Company name - Platinum Industries Ltd

Last closing price(NSE:PLATIND) - ₹447.1 (as on 18-Oct-2024)

Estimated reading time - 3 minutes

New notes update - We have recently published a series on ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our past analyses is available here.

Executive Summary

• Platinum Industries specializes in the manufacturing of PVC stabilizers, CPVC additives, and lubricants, catering to various industries such as agriculture, construction, healthcare, and consumer goods. It is ranked as the third-largest player in the domestic PVC stabilizer market, holding a 13% market share.

• The capital raised from the March 2024 IPO is being strategically used to fund capacity expansions, working capital, and operational improvements, further boosting earnings growth.

• The company has reported significant quarterly sales growth of 66%.

Stock price chart

Detailed Analysis

About The Company

• Platinum Industries specializes in the manufacturing of PVC stabilizers, CPVC additives, and lubricants, catering to various industries such as agriculture, construction, healthcare, and consumer goods.

• The company provides both lead-based and non-lead-based stabilizers, with a focus on eco-friendly alternatives like calcium-zinc stabilizers. They also manufacture CPVC compounds and lubricants like PE wax and OPE wax, which are crucial for PVC processing.

• Platinum Industries operates globally, with a presence in over 30 countries, including a manufacturing facility in Egypt and an expanded facility in Palghar, Maharashtra.

Future Prospects

What is the company’s plan to maintain earnings growth in the future?

• IPO and Capital Utilization: Following the company’s IPO earlier in the year, the raised capital has been effectively allocated towards expanding their manufacturing capabilities and meeting working capital requirements. This is allowing it to meet the rising demand without financial bottlenecks.

• Capacity Expansion: The company is expanding its production capacity with new manufacturing facilities in Egypt and Palghar, enabling them to meet increased demand globally, particularly in high-growth regions like the MENA and LATAM markets

• Global Market Penetration: Expanding presence in Europe, Asia, and MENA regions through their Egypt facility. The company is targeting to increase export contribution to 10% of total revenues, with a focus on emerging high-growth markets

• Product Innovation & Diversification: Ongoing investment in Research & Development (R&D) to launch new, eco-friendly products such as lead-free stabilizers and other sustainable additives. This innovation will help them stay competitive and capture new market opportunities.

Potential risks that could hamper the future growth?

• Raw Material Cost Volatility: Raw material cost fluctuations remain a challenge. The company plans to manage this by further diversifying its supply chain and leveraging cost efficiencies from new manufacturing facilities.

• Global Competition: The specialty chemicals industry faces stiff competition globally. Platinum Industries aims to overcome this by increasing market share in high-growth regions like MENA and LATAM through their Egypt facility.

• Energy Costs: Rising energy costs are a concern. The company is exploring process optimizations to reduce energy consumption at its plants.

Financial Analysis

Overview

• The promoter holding is strong at 71%, and pledged percentage is 0%.

• The company is almost debt-free with debt-to-equity of 0.03 and the ROCE is strong at 27.2%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant sales growth of 66%.

• The operating profit increased by 25%, although the operating profit margin reduced by 23%.

• The operating profit margin decreased due to expansion-related costs and market conditions.

• The net profit increased by 63.6% and EPS increased by 11.9%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 14.22%, and operating profit growth of 12.96%.

• The net profit increased by 15.7% and EPS decreased by 15.4% as the company got listed in the market.

Timing Analysis

(To decide if this is a suitable time to buy, we look for signs of high institutional trading volumes in recent weeks. Read more on Timing analysis here.)

• High institutional trading volume signs seen recently in the week of 14-Oct(3.2X).

This is not a stock recommendation. It’s an analysis of the stock based on the data available today, and the viewpoint may evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - KFin Technologies Ltd

Last closing price(NSE:KFINTECH) - ₹1109.45 (as on 16-Oct-2024)

Estimated reading time - 4 minutes

New notes update - we have recently published a series titled ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our previous analyses is available here.

Executive Summary

• KFin Technologies provides comprehensive financial services and technology solutions to mutual funds, alternative investments, and pension schemes in India and internationally.

• KFin Technologies holds a 46.1% market share in Issuer Solutions as of FY24. This market share is based on the number of folios and market capitalization of NSE 500 companies.

• The quarterly net profit increased by 58.1% and EPS increased by 55.6%.

Stock price chart

Detailed analysis

About the company

• KFin Technologies provides comprehensive financial services and technology solutions to mutual funds, alternative investments, and pension schemes in India and internationally.

• The company operates across various business lines, including domestic mutual fund solutions, issuer solutions, and alternative investment fund administration.

• KFintech has an asset-light, technology-driven model with offerings like registrar and transfer agent services, fund administration, and investor solutions for multiple asset classes

• Learn something new: What are Issuer Solutions? The services include:

  • Registrar and Transfer Agent (RTA) services: These services manage the corporate share registry, handling transactions related to share transfers, dividends, IPOs, and other corporate actions for listed companies.

  • Corporate Actions Management: Supporting companies in managing activities such as IPOs, rights issues, bonus issues, mergers, and acquisitions.

  • Shareholder Relationship Management: Providing ongoing support to corporate clients in managing their shareholders’ data and interactions.

  • KFin Technologies holds a 46.1% market share in Issuer Solutions as of FY24. This market share is based on the number of folios and market capitalization of NSE 500 companies.

• Revenue share of the three business segments -

  • Domestic Mutual Fund Solutions : ~60% (+12.3% YoY)

  • Issuer Solutions : ~30% (+21.3% YoY)

  • Alternative Investments & International Investor Solutions : ~10% (+28.6% YoY)

Future prospects

What is the company’s plan to maintain earnings growth in the future?

• Expanding International Presence: They are actively growing their footprint across Southeast Asia, Canada, and other regions.

• Diversification of Revenue Streams: Increasing the share of high-margin segments like Alternative Investment Fund (AIF) solutions and Value Added Services (VAS).

• Growing Market Share in Domestic Mutual Funds: KFintech is targeting further growth in SIP inflows and equity AAUM market share, with their mutual fund AUM market share rising from 31.6% to 32.1% in FY24.

Potential risks that could hamper the future growth?

• Market Volatility: KFintech’s business is sensitive to market conditions, particularly in the mutual fund segment. A significant downturn in equity markets could slow down AUM growth.

• Regulatory Changes: Any unfavorable regulatory changes in the mutual fund or capital market space could impact the company’s operations, especially in its RTA services.

• Competition: Increasing competition from global and domestic players in fund administration, AIF, and issuer solutions may pressure margins.

Financial analysis

Overview

• The promoter holding is 33.1%, and pledged percentage is 0%.

• The company is debt-free with a strong ROCE of 30.3%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported consistent double digit sales growth over the last 4 quarters, with a 30.89% growth in the last quarter.

• The operating profit increased by 42%, and operating profit margin increased by 7.6%.

• The net profit increased by 58.1% and EPS increased by 55.6%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 16.32%, and operating profit growth of 22.14%.

• The net profit increased by 25.5% and EPS increased by 24.37%.

Peer comparison

• The company’s EPS growth over the last 3 years is 3X that of its closest peer, CAMS services.

• It is also ahead in quarterly and annual profit growth rate.

Timing analysis

(To decide if this is a suitable time to buy, we look for signs of high institutional trading volumes in recent weeks. Read more on Timing analysis here.)

• High institutional trading volumes were observed recently in the weeks of 05-Aug(7.39X) and 26-Aug(7.1X).

This is not a stock recommendation. It’s an analysis of the stock based on the data available today, and the viewpoint may evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Symphony Ltd

Last closing price(NSE:SYMPHONY) - ₹1755.75 (as on 15-Oct-2024)

Estimated reading time - 3 minutes

New notes update - we have recently published a series on ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our past analyses is available here.

