be family issues brother; Even kitchen-politics can have such an effect in indian joint-families.
DeleteBtw: Company officials told me that D N Patel was never actually involved in the operations and was largely un-interested.
can I enter Goenka Diamonds?
ReplyDeleteno
DeleteThanks
DeleteSir y narmada gelatin going down?
ReplyDeleteI cannot comment on day to day price movements and genuine investors should not care about them; Narmada is for the investors, I posted with full financial and company/product related information; You have to decide if you are convinced or not; If you are convinced then you should not be asking why it is down; Since we are buying company's by studying their businesses and in the long-run fundamentally strong companies do not disappoint.
DeleteSir, I ve been following your recommendations for almost a month ago. Thank you for your unconditional service. could you please suggest me on Sun pharma stock? I entered at 962 with a hope of its merger and good quarterly results. How do you look at its charts for Feb series? This is my first futures stock Im trading in.
ReplyDeleteHi Ace,
ReplyDeletePlease if you could suggest whether a fresh buy can be made in the following stocks? I want to make a core portfolio buying them.
1) Asian Granito
2) Mold-Tek Packaging
3) Mindteck
4) Sunil-hi tech Engineers.
If you could also tell me about their future CAGR and growth prospects..
Mindteck is a buy, growth will depend on how e-governance platform is sold and how smart cities start rolling in.
DeleteI haven't done any analysis on 1 - 2 - and 4 so no comments to offer.
Sir Ive been folowing your stock recommendations. for a month. Thank uou for your recommendations. Sir yo you think Sun pharma can bounce back following its bad results? I entered at 962 levels for feb series.
ReplyDeleteSun Pharma is a really good Pharma stock and i feel now it will be more of a defensive stock which will not over-react to news; It is a good stock for long-term portfolio and i am not a trader so i cannot comment series specific.
DeleteIs it a right time to invest in dynemiic products?
ReplyDelete