Tuesday, October 21, 2008

Repro Ind - Q2 results

Index - 10683
CMP - 86.7

I had written here about Repro Industries and my liking for the business and the stock. I had followed that up with analysing the Q1 results here.

The company announced its Q2 results and it is in line with expectations. Sales increased dramatically over last year from Rs 44 crores to Rs 63 crores a increase of 43%. The increase sequentially over the Q1 quarter is about 36%.

The Q2 quarter invariably has higher sales due to the balance sheet printing business however it has lower margins.

The net profit has grown at 10% over last year from 3.8 crores to 4.2 crores. The reduced net profit margin is due to a mark to mark provisioning of Rs 2 crores on forex loss. Minus that the net profit would have moved from 3.8 crores to 5.4 crores a jump of nearly 42% at the operational level.

Half yearly EPS stands at Rs 8.57 per share and the cash EPS stands at Rs 12.26 per share.

I have added more to my position on the stock around the Rs 90 mark. Stock is available around a PE of 5-6 on FY09 profits.

I have uploaded the FY 2008 balance sheet here

Tuesday, October 14, 2008

K Sera Sera - What would be would be

I was browsing thru announcements on the BSE site and came across this

"K Sera Sera Productions Ltd has informed BSE that the Board of Directors of the Company at its meeting held on October 13, 2008, inter alia, has considered the following points.

1. The Board has constituted the committee, who shall allot the Fully Convertible Warrants to Yes Bank Ltd on preferential Basis."

Yes bank making movies :-)

Clearly the company is in a bad shape and I m sure this is Yes Bank's way of converting a dud loan into a equity stake. I m sure we will see a lot of this going forward.

Tata Motors acquires Miljo Grenland

I had in a earlier post talked about how I like the way Tata Motors has and is in the process of evolving into a global auto major with both geographical diversity and expanded product portfolio covering cars, trucks, buses, earth moving equipment etc.

A step in the process has been a small ticket acquisition that they announced today.
From the Business Standard
Tata European Technical Centre plc, a UK-based subsidiary company of India's third largest passenger vehicle manufacturer Tata Motors, has today acquired a 50.3 per cent holding in Norway-based Miljo Grenland/Innovasjon, a company specialising in development of electric vehicles, for Rs 9.40 crore.
The balance of shares will be retained by the existing shareholders who will continue to be associated with the venture, the company said in a press release. Miljo will produce electric vehicles based on Tata Motors’ products, besides manufacturing of state-of-the-art super polymer lithium ion batteries and the development of related technologies.
"Tata Motors believes that this investment in Miljo will help the company realise its strategy to develop convenient, affordable and sustainable mobility solutions through electric and hybrid vehicles", stated the release.

Niche acquisition which will enable Tata Motors to expand their electric and hybrid car portfolio. Another piece of the jigsaw falling in place.

Monday, October 13, 2008

We learn from history that we don’t learn from history - Part 2

I had in my earlier post talked about two trends that history tends to repeat. One was the cyclical nature of markets, the other is the fact that
All Empires Die
Francis Kukuyama wrote a essay in 1989 “ The End of History” presumptuously arguing that the advent of Western liberal democracy reflects the end point of the mankind’s ideological evolution.

Mr Kukuyama seems to have missed out on the rationalising ability of all winners in believing “ Since I won, I was right”. It is this belief that makes all winners propagate their way of life to the rest of the world. Alexander thought of doing it so did the Romans. The Spanish decided that Christianity is the best religion and carried out their inquisitions. The British followed it up with their way of life and the British sense of fairness ( as they plundered the world) was what the world needed.

And of course now the American way of life that pervades every aspect of our lives from Coke to free markets and exotic derivatives.

The denizens of these empire tend to lose touch with reality and believe that the moral high ground arising out of victory translates into a easy life. The greed of a empire works towards propagating itself hoping to make the rest of the world pay for its upkeep. It peaks at the height of the enterprising ability of its citizens and slowly deteriorates as its citizens start enjoying the fruits of the efforts of their forefathers.