Executive Summary

• Symphony Ltd. manufactures and trades residential, commercial, and industrial air coolers globally. They are the largest air cooler manufacturer, with a strong presence in over 60 countries.

• They are positioning their coolers as more eco-friendly versions to air-conditioners.

• The company has reported significant sales quarterly growth of 76%, representing a turnaround. The operating profit increased by 426%, with the operating profit margin also increasing by 233%.

Stock price chart

Detailed analysis

About the company

• Symphony Ltd. manufactures and trades residential, commercial, and industrial air coolers globally. They are the largest air cooler manufacturer, with a strong presence in over 60 countries.

• The company holds approximately 50% market share in the organized air-cooler market.

• 27°C eco-friendly positioning - The company is running a ‘27°C campaign’ which is not just about cooling; it is about creating a sustainable world that Symphony envisions through their eco-friendly and energy-efficient air-coolers. The company emphasizes its role in mitigating climate change by providing products that consume significantly less energy than traditional air-conditioners while maintaining comfortable indoor temperatures.

Future prospects

What is the company’s plan to maintain earnings growth in the future?

• Geographical Expansion: Symphony plans to further penetrate semi-urban and rural markets in India, which showed strong growth in Q1 FY2025. The company also aims to continue expanding its international footprint, leveraging its established presence in over 60 countries.

• Product Diversification: The company intends to broaden its product portfolio by expanding into adjacent categories, such as portable coolers, commercial cooling solutions, and newer air-cooler models. This is expected to increase revenue streams and reduce reliance on any single product category.

• Digital Sales and Direct-to-Consumer (D2C): Symphony is increasing its focus on digital channels, particularly its D2C platform, which has shown significant growth. By optimizing digital sales, Symphony aims to enhance margins (no cash-on-delivery model) and increase direct consumer engagement.

Potential risks that can hamper the future growth?

• Dependence on Weather Patterns: Symphony’s growth is highly dependent on hot weather conditions. A weaker-than-expected Indian summer in FY2023 impacted sales significantly.

• Economic Slowdowns in Key Markets: Economic challenges in international markets, particularly inflation in the USA and housing market troubles in Australia, could affect Symphony’s international revenue growth.

• Rising Input Costs: While Symphony has managed to increase margins through cost control, sustained increases in raw material prices or logistics costs could squeeze profitability.

Financial analysis

Overview

• The promoter holding is high at 73.4%, and pledged percentage is 0%.

• The debt-to-equity is in control at 0.23 and the ROCE is healthy at 18.8%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant sales growth of 76%, representing a turnaround on account of early onset of summer and an overall strong demand.

• The operating profit increased by 426%, with the operating profit margin also increasing by 233%.

• Operating margins improved to 21% due to a combination of factors such as operational efficiencies, value engineering, and strong international performance.

• The net profit increased by 366% and EPS increased by 366%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a negative sales growth of -2.65%, and operating profit growth of 22%.

• The net profit increased by 27.5% and EPS increased by 29%.

Peer comparison

• If we compare Symphony Ltd, with Whirpool India which is the peer with a higher market cap (+2.46X):

  • Symphony has nearly double the quarterly profit variance%, profit growth and sales growth.

  • The profit in the last 12 months for Symphony is only 12.8% less than Whirlpool India.

• There is a potential for Symphony’s market cap to grow if it is able to maintain its revived growth rate.

Timing analysis

(To decide if this is a suitable time to buy, we look for signs of high institutional trading volumes in recent weeks. Read more on Timing analysis here.)

• Institutional high trading volume signs seen recently in the weeks of 05-Aug(18X) and 07-Oct(3.7X).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Computer Age Management Services Ltd

Last closing price(NSE:CAMS) - ₹4600.6 (as of 14-Oct-2024)

Estimated reading time - 3 minutes

New notes update - we have recently published a series on ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our past analyses is available here.

Executive Summary

• The company is a mutual funds transfer agency. It provides investor services, distributor services and asset management companies (AMC) services. It is India’s largest registrar and transfer agent(“RTA”) of mutual funds with an aggregate market share of 68%.

• The debt-to-equity is low at 0.11 and the ROCE is very strong at 48.4%.

• In the last quarter, the net profit increased by 40% and EPS increased by 41.2%.

Stock price chart

Detailed analysis

About the company

• The company is a mutual funds transfer agency. It provides investor services, distributor services and asset management companies (AMC) services.

• It is India’s largest registrar and transfer agent(“RTA”) of mutual funds with an aggregate market share of 68%.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Diversification into Non-MF Segments: CAMS is expanding its revenue streams by focusing on non-mutual fund segments like Account Aggregator, CAMSPay (payment services), and AIF services. The goal is to increase non-MF revenue contribution to 20% in 3.5 years

• Technology Upgradation: Partnership with Google Cloud to rebuild its RTA platform, aiming for enhanced efficiency and new business opportunities.

• Strategic Partnerships: Expanding geographical presence in GIFT City and partnering with new financial institutions to grow its AIF and international business.

Potential risks that can hamper the future growth?

• Regulatory Risks: Changes in SEBI or IRDA regulations can impact the company’s operations, especially in core segments.

• Client Concentration: Reliance on a few large AMCs for substantial revenue could pose a risk if client relationships are disrupted.

• Competition: Increasing competition from new fintech entrants could pressure margins and market share.

• While non-MF revenue has grown, profitability from segments like insurance services remains limited. The ambitious platform rebuild also poses execution risk.

Financial analysis

Overview

• The pledged percentage is 0%.

• The debt-to-equity is low at 0.11 and the ROCE is very strong at 48.4%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant sales growth of 26.83%, and a consistent double-digit sales growth track record overall.

• The operating profit increased by 36%, on account of increased sales and operating profit margins.

• The net profit increased by 40% and EPS increased by 41.2%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 16.95%, and operating profit growth of 19.95%.

• The net profit increased by 23.15% and EPS increased by 23.6%.

Peer comparison

• The nearest peer in the range is CDSL with a net profit of ₹419.55 Cr in the last 12 months, and market cap is higher by 33%. CAMS Ltd is currently at ₹350.98 Cr as last 12-month profits.

• There is a potential for market cap to grow if CAMS Ltd is able to maintain its growth rate.

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Zen Technologies Ltd

Last closing price(NSE:ZENTEC) - ₹1899.95 (as on 11-Oct-2024)

Estimated reading time - 3 minutes

New notes update - we have recently published a series on ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our past analyses is available here.

Executive Summary

• Designs and manufactures combat training solutions: Zen Technologies specializes in developing high-tech training simulators for defense and security forces, which help enhance combat readiness.

• The company has upgraded the revenue target(guidance) for this year to ₹900Cr, which will be 104% growth compared to previous year.

• The company has reported significant quarterly sales growth of 92%.

Stock price chart

Detailed analysis

About the company

• Designs and manufactures combat training solutions: Zen Technologies specializes in developing high-tech training simulators for defense and security forces, which help enhance combat readiness.

• Develops counter-drone technologies: The company also focuses on anti-drone systems to detect, neutralize, and counter threats from unmanned aerial vehicles (UAVs).

• Serves global and domestic markets: Zen caters to both Indian and international defense forces, supplying advanced, customizable solutions to meet different combat training and defense needs.

• The company has upgraded the revenue target(guidance) for this year to ₹900Cr, which will be 104% growth compared to previous year.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Focus on Counter-Drone Solutions: The increasing demand for counter-drone technology is a key driver. Zen is investing heavily in expanding its range of anti-drone systems, which are critical for modern defense.

• Leverage India’s Defense Spending: Zen is well-positioned to capitalize on India’s increased defense budget and modernization efforts. The company aims to win significant contracts, especially for simulators and counter-drone systems, benefiting from the “Atmanirbhar Bharat” (self-reliant India) initiative.

• Focus on New Markets: Zen aims to penetrate new geographies, particularly in the Middle East and African markets, which are showing strong demand for defense solutions.

