Sunday, April 09, 2006

The God of Pennies

I first tracked Hindustan Dorr-Oliver Ltd. in the summer of 2004, somewhere in the month of May. The stock was lingering at around 36 rupees per share. A lot has happened to the stock price and the company over the last 24 months. I am kinda shaken over the current price of the stock, especially when I measure it up with the profit numbers (quarterly data) of the stock ...
Mar-04: 8.78 crs; Jun-04: 0.04 crs; Sep-04: -0.38 crs; Dec-04: -0.91 crs
Mar-05: 2.37 crs; Jun-05: 0.37 crs; Sep-05: 0.39 crs; Dec-05: 2.90 crs

As on 7-Apr-2006, the CMP of the company is at 847.00 rupees. So here is a stock which is at a trailing PE of 154.20 and a fwdPE of 97.90; with an EPS (fwd) of around 9 rupees per share .. and yet commands a market value of 489.52 crores.

Take a bow, gentlemen ... you've just met the god of 'pennies' !!!!

6 Comments:

Blogger Amol said...

Shankar,
Did you check Alok. It has moved up nicely. I have been accumulating it regularly. The results have been really impressive. The only issue why it did not rise was regular equity dilution (convertible bonds). Now, there is not much of dilution that can happen. Q4 quarter results will have a big impact on EPS. This rise in EPS is also going to have a good effect on the price of Alok Ind.
Regards,
-Amol.

10:55 AM  
Anonymous ajai said...

Hello,

Indeed it is god of pennies,it will be interesting to keep a track of it:).

Alok and paramount are moving ahead really well but would you advice to enter at current valuations or should one needs to be patient till the real correction comes.

Regards.

11:05 AM  
Blogger Amol said...

Ajai,
Paramount is a good buy. I am planning to get into it below 180 levels. The Dec Q4 EPS is 6. The current order book is at Rs.1000 mn. In pipeline Rs. 1000 mn again. Total order book 2000 mn. Capacity expansion in progress, will come up in Nov 2006. Buying it with a target of holding it for atleast a year would be good. I assume it can cross 250 levels till this year end. I managed to buy some at 160 levels but then was out of cash. Now waiting to buy some more whenever there is a slight correction and falls below 180.
Regards,
-Amol.

11:36 AM  
Blogger Amol said...

Shankar,
The diluted EPS of Alok for 3 quarters 05-06 is still around 4. They can make it to a total of 6 (diluted) this year. So buying below 80 is fine I think.
What do you think about it? In your blog "Fantastic P/E ratios" on Mar 13th you had mentioned Alok in green and going to comment on it.
Please share your views on the same.
-Amol.

1:57 PM  
Blogger Shankar said...

Alok Industries is at a fwdPE of 12.48, sales growth at 20%+, profits up 15%+ ... no bad news. A sound management.

Compared to peers .. ok, this was shocking. I ran a filter on over 200 stocks for atleast 50 crs of sales and 20 crs of profits. The only stock that met the criteria was Alok Textiles.

So there you go !!!!

7:46 PM  
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10:13 AM  

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