I am writing this in the month of January, so this is not an April Fool’s joke. 🙂
I am planning to re-launch the StockTalk initiative, and in a new avatar (again!).
If you have been a reader of Safal Niveshak for long, you know that I launched the original StockTalk initiative in November 2011.
My plan was to take requests from readers to research on specific companies and write reports explaining their businesses, without making any recommendations.
However, I stopped writing those reports after covering twelve companies.
My reason – I received emails from a lot of readers asking me –
- I bought that stock after you had recommended it. Now it has fallen! What should I do now?
- Have you revised your target price for the stock?
- Are you still convinced about the stock? Should I buy?
One actually posted this comment on the website and also on an external forum – “Most of the stocks analysed at Safal Niveshak are wrong. For eg. MCX is down almost 40% from Safal Niveshak’s recommended price…Opto Circuit is also well known…Same with Bharti…TCS is up 20% after Safal Niveshak recommended not to buy it. We should be honest and do a course correction.”
Now, I do not usually let critics decide where I want to go and what I want to at Safal Niveshak, the impression I got was that…
- People considered my reports as recommendations despite the fact that I covered those companies on request and not out of my own choice.
- People considered my reports as recommendations despite several disclaimers that my intention was just to look at the business from the eyes of a business analyst and not a financial analyst.
- People started making judgments on the short term performance of the companies I wrote on.
All these factors combined to force me to stop the StockTalk in its original avatar.
Then came StockTalk 2.0 in June 2013, where I asked readers to choose companies of their choice, write their reports on them, and send them to me.
My idea was to let the tribe benefit from the collective work and wisdom of several tribesmen who wanted to write such reports.
This initiative started out fine and I released seven reports over the subsequent four months (six of them not written by me).
Things came to a standstill again as a few readers did not send me their reports as per schedule, and I stopped following them after a few unanswered emails.
However, given that I have been receiving a lot of requests to restart the initiative, I am doing it with StockTalk 3.0. 🙂
Your first question will be – “Won’t this bomb as well?”
My answer – “I don’t know, but then we still have StockTalk 4.0 to look forward to!” 🙂
You second question will be – “So what is different in this new version of StockTalk?”
My answer is – “Management interviews.”
Simply put, here is what I intend to do –
- I will choose a company from within my circle of competence (or you send me a request by email) and then try and fix up a meeting or conference call with its management.
- I will announce to you which company I’m going to talk to so that you can send me in advance your questions that I should ask the management.
- After receiving all questions, I will pick a few and prepare the questionnaire.
- I will ask those questions to the company’s management, and then write a report, which will incorporate my analysis of the business and answers from the management on our questions.
When you send me a request for meeting / talking to a company of your choice, you must mention why you think that company needs attention. Just writing “I want you to meet XYZ company” won’t do, as I need to confirm that you have also done some homework on the business.
One final point worth mentioning here – I will not talk about the stock’s valuations in my report. This will save you from anchoring bias. And anyways, I have written a lot of stuff on the site about how you can calculate valuations…so that task is upon you.
Now, since you are ready, let me announce the name of the first company that I am going to talk to soon.
The company is Info Edge Ltd., India’s leading online classifieds company in recruitment (naukri.com), matrimony (jeevansathi.com), real estate (99acres.com) and education (shiksha.com).
If you have any questions to ask the company’s management, please add in the Comments section below over the next 2-3 days.
Let’s cross our fingers, and get this going! 🙂
Hi Vishal,
Great initiative. I liked your positive attitude, specially this line
Your first question will be – “Won’t this bomb as well?”
My answer – “I don’t know, but then we still have StockTalk 4.0 to look forward to!” 🙂
Company I would request for stalk talk 3.0 is Gruh Finance.
The Company is in housing finance space with HDFC parentage and predominately provides low ticket size housing loan to individual in salaried and self employed categories.
Reason: I believe Gruh has can grow 20% to 25% over next decade or more and with better processes due to HDFC parentage and is one of the best long term story.
Questions I have for management are as below.
1. What are its existing competitive threats (e.g. from Repco finance which is in same space and recently recommended by Basant Maheshwari of TheEquityDesk fame in outlook business)
2. What are its MOATS which can discourage any new entrant in this sector like ICICI, SBI etc.
3. How are risks due to rise in interest rate or slowing economy.
4. Is it a better bet than REPCO which is growing faster in the near term due to flush with IPO money
5. Are there any risk of equity dilution or is it even significant a significant risk considering GRUH mostly trades upwards of 25 P/E
6. What are their sources of finance.
7. How will negative black swan event like 2008 impact GRUH
8. How does it find new customer. TV/newspaper advertisements, tie-ups with builders etc.
9. How happy are customers who take loans with Gruh
10. Can a housing finance company grow faster than ROE without dilution of equity.
Thanks,
Dinesh
1. What is the threat perceived by INFOEDGE’s management to linkedin over the long term. Based on my limited experience it is much simple to apply for and search for jobs on linkedin.