• Strong Order Book Execution: Zen’s current order book of INR 800 crore provides a solid foundation for revenue in FY 2025, with a focus on timely delivery and execution of these contracts.

Potential risks that can hamper the future growth?

• Supply Chain Issues: The global supply chain was disrupted due to shortages in critical components, delaying production and increasing costs.

• Regulatory Approvals: Government defense contracts often faced delays due to extended regulatory processes, affecting order timelines.

• Rapid Technological Changes: Keeping up with fast-paced innovations in defense technology, particularly in the anti-drone space, remains a critical challenge. Zen is investing heavily in R&D, focusing on AI and machine learning to enhance its combat training solutions and drone defense systems.

Financial analysis

Overview

• The promoter holding is 51.3%, and pledged percentage is 0%.

• The company is debt-free and the ROCE is strong at 46.1%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant sales growth of 92%.

• The operating profit increased by 60.8%.

• The net profit increased by 64.5% and EPS increased by 63.2%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a strong sales growth of 101%, and operating profit growth of 247%.

• The net profit increased by 260% and EPS increased by 282%.

Peer comparison

• The company has the highest EPS variance in 3 years at 250% and highest sales growth at 78.86%

Timing analysis

• Institutional high trading volume signs seen recently in the week of 7-Oct(3X).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Triveni Turbine Ltd

Last closing price(NSE:TRITURBINE) - ₹795.8 (as on 11-Oct-2024)

Estimated reading time - 4 minutes

New notes update - we have recently published a series on ‘How do we trade in the stock market?’. It answers many of your queries around trading.

The updated performance of all our past analyses is available here.

Executive Summary

• Triveni Turbine is primarily engaged in the design, manufacture, and supply of steam turbines for industrial and renewable energy applications, focusing on turbines with a capacity of up to 100 MW.

• Triveni is well-positioned to leverage opportunities in the growing renewable energy sector, providing turbines for biomass, waste-to-energy, and geothermal projects. Their commitment to sustainable energy solutions aligns with global decarbonization trends.

• The company is debt free and the ROCE is strong at 38.3%.

• The quarterly net profit increased by 31.1% and EPS increased by 31.9%.

Stock price chart

Detailed analysis

About the company

• Power Generation Solutions: Triveni Turbine is primarily engaged in the design, manufacture, and supply of steam turbines for industrial and renewable energy applications, focusing on turbines with a capacity of up to 100 MW.

• Global Reach: The company caters to both domestic and international markets, with a significant presence in industries such as process industries (which require steam) and renewable-based applications.

• Aftermarket Services: Triveni also provides comprehensive aftermarket services, including refurbishment, which is a major growth area.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Global Expansion and Market Penetration:

  • Triveni aims to strengthen its global footprint, especially through its new subsidiary in Texas, USA, which will help build stronger customer relationships and local market presence. This is a key market for industrial turbines, and the company believes it will contribute significantly to future growth.

  • The company has a significant presence across 80 countries, with a strong focus on Europe, Southeast Asia, and Africa.

• Focus on Renewable Energy

  • Triveni is well-positioned to leverage opportunities in the growing renewable energy sector, providing turbines for biomass, waste-to-energy, and geothermal projects. Their commitment to sustainable energy solutions aligns with global decarbonization trends.

• Innovation and R&D

  • The company is investing heavily in developing supercritical CO2 turbines and exploring thermal battery solutions for energy storage, which are seen as future growth areas.

• Aftermarket Expansion

  • The aftermarket segment, including refurbishment services and spare parts, remains a strong driver of growth. Triveni aims to expand this portfolio and tap into more international markets.

Potential risks that can hamper the future growth?

• Order Booking Cyclicality: Triveni operates in a business where order bookings can be cyclical and lumpy. This could impact revenue predictability, although the company has managed this volatility with a strong order book providing visibility into FY 25 and FY 26.

• Macroeconomic and Geopolitical Risks: The company faces risks from geopolitical tensions and economic slowdowns in advanced economies like Europe and Southeast Asia. Although Southeast Asia is showing positive trends in the service business (refurbishment), product orders in this region have been slower than expected.

• Supply Chain and Inflationary Pressures: Global supply chain disruptions and inflation continue to be potential risks. However, the company benefits from a strong domestic supply chain, which provides resilience in times of global challenges

Financial analysis

Overview

• The promoter holding is 55.8%, and pledged percentage is 0%.

• The company is debt free and the ROCE is strong at 38.3%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has consistent double digit sales growth with 23.08% growth reported in the latest quarter.

• The operating profit increased by 35.2%, with operating profit margins increasing by 10.5%

• The net profit increased by 31.1% and EPS increased by 31.9%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 32.58%, and operating profit growth of 36.59%.

• The net profit increased by 39.37% and EPS increased by 39.3%.

Peer comparison

• The company has the 2nd highest net profit reported in the last 12 months at 269.49, among the peers in similar market cap range.

• The company has highest operating profit margin among it’s peers at 19.71%.

Timing analysis

• Institutional high trading volume signs seen recently in the week of 05-Aug(7.85X), 12-Aug(14.2X) and 07-Oct(5X).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Fino Payments Bank Ltd

Last closing price(NSE:FINOPB) - ₹412.3 (as on 11-Oct-2024)

Estimated reading time - 3 minutes

We recently covered INDIAGLYCO and CGPOWER, and the timing of our analysis worked out as they reached +10% in this week. The updated performance of all our past analyses is available here.

Executive Summary

• Fino Payments Bank Ltd is a technology-enabled financial inclusion bank, focused on providing digital payment solutions and services to unbanked and underbanked populations, primarily in rural and semi-urban areas of India.

• The company upgraded their annual revenue growth guidance from 20% to 25% for FY 2025.

• The annual net profit increased by 32.3% and EPS increased by 32.4%.

Stock price chart

Detailed analysis

About the company

• Fino Payments Bank Ltd is a technology-enabled financial inclusion bank, focused on providing digital payment solutions and services to unbanked and underbanked populations, primarily in rural and semi-urban areas of India.

• The bank offers services such as savings accounts, remittances, insurance, and digital payments through a robust network of merchants and digital channels.

• The company upgraded their annual revenue growth guidance from 20% to 25% for FY 2025, with the Q1 earnings.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Digital Business Contribution: Digital throughput grew by 170.8% YoY to ₹132.6k Cr, contributing 6% of overall revenue in FY24. The bank aims to further increase digital contribution to 16-17% of overall revenue in FY 25.

• Small Finance Bank (SFB) Transition: The bank is working towards becoming a Small Finance Bank (SFB), which will allow it to offer a broader range of financial products and improve its profitability through lending services. The application to RBI has been submitted.

• Partnerships and B2B Expansion: The bank intends to scale its B2B operations through partnerships and use its UPI switch to facilitate digital payments for businesses, contributing significantly to revenue growth.

• TAM strategy - The bank is moving from a transaction-based business model to a more customer-centric approach, where the bank seeks to establish deeper, long-term relationships with customers through enhanced engagement and diversified offerings.

Potential risks that can hamper the future growth?

• Regulatory Updates: No new updates on the Small Finance Bank (SFB) license application; internal preparations ongoing for technology and partnerships.

• Competitive Landscape: Concerns regarding competition from larger conglomerates entering the banking correspondent network.

• Digital Monetization and Profitability – While digital revenue is growing, monetization of digital services is still in early stages.

Financial analysis

Overview

• The promoter holding is 75%, and pledged percentage is 0%.

• The ROCE is at 7.07% which is in same range as majority of the private banks.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant revenue growth of 36% and reached highest revenue till date in a quarter.

• The net profit increased by 26.3%.

• The EPS increased by 29.7%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a significant revenue growth of 57%.

• The net profit increased by 32.3% and EPS increased by 32.4%.

Peer comparison

• The company has reported highest sales/revenue growth among it’s peers in the private banks segment at 48.86%.

