GUESS THIS STOCK - 1

It is the series of "Guess This Stock", this is the first one. Try to identify the stock from the given clues and send the answers to my email id- theaceinvestor@blogspot.com. The stock along with detailed summary and name of the winners will be announced on the blog this Saturday (11th April 2015).

:CLUES:

#1 - The company is operating in a debt-ridden sector which has not done great in last few years.

#2 - The market capitalization of the company is under 2000 crores.

#3 - The company enjoys partnership and backing of a company owned by one of the top 1000 people on the Forbes Billionaires 2015 list.

#4 - Promoters hold more than 39% stake in the company.

#5 - The total debt of the company is less than 1500 crores.

#6 - The interest coverage ratio for the company is well above 3.

#7 - The company's customer list includes ex-head of a prominent financial company headquartered outside India.

#8 - The company is not a loss making one.

#9 - The company paid dividend in FY12.

#10 - The current price of the stock is under 2000.

Update: 10/4/2015 - 8:35:00 AM

#11 - Businessman often called close to Narendra Modi by the opposition is among the list of customers of the company.

#12 - The biggest company in the sector was in the headlines for some deals it had done with better half of a politician kin.

#13 - The company's dividend in 2012 wasn't the last time it paid dividend.

#14 - The current price of the stock is under 2000, that doesn't mean it should be above 1000.
  
#15 - Company is listed in more than one exchange, It can be both BSE & NSE or it can even be some regional stock exchange.

We have received huge response by email but almost 99% are wrong answers that is why we have added more clues to make it a bit easier for the readers... All The Best!

I think the above clues are sufficient to guess this stock, Let us see how many of you can do it.

I hope this GTS will help test the research capabilities of all readers and also make them do proper due diligence before entering the stock.

Do not expect confirmations on whether the guess is right or wrong and it will be good if the answer is not revealed on any web portal.

GUESS THIS STOCK SERIES

I am starting "Guess This Stock" series.

The first GTS will be posted with clues on this Thursday (9th April 2015)

Readers have to identify the stock from the given clues and send the answers to my email id- theaceinvestor@blogspot.com. The stock along with detailed summary and name of the winners will be announced on the blog this Saturday (11th April 2015).

I hope GTS will help polish the research capabilities of all readers and also in a way force them to do proper due diligence before entering the stock.

Happy Investing!

R.I.P - Malli Mastan Babu

 

1974-2015

 

Mastan Babu Malli was India's ace mountaineer. He holds the record of being the fastest "7 summiteer" in the world, i.e. he was the fastest person to climb summits in 7 continents. In 2006, he scaled 7 summits in the world in 172 days.

Born In 1974 at GandhiJanaSangam village of Sangam mandal in Nellore district, Andhra Pradesh to Malli Mastanayya and Subbamma in an agricultural family, he was the fifth child to his parents. He was named after Mastan Swamy, a local saint. He did his schooling from Sainik School, Korukonda during 1985-1992 and graduated from National Institute of Technology, Jamshedpur in 1996, earned his M.Tech from Indian Institute of Technology Kharagpur in 1998. Malli also has a Post Graduate Diploma (PGDM) from Indian Institute of Management Calcutta and belongs to 2002-2004 batch. He got inspired about mountaineering in korukonda school, when he saw the statue of Uday Kumar, an old student died in Everest ascent. In IIM Calcutta, he was given DR. BC Roy award, for his outstanding achievements.

Malli worked as software engineer with Satyam Computers from 1998 to 2000. In 2006, he created world record by conquering all the seven highest peaks in seven continents in a span of contiguous seven months. He is called the "fastest Seven Summiteer".

Continent	Mountain	Height (metres)	Date of Reaching the Peak (in 2006)
Antarctica	Vinson Massif	4897	January 19
South America	Aconcagua	6962	February 17
Africa	kilimanjaro	5895	March 15
Australia	kosciuszko	2228	April 1
Asia	Everest	8850	May 21
Europe	Elbrus	5642	June 13
North America	Denali	6194	July 10

 

He was reported missing on March 24th 2015 while scaling high mountains between Argentina and Chile. He was reported dead on 3rd April 2015.

We are proud of you Malli Mastan Babu - R.I.P.

VALUE PICK - WATERBASE LTD.

About The Company & Products 

Waterbase Ltd. is a aquaculture company which started its operations in 1993 headquartered in Nellore, Andhra Pradesh.

The company is promoted by the respected Thapar Group. Thapar Group's past and present ventures include names like: KCT Coal, Crompton Greaves, Greaves Cotton, JCT, English India Clays, Ballarpur and many other companies.

The company as stated is into aquaculture and its main products are Shrimp Feed, Organic Feed and Processed Shrimp.

The feed mill of the company is into operation since 1993 and at present its capacity is 30,000 T.P.A. it is a smaller company when compared to Avanti Feeds which is more into prawn and fish rather than shrimp.

The Ace Investor - Value Pick

(BSE:523660) WATERBASE LTD.

Company listed on BSE, currently trading around 54 with a market cap of about 200 crores.