2. How does the management see INFOEDGE 5 years down the line. Do they see it as listed VC fund ?
Dear Vishal, This is a fantastic initiative. It should help the tribe a lot if management is responsive.
After fair amount of dynamic filtering, my software is getting following companies at top of the list. I would really appreciate if you could do Stock Talk for these companies.
Infinite Computer Solutions
Syndicate Bank
Neyveli Lignite
Dena Bank
Allahabad Bank
Reliance Infra
Wish you all the best with this initiative. Lets hope for the best.
Regards,
Abhijeet
Thanks Abhijeet!
Banks are outside my circle of competence, so I will avoid writing on them. Plus, I will never write on a Reliance business. 🙂
That leaves Infinite Comp. Let’s see when I am able to cover that.
Sure Vishal. Thanks a lot. Did you get a chance to check the document I mailed you. I would really love to know your thoughts on the software, especially if they are critical of it.
Regards,
Abhijeet
Hey,
I don’t mean to but in your private conversation, but as someone who follows many of the securities you’ve just listed (though I only owned Infinite last year) it looks to me like your gravitating towards value traps. I’m not offering any advice on whether to buy or not to buy anything, just don’t want to see someone lose their hard earned money.
Hello Vishal,
Thanks for this initiative. Below is my suggestion for the stalk talk 3.0:
Company: Tree House Education & Accessories Ltd
Past 4 year numbers:
Revenue: 77% CAGR from 21 cr to 121 cr
EBITDA : 106% CAGR from 7 cr to 61 cr
PAT : 134% CAGR from 2.6cr to 33cr
No of centres has grown from 42 in 2009 to 262 in 2013. Management guidance is to grow the no of students at a CAGR of 28% from the current student strength of 32,430 to 67,000 by FY17.
Company has recently put up 4 of their school buildings for sale and the reported reason is to become asset light and increase their ROE. Current debt at 66cr does not seem to be high and it looks like the company will become FCF positive and possibly debt free next year.
Tree House Managing Director Mr. Rajesh Bhatia has bought Tree House shares quite a few times from the open market in the past few months.
Overall the story seems impressive as the earnings risk is low and Tree House seems to have mastered the process of setting up new centres and quickly turning them profitable. There are no foreign exchange fluctuation risks etc. With growing Indian middle class the preschool market will continue to thrive.
Thanks
Thanks Maheswar!
Hi Vishal,
Good Initiative!
My Questions:
1. When do company see job marketing picking up? Do they see this year again as challenging one?
2. What competition do they see from other real estate portals like Housing.co.in and commonfloor.com as these companies have build a reasonable analytic database along with map based services?
3. What is the visibility of advertisement earnings in all the 4 companies?
Regards,
Saurabh
Thanks Saurabh!
1. Info edge sites have been around for along time . Has the management done a brand valuation of the different brands ?
2. Why is the dividend pay out so low ?
3. What is the % of business got from overseas for different sites ?
4. Apart from subscription revenues , does the company earn from advertising or cross- selling ?
5. Is the company planning to have other niche sites ?
Hello Vishal, your current post is music to my ears!!! I have great faith in the following companies seeing their past 10 years track record & I believe they would do well in the future too:- 1) AMARA RAJA BATTERIES (ALREADY FEATURED IN STOCK TALK); 2) SUPREME INDUSTRIES; 3) BERGER PAINTS; 4) PIDILITE INDUSTRIES; 5) LUPIN; 6) IPCA LABS.
You would do me a favour by conducting Stock Talk on the above companies.
Hi Vishal
Very Good Initiative.
I have been watching Info Edge for quite some time, They are one of the very few player in Portal Business, who are successful so far, My question to management would be;
1. Who are the key management people and advisors( to understand the mang. bandwidth), their experience and success and failures since .COM era.
2. What will be their bias for business model in future like taking over existing company (like SOFTBANK of Japan) or building them.
3. How do you (or Google / Amazon) value such portals / e commerce site. for example how did you valued ZOMATO before taking a stake in that comp.
4. Which are the similar company in other part of the world and how they have valued.
thanks
Hi
Good initiative.
Please don’t listen to the critics and don’t let stock talk die.