Timing analysis

• Institutional high trading volume signs seen recently in the weeks of 19-Aug(5X), 26-Aug(4.5X) and 2-Sep(5X).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

The stock market tends to reward companies with high growth rates or those showing significant improvements in financial metrics with increased valuations and stock prices. As investors looking to benefit from such upward price movements, it’s crucial to identify these indicators of improvement in a straightforward manner.

In this post, we will cover:

• Our approach to financial analysis.

• Clear explanations of financial terms that are frequently used in our analyses.

What We Look For in Financial Analysis

1. A track record of consistent growth over multiple years.

2. High growth rates in metrics like sales, profits, and EPS.

3. Under-valuation compared to industry peers.

4. Relatively higher growth in sales and profits compared to peers.

5. Turnaround signs in sales or profit growth.

   Note: No company is perfect, so not all of the above criteria need to be met for us to consider an investment.

Companies We Avoid

• Those that show consistent decline in sales or profits with no signs of a turnaround.

• Companies reporting net losses over multiple periods without any indication of recovery.

• Businesses with low growth rates and/or lack of ambition.

• Companies with very high debt relative to their business model. Excessive debt is one of the leading causes of business failures and bankruptcies.

• Firms with consistently high negative cash flow.

Explaining financial terms

Keeping the above approach in mind, sharing a list of terms we typically look at and their simple explanation -

General Terms

• FY (Financial Year):

  A 12-month period used for accounting purposes, differing from the calendar year. For example, FY23 refers to the financial year starting from April 1, 2022, to March 31, 2023.

• Q1 - Q4 (Quarter 1 - Quarter 4):

  Represents the four quarters of a fiscal year. For example, Q1 for a company like Reliance Industries Ltd. would be April-June, Q2 would be July-September, and so on.

Company Overview Section

• Market Capitalization (Market Cap):

  The total market value of a company’s outstanding shares, calculated by multiplying the current stock price by the number of outstanding shares. Example: If Reliance Industries Ltd. has 6.34 billion shares and a share price of ₹2,300, its market cap would be ₹14.58 trillion.

• Stock P/E (Price to Earnings Ratio):

  The ratio of a company’s current share price to its earnings per share (EPS). It indicates how much investors are willing to pay per rupee of earnings. Example: If Reliance Industries Ltd. has an EPS of ₹100 and a share price of ₹2,300, its P/E ratio would be 23.

• Price to Book Value (PBV):

  A valuation ratio comparing the market value of a company to its book value. It shows how much investors are willing to pay for each rupee of book value. A PBV below 1 indicates that a company’s market value is less than its book value.

• Return on Capital Employed (ROCE):

  A measure of a company’s profitability and the efficiency with which its capital is employed. Calculated as EBIT (Earnings Before Interest and Tax) divided by capital employed. It shows how much profit is generated per rupee of capital employed. Example: If Reliance Industries Ltd. has EBIT of ₹100 billion and capital employed of ₹500 billion, its ROCE is 20%.

• Debt-to-Equity Ratio:

  Indicates the proportion of debt used to finance a company’s assets relative to equity. A ratio of 1 means equal amounts of debt and equity. Lower ratios are generally preferred as they indicate financial stability.

• Promoter Holding:

  The percentage of shares held by the promoters of the company. High promoter holding often suggests confidence in the business, while low or declining promoter holding could indicate lack of faith.

• Pledged Percentage:

  The percentage of promoter shares pledged as collateral for loans. A high pledged percentage is a risk factor because, if the share price falls, promoters might be forced to sell their holdings.

Quarterly and Annual Results Section

• Sales (or Revenue):

  The total amount generated from selling goods or services before deducting any expenses. For example, if Reliance Industries Ltd. sells products worth ₹1 trillion in a quarter, that amount would be its sales or revenue for that period.

• Operating Profit and OPM (Operating Profit Margin):

  Operating profit is the profit from core operations, excluding other income and interest. OPM is calculated as (Operating Profit / Sales) x 100, indicating how much profit the company makes on each rupee of sales.

• Other Income:

  Includes non-core earnings like dividends, interest, and gains from asset sales. It is separate from the operating profit and can significantly impact the net profit.

• Interest:

  The cost incurred on borrowed funds. A high-interest expense relative to operating profit indicates high debt levels.

• Profit Before Tax (PBT):

  Calculated as operating profit plus other income minus interest. It reflects the profit a company generates before accounting for tax expenses.

• Net Profit (or Profit After Tax, PAT):

  The profit remaining after deducting all expenses, including taxes, from total revenue. PAT shows the actual profitability of a company. For example, if Reliance Industries Ltd. has revenue of ₹1 trillion, expenses of ₹900 billion, and tax of ₹30 billion, its PAT would be ₹70 billion.

• Earnings Per Share (EPS):

  Indicates the profit attributable to each outstanding share, calculated as Net Profit divided by the number of shares. It is a key measure for evaluating profitability on a per-share basis. If Reliance Industries Ltd. has a PAT of ₹70 billion and 6.34 billion shares, its EPS would be ₹11.

Note for finance sector companies (Banks and NBFCs)

• We ignore certain metrics like debt-to-equity and other income. The only important metrics to observe is net-profit and EPS.

This precise approach used in financial analysis along with the understanding of the essential terms provides a clearer understanding of a company’s performance and financial health.

Subscribe now

Subscribe now

Hello,

In this post, we’ll discuss how we determine if the timing of our stock selection and entry is appropriate.

This falls broadly under the category of technical analysis, which is a vast and complex subject that requires significant time to master and practice. To simplify this process, we focus on a few fundamental principles that form the basis of any technical analysis.

We have found these principles to be sufficient for our analysis. The three key factors we consider are:

1. Trend Alignment to Dow Theory

   Determine if the stock is in a primary uptrend, characterized by higher highs and higher lows. Confirm alignment with broader market movements to validate the trend.

2. Institutional Interest with Volume Analysis

   Track buying and selling activity by institutional investors. Increased volume typically signals strong interest and confidence in the stock’s future performance.

3. Price Near Support Levels

   Filter out stocks that are far from support levels or are near resistance levels based on historical price movements to identify optimal entry or exit points.

Case Study: Punjab National Bank (PNB)

Let’s take Punjab National Bank (PNB) as an example to illustrate this framework.

Financial Analysis

This is a brief summary of PNB’s financial performance:

• Net Profit Analysis:

  • In FY 2015, the company posted a net profit of ₹3525 Cr.

  • Over the next four years, PNB experienced a decline and reported negative results until FY 2019.

  • In FY 2020, the company saw a turnaround with a net profit of ₹485 Cr.

  • By FY 2022, PNB’s net profit returned to FY 2015 levels, reaching ₹3908 Cr.

  • Currently, the net profit is at a lifetime high of ₹11,786 Cr in the last 12 months.

Technical stock price chart

Below is a weekly price chart of Punjab National Bank, where each candlestick represents one week.

Key Observations (in relation to the financial analysis):

1. Downtrend and Sideways Phase

   • Despite the positive turnaround in FY 2020, the stock price declined by 70% during the same period.

   • From April 1, 2020, to November 21, 2022 (a period of 2.5 years), the stock moved sideways even though net profits had recovered to FY 2015 levels at ₹3908 Cr.

   • There were indications of high institutional interest through volume analysis, but the price uptrend had not yet started.

   Note: Investing during this phase would have led to a net decline and missed opportunity cost, despite the company’s improving financial performance.
   

2. Uptrend Phase

   • During the uptrend phase, as per Dow Theory’s principles of higher highs and higher lows, the stock price gained 143% in just 210 days.

   • This uptrend was supported by high-volume activity driven by institutional interest, indicated by high volumes.

Note: Investing during this phase would have yielded significantly higher returns. In the earlier phase, it would have been more advantageous to allocate capital to a stock already in an uptrend with strong institutional interest.

