I wrote below in the month of Oct, 15 as the thesis for investment. This is the first time I created 100% position in a single trade and decision was made overnight after reading Company update available in stock exchange.
A simple Idea
Fast forward - With in 3 years market cap reached about 600 cr+ and currently 300 cr. If you notice, my assumptions never realized (2500 cr sales in few years). They recorded topline of ~750 cr in next 4 years and net profit of less than 100 cr. There was enough safety margin that even after partial fulfillment of thesis, Company delivered desired results.
How Company is going to do in future - I have no idea. However management is trying to work with in asset light model (working with land owners, buying limited land, etc). I am still holding the Company, though trimmed the position slightly when position size was more than 12% to 10% at peak.
Note: I will be sharing my failures and lesson learned in my next post
Disclosures: I hold the Company and view may be biased. Please note that this is not a recommendation to buy or sell. Please do your own check before investment.
Real Estate is in bad shape and you may lost money in this Company.
A simple Idea
Investment made
on around 16-Sep-15 (~5% of portfolio).
A company
demerged and listed separately. Since the Market cap of this demerged Company
compared to Mother company is very low, where a significant % of shares are
held by institutional, price of demerged Company fell significantly from it’s
peak with in a month of listing as institutions start getting rid of this tiny Company.
This demerged company
is in Real Estate business, mostly developing properties on it’s own land or on
collaboration with land owners. Market cap less than 100 cr., sales of more
than 100 cr, operating margins of ~30% and net profit margins of 12% on
consolidate basis. Made net profit of 10 cr last year. P/B – 0.3 & PE=9. With
the ongoing & future projects, Company is expected to do sale of 2500 cr in next few years.
Assume sale is
going to be 80% of projections – 2000 cr
Operating profit
(30%)– 600 cr
Net profit (12%)
– 240 cr.
Market cap < 100 cr.
So even if you
consider this company is going to just finish the projects in hand, distribute
the profit after paying off debt (80 cr debt) & shut down, you still make
money.
Additionally - this
Company is from a reputed group, so they will not let this Company a 100 cr
company in future and definitely will do something to grow at the industry
rate.
Market sometime
provide such opportunities and you have to be lucky to notice and grab.
Fast forward - With in 3 years market cap reached about 600 cr+ and currently 300 cr. If you notice, my assumptions never realized (2500 cr sales in few years). They recorded topline of ~750 cr in next 4 years and net profit of less than 100 cr. There was enough safety margin that even after partial fulfillment of thesis, Company delivered desired results.
How Company is going to do in future - I have no idea. However management is trying to work with in asset light model (working with land owners, buying limited land, etc). I am still holding the Company, though trimmed the position slightly when position size was more than 12% to 10% at peak.
Note: I will be sharing my failures and lesson learned in my next post
Disclosures: I hold the Company and view may be biased. Please note that this is not a recommendation to buy or sell. Please do your own check before investment.
Real Estate is in bad shape and you may lost money in this Company.
No comments:
Post a Comment