From the point that it starts living off its vassal states and their citizens to the point where it gets lazy to be enterprising and slowly giving that advantage off.

America the empire that took over from the British is in a decline and is slowly giving up its right to rule the world. You can’t be a king with tattered clothes and IOU’s to your subjects. It wont happen tomorrow but it is happening as the power shifts and I suspect will shift to the Chinese who will rule the world over the next century. Though this is apparent to an outsider as he sees the Americans sell off their family jewels to feed themselves, for Americans I don’t think the wake up call has happened.

It is the rationalising nature of the human mind which believes that the good old American way of life will continue, failing to read the writing on the wall or the path of history that will lead to the decay of the empire.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin.
And the first one now
Will later be last For the times they are a-changin. - Bob Dylan

Friday, October 10, 2008

Some humour to make us feel young again

While reading through the web I came across Eddie Cantor who was a comedian and here's a quip by him during the Great Depression of 1929.

Eddie Cantor, said that his broker had told him "To buy this stock for my old age. It worked wonderfully. Within a week I was an old man!" :-)

We learn from history that we don’t learn from history - Part 1

This is amongst my favourite paradoxes and I savour the deep meaning that the paradox throws at us.

It is human to experience the wide range of emotions which enrich our lives. From the exhilarating highs to the depressing lows. Markets are like mirrors that stare back at us, displaying our own emotions and blurring the picture over a period of time. Do our emotions define the markets or does the market define our emotions? Who is the dog and who is the tail gets lost in the concoction of emotions that wag around us.

History poses the same problem to the human mind. Does history define the path that we will walk or do we chart the path which will rewrite history?. Surprisingly, though science has progressed on all frontiers, the human mind still remains where it was and experiences the same set of emotions. The thrill of a hunting kill is the twin sister of the kick in executing that profitable trade. Our primal emotions have moved unaltered through history and are bounded by the framework that history defines for us. We are destined to operate within those boundaries, believing that we will rewrite history as history makes us repeat it.

There are two discernable trends that I want to touch upon where history keeps repeating itself.

Cyclical nature of all markets
Man is not a rational animal but a rationalising one. The ability of the human mind to rationalise everything from valuing eyeballs during the dotcom boom to sending millions of Jews to the ghetto is amazing. We don’t find answers for our questions but define the questions for the answers that we have already decided on.

This rationalising ability of the human mind makes it experience the exhilarating high to the depressing lows.

“Greed is good” said Ivan Boesky at Berkeley’s which Michael Douglas ( Gordon Gekko) later made it famous in the movie “Wall Street”.

Combine greed with the rationalising nature of the human mind and we get “irrational exuberance”. To covet the other man’s land, gold or his wife while keeping our‘s at home has driven human civilisations through history and it will continue. Fear of losing your life or your wealth over it is the flipside of that pursuit. Can we overcome the cycle of greed and fear? We haven’t in 8000 years of human evolution and I don’t see we managing it now. So we will go thru this fear phase to experience the next round of unbridled greed. The actors in the play might change but the play will go on.

To quote Shakespeare
“All the world's a stage,
And all the men and women merely players:
They have their exits and their entrances”

To be continued ......

Wednesday, October 8, 2008

Iceland getting chilled out

The wonderful small little country of Iceland which is inhabitated with about 3,20,000 denizens is heading for bankruptcy. It is on the verge of joining the elite group comprising Lehman Bros, AIG, Washington Mutual and could become the first country to go down in the current credit crisis.

What is interesting is not the fact that a country is heading for bankruptcy, a lot of them have in the past from Asian to African countries. What however is interesting is the fact that it would be amongst the first so called "developed" "rich" countries which will go down.

We live in interesting times. The times they are a changin.

End of Year Closing Sale

We have a end of the year closing sale going on. One on One free :-)

To quote Mark Twain " We are now interested on the return of our money and not the return on our money".
Well thats how the market is behaving as it stampedes itself thru the exit door.