This case study demonstrates the importance of timing when entering a stock, even if the financial fundamentals are improving. Our approach helps avoid opportunity costs by ensuring that capital is deployed in stocks showing positive price action and institutional support. Also, explains why we don’t operate with the ‘buy and forget’ approach.

Subscribe now

Welcome to the Boring Wealth community!

In this series, we will share our approach to trading in the stock market.

Subscribe now

Before we begin -

• We are not here to indulge in the ‘get rich quick schemes’ or ‘exciting things’. If that is what you are looking for, this community is not for you.

• We also don’t operate with the ‘buy and forget’ lazy approach. We understand that extra gains require putting in extra effort, while continuing with our day jobs.

• We believe in a simpler, higher success probability approach and understand that compounding requires time, patience and consistency.

What we don’t indulge in -

• Futures and Options

• Any kind of margin trading

• Short selling

• Intraday trading

• Penny stocks

• Taking a new trade near a company’s upcoming earning results announcement day

• Taking a new trade near a major event e.g. upcoming election results day or budget announcement day

With those things clear, let’s understand the things we control and don’t control as a trader in the stock markets. This clarity helps to not stress on a lot of variables which are beyond our control.

What we control

1. What to buy (Stock selection)

2. When to buy (Timing of the trade)

3. How much to buy (Capital allocation)

4. When to sell (Trade management)

What we don’t control

1. Will the stock price move in our favour

2. When will the price start moving in our favour

3. How much will the stock price move(upwards or downwards)

We have detailed out each component of what we control below -

1. What to buy

2. When to buy

3. Trade Management (3 parts)

Subscribe now

Subscribe now

Hello,

In this post, we’ll detail out our stock selection framework - or ‘What to buy’ part.

Before we begin -

• Our approach to scanning a company is akin to that of a board member or a company executive—focusing on key financial metrics and strategic insights to make quick, informed decisions. We avoid the granular approach of an accountant who scrutinizes every minor detail, allowing us to keep a broader perspective on the company’s overall health and potential.

Our stock selection framework is divided into three main parts: Fundamental Analysis, Financial Analysis, and Timing/Technical Analysis. This structured approach helps identify high-quality stocks with strong fundamentals, healthy financials, and favorable technical indicators.

1. Fundamental Analysis

• Company Overview

  Understand what the company does, its business segments, and how it generates revenue.

• Business Type

  Determine if it is a stable, low-volatility business (e.g., utilities) or a high-growth but more unpredictable sector. Also if it’s a large company which is usually slow grower or a nimble fast-grower.

• Is It a Boring Business?

  Evaluate if the business operates in a stable and predictable industry with steady demand, such as consumer staples or utilities. Boring businesses are often resilient during economic downturns.

• Management Track Record

  Review management’s past performance in scaling the business and maintaining profitability during economic cycles.

• Future Growth Potential

  Analyze the company’s strategic initiatives, new product launches, market expansion plans, and ability to sustain growth.

• Risks

  Identify external and internal risks that could impede growth, such as regulatory challenges, competition, or supply chain disruptions.

• Tailwinds

  Assess alignment with broader economic trends, such as favorable government policies or rising consumer demand, that could boost performance.

• Cyclical Nature

  Determine if the company is affected by economic cycles and whether it is currently in a growth, peak, decline, or recovery phase.

• Turnaround Potential

  If the company is in distress or facing challenges, analyze recent management actions, cost-cutting measures, and restructuring efforts to gauge the likelihood of a successful turnaround.

2. Financial Analysis

• Overview of financial health

  • Assess overall financial health of the company by looking at the key metrics like promoter holding, pledging percetage, debt position, P/E, book value, ROCE etc.

• Quarterly Results

  Examine recent quarterly performance for trends in revenue, margins, and profits. Look for signs of growth or stagnation over the past few quarters or turnaround signals.

• Annual Results

  Review annual financials over the past few years to evaluate consistency in growth, profitability, and return ratios.

• Peer Comparison

  • Relative Performance: Compare the company’s financial metrics (e.g., ROCE, EBITDA, and profit margins) against its industry peers.

  • Market Share and Revenue Growth: Analyze the company’s market share and how its revenue growth rate stacks up against competitors.

  • Valuation Against Peers: Determine if the company is undervalued or overvalued relative to peers. Evaluate potential for valuation growth if the company achieves higher revenues or profits in line with top-performing competitors.

Financial analysis and financial terms are explained in more detail in this post.

3. Timing/Technical Analysis

• Trend Alignment to Dow Theory

  Determine if the stock is in a primary uptrend, making higher highs and higher lows and confirm alignment with broader market movements.

• Institutional Interest with volume analysis

  Track buying and selling activity by institutional investors, as increased interest often signals confidence in the stock’s future performance. The volume trends can indicate recent institutional interest.

• Price Near Supports

  Filter out stock which are away from support or near resistance levels based on historical price movements to find optimal entry or exit points.

This enhanced stock selection framework provides a comprehensive view of a company’s fundamentals, financial strength, and timing positioning, enabling informed investment decisions and helping to maximize potential returns while managing risk effectively.

Subscribe now

Subscribe now

<pre-read - part 1 and part 2>

Hello,

This is a continuation of the series on ‘How we manage trades’. In this part 3, we share our approach to protecting and booking profits.

Setting Realistic Goals

• Most new traders aim to beat their existing investments. While mutual funds on an average generate 10%-15% CAGR, if you calculate an overall return rate on all your investments including MF, FDs, savings accounts etc - the average rate would come out ~10%.

• Achieving a 100% success rate on each trade is unrealistic. Even the most celebrated investors in the world don’t have a 100% success rate. The success rate will vary based on market conditions, stock valuations, and your timing.

• When our success rate drops below 50%, it’s a sign to step back and reassess the situation. Cash is also a position; being fully invested all the time is unnecessary.

Risk-to-Reward Approach

The risk-to-reward ratio measures how much risk you take for a potential reward. For example, a 1:2 ratio means risking ₹1 to gain ₹2. While popular, we don’t follow this ratio rigidly for every trade because it doesn’t always suit small and mid-cap stocks.

1. Higher Volatility: Small caps can swing 5% down and hit stop-losses before reversing.

2. High Reward Thresholds: Aiming for 20% rewards with a 10% risk often results in missed gains.

Our Strategy: Protect Breakeven and Book Partial Profits

1. Move Stop-Loss to Breakeven

We shift our stop-loss to breakeven once a trade moves in our favour at +5% profit to secure initial capital.

2. Book Partial Profits at +10%

We sell 50% of our position at +10% profit and keep the remaining portion at breakeven stop-loss. This locks in gains and reduces risk.

3. Trailing Stop-Loss

For the remaining position, we adjust the stop-loss at every +5% milestone, capturing larger gains if the price moves favorably.

Why 10%?

Our research shows that mid-cap and small-cap stocks can move 10% to 100% if the timing of the analysis is right. However, predicting exact price moves is futile. Holding every trade for maximum gains can lead to missed opportunities.

Balancing Risk and Reward

Using a balanced risk/reward ratio over 100 trades is more effective than strict formulas, especially in volatile markets. We aim for an average ratio of 1:2 over time.

Practical Scenario: Why a 100% success strategy is not needed

Let’s analyze the impact using different success rates:

• Capital allocated per trade = 10%

• Total trades = 100

• Average loss = 5% (including the trades where we protect breakeven)

• Average gain = 10%

This table demonstrates that, even with a 53% success rate, booking average profits at 10% and maintaining an average risk:reward ratio of 1:2 results leads to a positive net gain of 40% on your total allocated capital, making it a viable approach for consistent profitability.

Conclusion

By focusing on breakeven protection and partial profit booking, traders can maximize returns while keeping losses under control.