I, personally, like the way you evaluate company’s business, long term trends, management etc. Its a learning experience for me. I never consider your evaluation as a recommendation but it helps me increase my circle of incompetence. On this note, I would like to request you to ask someone to stock research on any banking sector company may be best performing or worst performing. It would be nice to know traits, pitfalls of this industry.
Also other company I would like to recommend is Credit rating and analysis.
1)Considering a low competition(comparatively) in this sector I think this company has some potential.
2) I would like to know do the rating companies influence or get influenced by the companies, they rate? If yes how? because sometimes different rating firms rate the same company differently.
3) Have this sector lost confidence from their clients especially after they fail to predict mortgage crisis in 2008 when big wigs like s&p etc. rated bad mortgages as AAA? Also this created a sense of mistrust among the financial institutions.
4) What is the regularity policy(self regulatory and not government) of this sector?
5) What percentage of trust do you have in your judgement while rating a product?
6) How do you rate your competitors ICRA, CRISIL?
Only one question to infoedge.
How will they survive when competition becomes tough especially from foreign players, as we can see more and more Indian portals are getting acquired by Google, facebook etc?
By the way you will also get some ideas about revenue generation from website/blogs business. Please share them too.
Thank you.
Hi Vishal,
Good initiative of staring Stock Talk 3.0. I was actually wondering where Stock Talk went but I do understand the issues faced.
Let me share my 2 cents regarding comment on the recommendations that went wrong.
In my view the stock research done here is only based on the facts and information available at the time or preparation and things change dynamically post that. And the recommendations could be 75-80% right and there is always a chance of going wrong. If one builds a portfolio its possible that a few stocks may not perform and would require disposal if fundamentals turn unfavorable. The Opto Circuits was the only case which received repeated coverage and became a blunder, but other recommendations were good in my opinion.
The companies that I like to be covered for Management Interviews are below:-
1) Ratnamani Metals & Tubes – a mid-sized steel and carbon tube manufacturer. Would like to know about capex plans, order book, break-up of their revenues across sectors.
2) Infinite Computer Solutions – Do they see recovery and more business from the US market?
3) MOIL (Manganese Ore India) – Do they see any recovery in the steel demand which will lead to higher managese prices ? Any new areas of diversification?
4) Cairn India – Any updates on the commercialization of gas in Srilankan fields? Would they see any impact on international crude prices or revenue realizations due to US shale gas developments?
I’m not so familiar with Info Edge except knowing about their few websites such as Naukri, Jeevan Sathi, 99 acres, etc so I’m not posting questions right now.
Looking forward to your comments on other questions above in case you plan to meet those managements.
Gr8 Initiative!!
I would like to know about sintex and kolte patil in real estate.
thanks
Ankit
Hello Vishal,
I am not sure if this is the right place to ask this qn. (If it isn’t, please let me know where I should ask this.)
I came across Gabriel India and after doing some analysis on their financials- I thought this was a very good pick. The value using DCF was 49 whereas the stock is trading at low 20s. Almost negligible debt. The Moats are- the brand name (India’s No 1 shocks and struts) and their wide manufacturing and distribution network. I can send a detailed analysis if required. I did not see any tribesmen discussing this or mentioning this as well. Am I missing something here?
Hi Vishal
The stocks I would like you to cover in STOCK TALK are
1. Heavy mineral asset company NMDC
2. A small cap textile company “Rajastan Spinning and Weaving Mills” (RSWM) which is offering a dividend yield of 8%.
3. Kaveri Seeds, a company from Andhra Pradesh which has a 3500 Cr market cap.
Hi Vishal,
Appreciate your great initiative. The company I would like you to interview will be IPCA laboratories.
IPCA is a Mumbai based, mid-cap integerated pharma company. The company deals in formulations(generic and branded), APIs and intermediaries. As per latest data 63% of the revenues comes from exports to Europe, Africa, US, Australia & CIS. The company has been in news past year over the USFDA report on their Ratlam facility.
My questions to the management are :-
1) What is the company’s progress on actions taken to sort out the issues at Ratlam facility?
2) What is the company’s estimate of the impact of this USFDA report? Going forward, how much do they expect the revenues to be impacted over the next 5-10 years?
3) How does the management plans to hedge against such regulatory risks arising in future?
4) Apart from the regulatory risk, what is one problem that the company faces in implementing its long term plans?
Hi Vishal
I would like you to do a stock talk on Eclerx Servises Ltd, Vinati Organics, Shilpa Medicare,Tata Elxsi, Cera Sanitaryware and Sanjay bakshi’s recent investment Thomas Cook.