Tuesday, March 28, 2006

Sandesh Ltd.

Sandesh Ltd. is available at 113.00 rupees (28-Mar).
Sandesh Ltd. has an NCAV of 111.45 rupees.

The scrip has cash per share of 26.60 rupees which is very good. It has a good market share in Gujarat where it is now the #3 newspaper (from #2, a year ago). At these numbers, prudence has it that the stock will go up however from an investing viewpt, the following needs a look into -
a) Sales have dropped; so have profits
b) Didn't declare any dividend last year
c) There was a sudden spurt in sales last yr (from nowhere we has a number of 635 crs in the financial statement)
d) Q3, 2005 was a negative profits quarter
e) Fwd PE comes to 17.20 (but very inconsistent profits)

So although this stock gives me fantastic margin-of-safety, it doesnt give me the comfort of a consistent and growing earnings growth. If anyone's been tracking this stock, then opinions are soughted.

12 Comments:

Blogger Prem Sagar said...

hi shankar,
I think I remember someone telling me sometime ago that the huge variant in sales was due to a bullion (import-export of various commodities) sale or something similar. But note that it had not brought anything much in profits.
This is mentioned in the Operating income schedule, which I dont have more info on. (Sales Trading for 511.97 Cr)

And a good chunk had come from property development and misc services.(wonder if the co is really into media business??)
Looks like the co doesnt really know where it needs to go...

Do let me know if you find anything more in your analysis.

And the NCAV indicated by you includes lot of inventory, receivables and loans.. and I am not sure I am comfortable factoring them in my review.. I will take the cash of 20.25Cr though.. (who wouldnt?)
I am not sure of this.. but it appears that the mainstream of business brought in only 54Cr of sales last yr after deducting the other income like the trade and land deal.... and they have an inventory pile of 40 Cr in different stages..
I am relatively new to this analysis.. and being an engr doesnt help me.. so correct me if I am wrong anywhere.

1:21 AM  
Anonymous Rajdeep said...

Prem Sagar is right. I live in Ahmedabad so I know this company and the promoters well. As far as the media business is concerned, they are going down after Divya Bhaskar's entry. They will certainly do real estate development, etc. and make money but then why not invest in a real estate company?

11:06 AM  
Anonymous anunay said...

Hello shankar,
Here i need a help from you,yaar according to the recieved info RIL is coming with a IPO around 10th of april.

I have also heard some talk about preferential allotment,i have 15 reliance shares,please tell me that in what ratio the companies allot the preferential shares.

What do you suggest,should i buy more RIL shares so as to get a larger IPO chunk.

Please help,i do not hav any idea abt preferential allotments.

Hope u will help.

Thanks,
anunay

2:18 PM  
Blogger Shankar said...

Hi Anunay,

I've not been tracking this stock and hence would not be the right person to comment on the same. Anyway, I find the complexity too stretched for comfort.

One thing - for an excellent account of preference shares, I suggest you get hold of the Intelligent Investor by Benjamin Graham.

Regards,
Shankar

9:49 PM  
Blogger Shankar said...

Premsagar/Rajdeep,

Thanks for your inputs. aa stock saras naththi !! (I spent 3 yrs in Gujarat and this is the ony Gujarati I could pick up)

As predicted, the stock however has gone up by 9% in the last 2 days.

Warm Rgds,
Shankar

9:52 PM  
Blogger Prem Sagar said...

Hi Shankar,
I think you have an interest in PNB gilts too.
I too have. Though there is excellent margin of safety and is trading close to cash holding and far below NCAV & book, I just think somehow this would continue until some acceleration is provided by some news event or something. Else it could be a value stock forever.
I am very comfortable holding it, but in a bull run, its hard to justify a decent one trade for less, and makes me think.
But a very good value pick. I would add a bit more on declines.
Whats ur take on it?

10:13 PM  
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