Lastly - Contrary to the popular belief, profit booking is one of the hardest thing to do in trading. There is always a hope for some more gain or a turn-around from losses tomorrow. It is an activity which a trader always regrets. Hence practicing this emotion-less discipline is important.

Subscribe now

Subscribe now

<read part 1 here>

Hello,

This is a continuation of the series on ‘How we manage trades’. In this part 2, we share our approach to capital allocation.

Before we begin, it’s important to understand -

• The priority is to build trading as a skill first, and let it take it’s time. A skill or expertise can’t be built over night. It needs it’s own baking time, where you have to go through the different phases of market conditions, put in consistent effort, learn from the mistakes and improvise.

• The analogy to think of is your journey of learning to speak, read and write the language English. While, today, you might be confident in speaking in English in public, it required a certain slow path and effort to reach here where you started small but kept at it with consistency.

• As we mentioned in part 1, a typical trader’s emotions oscillate between greed and fear. Do not rush into excessive greed and go all-in. Rather, obsess over building the skill and the confidence which will come with it. It is a lifelong skill, and a life saving skill. And the markets are not going anywhere, so don’t feel FOMO of losing out on certain potential gains.

Risk Management in Stock Trading: Capital Allocation Strategy

Capital allocation is a key component that determines how much capital you allocate to trading and each individual trade. Proper allocation ensures that losses are manageable, emotions stay in check, and trading decisions are more structured. Let’s explore this concept further by breaking it down into two essential parts: overall capital allocation and per-trade capital allocation.

1. How Much Total Capital to Allocate

Think of capital allocation as learning to drive. When you start driving, it’s with a small car in safe environments, such as an open ground or internal roads, before venturing out to highways, congested areas, or steep slopes. Similarly, in trading, the initial focus should be on minimizing risks by allocating a small portion of total capital.

Begin with Caution: If you are a new trader, consider allocating 10% or less of your total capital. This allows you to gain experience, adapt to different market conditions, and refine your strategy without risking substantial capital. This approach also gives you time to build the emotional discipline necessary for trading.

The Learning Curve

As with driving, where you progress from a small car to a sedan, and then to a luxury SUV as your skill improves, capital allocation should increase only when trading expertise and confidence grow. Sudden exposure to large capital in a high-risk environment, like starting with a luxury SUV on a steep cliff, can be detrimental. Therefore, increase your allocation gradually—after consistent results over a period, alteast a year—until you are confident in trading with a larger capital base.

Adapting to Market Conditions

• As the market moves in different bear(downtrend) and bull(uptrend) phases, we will find our trades timing success rate also varying.

• It is important to accept the market reality during such bear phases and reduce our total allocation further during bear phases, to protect our capital and the opportunity cost.

• As the markets turn around, our trades and analysis timing success-rate will give us an indication of the market phase, and we can again increase the total allocation gradually.

• Remember - Our goal is to make money in the markets, and not to prove that we are right all the time. The markets are never wrong.

2. How Much Capital to Allocate Per Trade

• There’s a common belief that diversification is key to risk management. However, excessive diversification can dilute the impact of successful trades and make monitoring multiple positions overwhelming, turning it into what is known as “diworsification.”

• Our approach advocates for a concentrated portfolio with focused management. Ideally, aim for 5-6 active trades at a time, though as a beginner, it’s reasonable to start with 8-10 trades to maintain a balanced risk profile.

Calculating Risk Per Trade: Assuming a 10% stop-loss per trade, the maximum loss across 10 trades should not exceed 10% of the allocated capital. If your comfort level is lower than this threshold, reduce overall allocation to keep risk within acceptable limits.

Real-World Application

If your total capital is ₹10,00,000, allocate ₹1,00,000 (10%) for trading purposes. With 10 trades, this means allocating ₹10,000 per trade. Implementing a 10% stop-loss on each position limits total risk exposure to ₹1000 per trade and a maximum of ₹10,000 if all trades incur losses. Adjust these allocations based on your risk tolerance.

Why Gradual Allocation is Crucial

Capital allocation is not just about limiting risk but about understanding your emotional threshold and the opportunity costs involved. It’s better to start small and experience different market phases and conditions rather than being forced into taking drastic measures due to a poorly sized position.

By embracing these principles of capital allocation, traders can create a solid foundation for long-term success, allowing for sustainable growth while managing risks effectively.

Read next -

Subscribe now

Company name - Surya Roshni Ltd

Last closing price(NSE:SURYAROSNI) - ₹732.35 (as on 03-Oct-2024)

Estimated reading time - 3 minutes

The updated performance of all our past analyses is available here.

Executive Summary

• Established in 1973, ‘SURYA’ is one of the most respected and trusted brand in Steel Pipes, Lighting & Consumer Durables (FMEG) and PVC pipes in India and Globally.

• Strong in-hand order book of about ₹ 600 crore as on 30th June 2024 for Oil & Gas sector, Water Sector and Exports business.

• The company improved the quarterly operating margins significantly by 33%, and EPS by 56%.

Stock price chart

Detailed analysis

About the company

• Established in 1973, ‘SURYA’ is one of the most respected and trusted brand in Steel Pipes, Lighting & Consumer Durables (FMEG) and PVC pipes in India and Globally.

• The company operates two segments -

  • Lighting and Consumer Durables

  • Steel Pipe and Strips Segment

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Strong in - hand order book of about ₹ 600 crore as on 30th June 2024 for Oil & Gas sector, Water Sector and Exports business.

• Anticipating revenue growth of 12%-15% for FY25 driven by consumer aspirations and government focus on infrastructure.

• Focused on higher value-added products with higher margins, with 75% of capex directed towards these segments.

• Spiral pipe plant in Gwalior with an annual capacity of 60,000 tons expected to start operations by December 2024.

• Expansion into the residential pump segment with ‘Surya Water Pumps’ launched in July 2024, targeting government-driven initiatives like ‘Har Ghar Jal Yojana’.

Potential risks that can hamper the future growth?

• Raw Material Price Volatility - Fluctuating steel and raw material prices can impact margins if costs cannot be passed to customers.

• Dependence on Government Projects - Slowdowns or delays in government infrastructure projects could reduce order volumes and revenue growth.

Financial analysis

Overview

• The company is a zero-debt company, and has surplus cash of ₹156 Cr.

• The promoter holding is 63%, and pledged percentage is 0%.

• The company has a strong ROCE at 20.8%, and price to book value at 3.51.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The sales growth was muted at 0.96%, but company improved the operating margins significantly by 33%.

• This resulted in a operating profit growth of 32% and EPS growth of 56%.

• EBITDA/Ton for Steel Pipe and Strips segment increased by 38% on account of better product-mix.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The overall sales growth was negative at -2.34%.

• The trailing-twelve-month(TTM) operating profit is +6.4% and EPS is +10.14% is on account of improved margins.

Peer comparison

• A peer in the similar product category of tubes - ‘APL Apollo Tubes Ltd’ has (compared to Surya Roshni Ltd) -

  • Market cap - ₹ 40,923 Cr.(5.39x higher)

  • Profit in last 12 months - ₹ 732(2.2x higher)

  • Price to book - 11.4 (3.25x higher) and P/E of 55.9 (2.6x higher)

• This shows a potential for Surya Roshni Ltd’s market cap to grow if it is able to maintain it’s growth rate.

Timing analysis

• Institutional high trading volume signs seen recently in the weeks of 05 Aug(3.1x), 12 Aug(3.3x) and 19 Aug(3.7x).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Subscribe now

Hello,

In this series, we will share our approach to taking trades and trades management in the stock markets.

Before we begin, a few important points -

• Fear and greed - A typical trader’s emotions oscillate between greed and fear. The market movers feed on this, to ensure the uninformed and undisciplined traders loose more money than they gain. This emotional rush is more frequent in stock markets trading because of very frequent movement of prices than any other type of trading.

• Keep emotions aside - If we want to make consistent good gains out of the market, we have to adopt a mechanical emotionless approach in trade-management.