Promoter holding is at 52.47%, total debt on the books is at just around 12 crores as the company has reduced its debt.

The current price to earning ratio is around 11 and the stock looks very under-valued.

The company as mentioned above is into Aquaculture. Recent times for Shrimp industry has been bad, since the second half of CY2014 the industry is going through troubled times. More recently there has been news that Running mortality syndrome (RMS) is affecting the shrimp industry and India might miss the export target. But at the same time, there is a raw material shortage in Thailand which increases the chance of exports from Indian companies like Waterbase which is doing fairly well in troubled times.

The news about RMS and India missing the export target in the media has resulted in a correction in the share price of Waterbase, it was hovering around 95+ and now down to 50s so it is safe to assume that all bad news are now discounted and a healthy consolidation has already taken place.

Even in the testing times, Waterbase has reported good financial performance as for Dec14 quarter the company announced 10.45% sales growth and 30% profit growth YoY.

Check the annual result table below :-

Particulars	FY10	FY11	FY12	FY13	FY14	FY15
Period	12 months	12 months	12 months	12 months	12 months	Trailing
Sales	27.76	46.31	103.47	157.02	228.21	281.71
Operating Profit	1.20	4.09	10.47	12.05	23.74	32.33
OPM	-4.32%	8.83%	10.12%	7.67%	10.40%	11.43%
Other Income	0.61	0.8	0.66	0.58	1.38	2.13
EBIDT	-0.59	4.89	11.13	12.63	25.12	34.36
Interest	2.42	2.39	1.82	2.2	2.87	1.80
Depreciation	2.31	2.34	2.46	2.81	1.80	1.24
Profit before tax	-5.32	0.17	6.85	7.61	20.45	31.32
Tax	-0.38	-0.55	0.97	1.58	6.87	13.20
Net profit	-3.61	0.69	5.63	6.01	13.57	18.01
EPS	-1.46	0.28	2.19	2.34	3.52	4.66

As it can be understood from above result table, the company has turned around brilliantly in the last 5 years and even the trailing earnings show that in the testing times the company has performed well and exceeded the expectations.

Coming back to the industry, Aquaculture companies have requested the Andhra Pradesh govt. to take necessary steps to ensure seed quality as the vannamei shrimp farming seems to be under-threat from defective seeds by unauthorized hatcheries. It is feared that Vannamei shrimp could face the same problems as black tiger had years ago. I believe, that the govt. will be quick to act on it since there are no quarantine facilities in the state for the broomstick from the U.S. coming through port of Chennai.

Govt. policy plays an important part when any industry at whole is looking for a turnaround and for Aquaculture it looks awesome. Recent statement from A.P. C.M. N Chandrababu Naidu is: "Aquaculture to be a leading employment generator" at the Aqua Aquaria 2015 he asked officials and farmers to adopt the best technology and seeds to improve production so that sector could contribute Rs 2 Lac crores to the state's GDP by 2029. He also exhorted them to achieve a ten-fold increase in production in ten years to make the country leading one in aquaculture.

Another recent development is that the Chief Minister has also made a statement which states that aquaculture will get agriculture status in A.P. to increase fund inflows in the sector. A new aquaculture policy is also soon going to be announced to make A.P. the top exporter of marine products in the world.

Malaysian and Australian governments have expressed interest to work with the A.P. govt. in Aquaculture field R&D to improve feed and sustainability.

On the valuations front, as stated above Price to Earnings Ratio for the company is around 11. The key here is growth, Waterbase looks like Avanti Feeds of FY11 when Avanti had 200 crores sales and Net Profit of 4.28 crores. Now Avanti Feeds has transformed into a 1500 crores+ sales and 100 crores+ profit company.
At end of FY-11, Avanti Feeds too was hovering in the 30s and the 60s and now recently it was trading at 2000+.

All in All, I feel Waterbase is a value pick at current market price of 54. The future growth can make this a future Avanti Feeds, early to expect but i am really hopeful looking at the performance of the company. If we do not buy at these levels then we might have to buy after it would already have turned into a multibagger which is what has happened with many investors in Avanti Feeds.

Technically above 59 there is an medium-term triangle pattern breakout which suggests a target in triple digit but that is the technical charts part, this stock offers huge value for the long-term investors and hence a compelling buy.

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 Waterbase in my portfolio and hence my point of view can be biased. Readers should conduct their financial advisory before any investments.

:Links:

http://www.undercurrentnews.com/2015/02/23/andhra-pradesh-shrimp-farmers-plead-for-quality-seed/

http://www.business-standard.com/article/pti-stories/aquaculture-to-be-leading-employment-generator-ap-cm-115022001076_1.html

http://timesofindia.indiatimes.com/city/hyderabad/Aquaculture-to-get-agriculture-status-in-Andhra-Pradesh/articleshow/46319606.cms

http://articles.economictimes.indiatimes.com/2015-02-23/news/59423287_1_aquaculture-sean-kelly-marine-industry

http://www.thehindu.com/news/national/andhra-pradesh/malaysian-team-calls-on-naidu/article7005026.ece

Technical Chart: http://photouploads.com/images/waterbasec.png