VALUE-JAN11-Panasonic Carbon
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Transcript of VALUE-JAN11-Panasonic Carbon
8/7/2019 VALUE-JAN11-Panasonic Carbon
http://slidepdf.com/reader/full/value-jan11-panasonic-carbon 1/3
http://www.chennai-investors-club.com
VALUE Stock Newsletter – Jan 2011
Panasonic Carbon India Co. Ltd – Accumulate at Current Levels
CMP Rs 140 - Jan 2011
BSE Code 508941
BSE Sensex 19224 NSE Nifty 5762
(52 wk High is Rs 204 / Low is Rs 130)
KEY POINTS
• Its business is manufacturing of carbon rods, which is used in dry cell battery. Steady
Sales in the last 5 years.
• Market Cap of approx Rs 69 crores
• Face Value – Rs 10
• Book Value per share is Rs 115
• Dividend Paid is Rs 7 per share. Excellent Div yield of 5%.
• Promoters hold 74% stake in the company
• Zero Debt Company
• Company has Rs 52 crores as Fixed Deposits which is approx Rs 110/share as Cash.
This means at the current price of Rs 140 values the core business at just Rs 30 per
share
• The current manufacturing capacity will be increased in next 2 – 3 years time frame
by way of internal accruals.
• Trades at approx 13 times its current earnings, which is fair
8/7/2019 VALUE-JAN11-Panasonic Carbon
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CONCERNS
• Chinese Competition which is hurting the Indian players for which the local players
want anti dumping duties to be imposed
• Increase in Raw material Prices is been impacting margins and the trend is expected
for the next few quarters also. So FY 11-12 will MOST LIKELY be FLAT
STRENGTHS
• Very Conservative Management which focuses on cost cutting and also expands its
facilities from internal accruals
• Leader in this sector
• Strong Balance Sheet and Dividend History
INVESTMENT STRATEGY
Remember, we told this is a VALUE STOCK so this is picked on a true BEN
GRAHAM’s Investment Principles. We feel that the dividend yield of 5% will act as a
Cushion. Moreover in Cash/Share is also around Rs 110 which means unless there is a
huge ‘Panic Selling’ you may not find the stock trading below these levels
Any price between 120 – 140 levels could be considered to Accumulate the stock during
days when market declines. Also the stock is quite illiquid as the market cap is low and
promoters hold 74% so you will not be able to buy large quantities. This should NOT be
a worry for a VALUE Investor.
Considering the above facts we may see a 25-30% upside in next 12 to 18 months and an
additional 5% by way of Dividends.
This is reasonable for a VALUE INVESTOR who is not taking an aggressive exposure.
Remember an Aggressive Growth Strategy can give you higher returns but comes at a
higher risk. Therefore may not suit Conservative Investors
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WHY YOU MUST OWN A VALUE STOCK ?
In times when Sensex is trading at 24 times its earnings an investor is left with few
investment avenues which offer a low downside risk.
Warren Buffet says
#1 Rule of Money is ‘Don’t LOSE Money’
#2 Rule of Money is ‘Don’t FORGET Rule #1’
And this Stock could well fit in the Rule #1
Happy Investing
Ravi Padmanabhan - Wealth Coach
http://www.chennai-investors-club.com
Disclosure:
Analysts Ownership of the stock as of today – NIL
Analyst’s Clients Ownership of the stock as of today – YES
About Us:
We are into Stock Market Training, Advisory & Portfolio Management Services for the
last 4 years. We have trained over hundreds of investors in Stock Markets across
Chennai, Bangalore & Hyderabad. Our Chief Analyst – Ravi Padmanabhan has close toTen years experience in the Stock Markets and appears on NDTV Hindu ‘ScripTease’
Show for answering viewers queries on Investing in Indian Stock Markets.