• Practice consistency and discipline - As with any new skill or approach, the only way to acquire a skill is to practice it with discipline consistently and give it time. It’s not easy at first, but as with everything, it can be turned into a habit with repetitions for months.

Priorities in Trading

1. Protecting Capital

Capital protection is the cornerstone of trading success. It ensures traders can withstand market downturns and have the opportunity to participate in future trades. There are two main priorities in order -

• a) Protecting Loss: Setting stop-loss orders or predetermined exit points minimizes potential damage to capital. This avoids a situation where losses spiral out of control.

• b) Protecting Breakeven: Once a trade moves favorably, adjusting the stop-loss to breakeven secures initial capital, preventing turning a profitable position into a loss.

2. Protecting Profits

• After securing capital, the next priority is protecting accumulated gains. This involves trailing stops or taking partial profits to lock in gains while leaving room for further upside. We’ll share a detailed post on this separately.

Why Capital Protection is Critical

Protecting capital is vital because significant losses make recovery disproportionately difficult. A 50% loss, for example, requires a 100% gain just to return to the starting point. Thus, avoiding large losses ensures that traders don’t need extraordinary gains to stay profitable.

The Inverse Effect of Losses: Recovery Table

This table illustrates that the deeper the loss, the more significant the required gain to recover. For instance, a 10% loss needs an 11.11% gain to recover, while a 20% loss requires a 25% gain, showing the inverse relationship between loss and required recovery. The gap widens as losses go into double digits.

Opportunity Cost in Trading

Opportunity cost refers to the potential gain missed by keeping capital tied up in an underperforming or stagnant trade instead of reallocating it to a potentially profitable opportunity. Taking a small loss and freeing up capital allows traders to pursue more promising trades, ultimately maximizing overall profitability.

Limiting Losses to Minimize Opportunity Cost

To manage opportunity cost effectively, we usually aim to limit our losses to 8-10%. This ensures that we don’t suffer significant drawdowns, which are harder to recover from, and keeps capital free for new opportunities.

By focusing on these principles, traders can create a robust risk management framework that prioritizes capital preservation and profit protection, leading to more consistent trading success.

Read next -

Subscribe now

Company name - Eicher Motors Ltd

Last closing price(NSE:EICHERMOT) - ₹4972.65 (as on 1-Oct-2024)

Estimated reading time - 3 minutes

The updated performance of all our past analyses is available here.

Executive Summary

• Eicher Motors Limited, incorporated in 1982, is the listed company of the Eicher Group in India and a leading player in the Indian automobile industry and the global leader in middleweight motorcycles. It is the owner of the iconic Royal Enfield brand.

• The company is debt-free with debt-to-equity at 0.02 and the ROCE is strong at 31.1%.

• The annual net profit increased by 37.3% and EPS increased by 37.14%.

Stock price chart

Detailed analysis

About the company

• Eicher Motors Limited, incorporated in 1982, is the listed company of the Eicher Group in India and a leading player in the Indian automobile industry and the global leader in middleweight motorcycles.

• It is the owner of the iconic Royal Enfield brand which is focused on mid-sized motorcycles (250-750 cc). Classic, Bullet, Himalayan are some of the brands that come under its Royal Enfield brand. It is sold in 60+ countries globally.

• Eicher has a joint venture with Sweden’s AB Volvo to create Volvo Eicher Commercial Vehicles Limited (VECV). VECV is engaged in truck and bus operations, auto components business, and technical consulting services business.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Continue to increase share of exports, currently at about 9%. Exports grew significantly by 57.5% to 1,192 units over Q1 of the previous year.

• New product launches and confidence in upcoming festive season demand, with expectations of improved consumer engagement through brand activation efforts.

• Transitioning from a forecast-based production model to an auto replenishment model aimed at improving dealer profitability and inventory management.

• Company has also been working on electric 2-wheeler products and has made significant progress on the same.

Potential risks that can hamper the future growth?

• The middleweight motorcycle segment is experiencing slower growth, attributed to market confusion due to increased competition.

• The sales growth rate for 2-wheelers has reduced in the past year compared to last year.

Financial analysis

Overview

• The promoter holding is 49.1%, and pledged percentage is 0%.

• The company is debt-free with debt-to-equity at 0.02 and the ROCE is strong at 31.1%.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported sales growth of 10.2%.

• The operating profit increased by 14%, on account of increase in operating margin by 3.8% along with the sales growth.

• The net profit increased by 20% and EPS increased by 19.7%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 14.5%, and operating profit growth of 25.6% on account of increased profit margins.

• The net profit increased by 37.3% and EPS increased by 37.14%.

Peer comparison

• The company has highest - EPS variance in 3 years, highest profit in the last 12 months and highest operating margins among it’s peers.

• The nearest peer in terms of market-cap TVS Motor Co has less than half the profits, and more than double the P/E. And almost similar market cap.

• This shows a potential for growth in Eicher Motors Ltd’s market cap if it is able to maintain it’s growth rate.

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - India Glycols Ltd

Last closing price(NSE:INDIAGLYCO) - ₹1354.95 (as on 1-Oct-2024)

Estimated reading time - 3 minutes

We recently covered RPG Life Sciences Ltd on 22-Sep, and the timing of our analysis worked out as it reached +10% yesterday. The updated performance of all our past analyses is available here.

Executive Summary

• Established in 1988, India Glycols Ltd. is engaged in the manufacturing of green technology-based bulk, specialty & performance chemicals, and natural gums, spirits, industrial gases, sugar, and nutraceuticals.

• The govt. is targeting an Ethanol Blending of 20% by ESY 25-26 and this provides an opportunity for growth for the company.

• The company has reported significant sales growth in the last 3 quarters, with 40.58% growth in Q1 - 2025.

Stock price chart

Detailed analysis

About the company

• Established in 1988, India Glycols Ltd. is engaged in the manufacturing of green technology-based bulk, specialty & performance chemicals, and natural gums, spirits, industrial gases, sugar, and nutraceuticals.

• The company operates 4 business segments - Bio-Based Specialties and Performance Chemicals (BSPC), Bio-fuel, Potable Spirits (PS) and Ennature Biopharma (EB).

• The annual net profit increased by 22% and EPS increased by 38%.

  

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Govt. is targeting an Ethanol Blending of 20% by ESY 25-26 and this provides an opportunity for growth for the company.

• New biofuels portfolio helping build top line as well as bottom line.

Potential risks that can hamper the future growth?

• Cost Pressures: Despite growth, the company faces ongoing cost pressures, particularly in raw materials and logistics.

• Finance Costs: Rising finance costs due to increased term loans and higher interest rates; expected to remain elevated until FY25-26.

• Market Dynamics: Uncertainty in margin improvement for the biofuels segment due to fluctuating grain prices and energy costs.

Financial analysis

Overview

• The promoter holding is 61%, and pledged percentage is 0%.

• The debt-to-equity is 0.66 and the price to book value ratio is 2.03.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has reported significant sales growth in the last 3 quarters, with 40.58% growth in Q1 - 2025.

• The operating profit increased by 26%.

• The net profit increased by 17% and EPS increased by 18%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a sales growth of 24.26%, and operating profit growth of 36%.

• The net profit increased by 22% and EPS increased by 38%.

Peer comparison

• The company has a the lower P/E among it’s peers at 22.54, while having the highest sales growth at 41.15%.

• The 3 peers valued more than India Glycols in the above table have lesser total sales, profits but have much higher current market cap. This shows a potential for India Glycols Ltd stock price to grow, if it is able to maintain it’s sales growth.

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Arvind SmartSpaces Ltd.

Last closing price(NSE:ARVSMART) - ₹826.45 (as on 30-Sep-2024)

Estimated reading time - 3 minutes

We recently covered Hitachi Energy India Ltd on 26-Sep, and the timing of our analysis worked out as it reached +10% yesterday. The updated performance of all our past analyses is available here.

