![]() Infact even in a competitive market like moulded furniture, they have a sort of a brand and sell their products at a premium. Since last 5 years, the business has really improved. ![]() It had a poor past because a major part of the business was from trading and hence the volatility. I feel at times a co may be having common products but still it may be a fantastic business due to quality of mgmt and managing of balance sheet (i.e… managing of loans, working capital etc). Word moat is very commonly used but many often very tough to identify. I think moat is not always because of brand or something like that. However, I couldn’t agree with yourreasoningin some of the stocks mentioned above and thought of sharing my views: Thanks for sharing your checklist and it looks great. PS: I thought examples are the best way to answer your question, feel free to suggest any other alternative Even for Wimplast ROCE during 2002-08 was between 5-10% and its not clear to me how long the current improvement in the business can last. There does not appear to be any moat in this business. ROCE of Nilkamal never crossed 20% in the last decade and mostly around 10% during 2001-07. Their fortune appears to improved in last few years only because of Cello bubble Guard product. Unorganised player has advantage as they evade excise duty, use lower quality plastics and are able to sell at cheaper price.ĥ). Unbranded playersâ market share is still more than organised players in moulded furniture. As per my friend the main reason was competition from unorganised group.Ĥ). During 2000-07, their sales were flat and their net profit declined from 11 to 2crs. Quality of supreme furniture much better than Cello.ģ). Lot of competition from unorganised players.Ģ). I am unable to visualise whether company will remain profitable after five years. Narmada Gelatine: Story is based on ASP increase and volume lead growth not possible. Corporate guarantees issued on behalf of group company and JV (JV total liabilities is less than a cr, so major part must be for group company) â23 crs. I do not understand the logic of setting up a windmill under Weizmann.ģ). 30crs invested in Windwill in 2011â This is despite the fact that only during the same year group segregated and demerged its power business into Karma Energy Limited. (AR 2012) â As per demerger doc âThe company being in the retail business has large number of customers and the business being highly competitive there is always a need to extend credit to the valuable customers.âĢ). ![]() Receivables overdue for six months â 5.4crs. Networth of the company is 60crs, so below numbers are material)ġ). Weizmann Forex (did not invest on corporate governance issues. 3) Volatile financial history 4) Incurred losses during 2001-04 5) debt equity ratio of 1x 6) Net profit margin improved from 1.5% in 2009 4% in 2012. 2) Exposed more to tractors - which I do not think can grow much or limited by availability of credit to farmers. 4) Debt free company but very low market cap. 3) Company manufacturers Chasis, exhaust system, parking brake etc. 2) No leadership position in any of the products and no great value addition products. (Not implying that these stock will not be wealth creator but they do not clear the criteria I have set)ġ). Let me give you a few example of stock where I have decided not to invest for various reasons. Buy decision is quite subjective and depends on lot of moving parts. To buy or not to buy depends on lot of factors and a positive on few items not necessary means itâs a buy and vice-versa. ![]() As Charlie Munger says âInvert always invertâ so let me reverse your question as I think itâs easier to explain situations in which I will not invest. Moreover this is not an exhaustive checklist but the purpose was to remind me to check certain crucial things. Excellent question, but I do not think I have any ready answer for that.
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