Executive Summary

• Arvind Smartspaces Ltd was listed in 2015 through a demerger from Arvind Ltd. It is a real-estate company focused on residential projects, currently operating in Gujarat, Karnataka and Maharashtra.

• The company has a fast growing project portfolio - delivered 4.9 msf, ongoing projects of 26.7msf and planned projects of 46 msf.

• The annual net profit increased by 82% and EPS increased by 62%.

Stock price chart

Detailed analysis

About the company

• Arvind Smartspaces was listed in 2015 through a demerger from Arvind Ltd.

• It is a real-estate company focused on residential projects, currently operating in Gujarat, Karnataka and Maharashtra.

• The company is poised to ride the growth wave of spike in demand of premium housing in India.

• The company has a higher share of JDA(Joint Development Agreements) projects with the land-owners. This helps them keep an asset light model, enables faster turn-around and have a robust OCF(Operational Cash Flow) generation.

• Growing project portfolio -

  • Delivered 4.9 msf

  • Ongoing projects of 26.7msf

  • Planned projects of 46 msf

Future prospects

What is the company’s plan to maintain earnings growth in future?

• The company recently announced separate business and PnL heads for each zone, who will develop expertise and handle the nuances of each zone.

• The company is focused on premium residential market.

• The company has a robust pipeline of projects.

Potential risks that can hamper the future growth?

• A potential slow down in over-all real-estate, or supply increasing demand in near future.

• As the company plans to enter newer regions, with each region having it’s nuances, can they still deliver similar sales given local competition from established players.

Financial analysis

Overview

• The promoter holding is 50.3% and the pledged percentage is 0%.

• The company has a ROCE of 15.9% and debt-to-equity of 0.22.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The overall reported sales, operating profit and net profit numbers show a de-growth compared to last 3 quarters because of the accounting mechanism for real-estate.

• The metrics critical in this context are bookings(+48%) and collections(+21%).

• The current quarter shows lower EBITDA and PAT margins due to periodical costs and lower booking values compared to budgeted expectations.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The total reported sales increased by 33.3%.

• The operating profit increased by 228% on account of increased sales and operating margins.

• The net profit increased by 82% and EPS increased by 62%.

• Long term debt reduced by 36% from ₹143Cr to ₹91Cr.

Peer comparison

• The company has reported highest EPS 3yr variance at 49.9%.

Timing analysis

• Institutional high trading volume signs seen recently in the week of 23-Sep(17X).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - MRF Ltd

Last closing price(NSE:MRF) - ₹140973.9 (as on 27-Sep-2024)

Estimated reading time - 3 minutes

The updated performance of all our past analyses is available here.

Executive Summary

• Madras Rubber Factory Limited (MRF) is the parent company of the MRF Group. The company is engaged in the business of manufacturing tyres.

• The p manufactures tyres (flagship) for Passenger cars, Two-wheelers, Three Wheelers, OTR, Trucks, Farm tractors, LCVs, Tubes & flaps, SCV, Pick up cars, MCV and ICV.

• The debt-to-equity is 0.17% and the ROCE is at 16.1%

• The company improved annual operating profit margins significantly by 70%. This led to a net profit increase of 70.6% and EPS increase of 70.65%.

Stock price chart

Detailed analysis

About the company

• Madras Rubber Factory Limited (MRF) is the parent company of the MRF Group. The company is engaged in the business of manufacturing tyres.

• The company manufactures tyres (flagship) for Passenger cars, Two-wheelers, Three Wheelers, OTR, Trucks, Farm tractors, LCVs, Tubes & flaps, SCV, Pick up cars, MCV and ICV.

• It also manufactures Sports goods, Paints & Coats and Pretreads. It also manufactures Puzzles, games, and toys for kids through its brand Funskool.

• It also has the distinction of being the most expensive stock in India currently.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• Increasing % share of exports

• Positioning products for SUVs to the OE manufacturers

Potential risks that can hamper the future growth?

• Slowing growth in the automotive sector overall

Financial analysis

Overview

• The promoter holding is 27.8% and the pledged percentage is 0%.

• The debt-to-equity is 0.17% and the ROCE is at 16.1%

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company reported a 11.74% growth in sales in the latest quarter.

• A 11.1% dip in operating profit margin was reported.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The annual sales increased by 9.39%.

• The company improved operating profit margins significantly by 70%.

• This led to a net profit increase of 70.6% and EPS increase of 70.65%

Peer comparison

• MRF has the highest sales growth among it’s peers at 9.15%.

• Tyres sector participation - we covered CEAT Ltd on 25-Sep and the price has moved +7.62% since then.

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now

Company name - Samvardhana Motherson International Ltd

Last closing price(NSE:MOTHERSON) - ₹212.98 (as on 26-Sep-2024)

Estimated reading time - 3 minutes

The updated performance of all our past analyses is available here.

Executive Summary

• The MSSL group is amongst the world's largest manufacturers of exterior rear-view mirrors with a dominant market share, and is a leading global player in polymer-based interior and exterior modules. The group is also the largest manufacturer of wiring harnesses for passenger vehicles in India. It is also India’s largest auto-ancilliaries company by market cap.

• The company has had a strong track record of 20%+ sales growth in the last 9 quarters, with the latest sales growth reported at 28.52%.

• The annual net profit increased by 80% and the EPS increased by 81.4% in FY 2024.

Stock price chart

Detailed analysis

About the company

• The MSSL group is amongst the world's largest manufacturers of exterior rear-view mirrors with a dominant market share, and is a leading global player in polymer-based interior and exterior modules.

• The group is also the largest manufacturer of wiring harnesses for passenger vehicles in India. It is also India’s largest auto-ancilliaries company by market cap.

• It operates 5 business divisions - Wiring Harness, Vision Systems, Modules and Polymer Products, Integrated Assemblies and Emerging Businesses.

Future prospects

What is the company’s plan to maintain earnings growth in future?

• The company is focused on improved ROCE and absolute profitability.

• It is well-positioned to benefit from tailwinds in emerging markets.

• Continuously evaluating growth opportunities and acquisitions.

• Impact of key acquisitions like Yachiyo, AD Industries, and Lumen to be visible from FY'25 quarter 1 onwards.

Potential risks that can hamper the future growth?

• Logistic costs increased due to the Red Sea crisis and congestion at Asian ports, leading to longer lead times and higher inventories.

• Light vehicle production remains largely flat year-on-year, with significant growth from India and China offset by softness in developed markets, especially Europe.

Financial analysis

Overview

• The promoter holding is at 58.1%, and the pledged percentage is 0%.

• The company has a ROCE of 13.7%, and debt-to-equity is 0.76.

Quarterly results

Growth in key metrics in the latest quarter Q1 - 2025 compared to the last year’s same quarter -

• The company has had a strong track record of 20%+ sales growth in the last 9 quarters, with the latest sales growth reported at 28.52%.

• The operating margins also improved by 11%.

• Overall net profit increased by 58.9% and EPS increased by 65.1%.

Annual results

Growth in key metrics in the last financial year 2024 compared to the previous financial year -

• The company reported a strong sales growth of 25.26% in FY 2024, and operating profit increased by 12.5%.

• The net profit increased by 80% and the EPS increased by 81.4%.

Peer comparison

• Even though Samvardhana Motherson International Ltd is the largest among it’s peers in the auto-ancilliaries sector in terms of total sales and profits, it still has -

  • Highest quarterly profit growth

  • Lowest P/E at 44.96

  • Lowest Price-to-book value at 5.44.

Timing analysis

• Institutional high trading volume signs seen recently in the week of 16-Sep(4.7x).

This is not a stock recommendation. It’s an analysis of the stock basis the data available today, and the viewpoint can evolve in future. Please read our Disclaimer here.

Credits : Financial data source - screener.in

Subscribe now