Skip to main content

Kothari Products


Kothari Products is engaged in international trading and real estate activities.

Its trading is mainly constituted of metals, edible oil, and machinery items.

It owns about 100cr of quoted investments at market.

The company has scaled up its international trade only recently and in the last nine months ended 31st December, 2011, it reported about 71cr of total operating profits before exchange losses and loss of 36cr after accounting for it.  This was on net sales of about 2,250cr. 

The business is exposed to government bans on imports/exports.  It is a large net importer exposing it adversely to a weakening INR.

Management have indicated their intention to focus on trading and expand in that area.  This is usually a low value-added activity with low margins making its profits unusually vulnerable to relatively small declines in trading revenues.

Management also maintains investments in companies operating in unrelated areas such as construction developers and internet ventures indicating a lack of focus.  Furthermore, not much information is provided about these investments, which doesn’t help an investor’s evaluation process.

Comments

Post a Comment

Popular posts from this blog

Under The Radar: India’s Small-Cap Equities (Part Three)

In February of this year, we summarised the valuation parameters of the BSE Small-cap Index in India (now the S&P BSE Small Cap Index) - following on from an earlier report we wrote in December, 2011 - and drew certain conclusions. We would like to update the valuation scenario with the data today, review those conclusions, and form new ones based on the available information. The small-cap index closed today (17 th December, 2013) at 6,150.65 with an indicated price to book value of 1.04. The closing value as on February, 2013 was 7,006.73 representing a decline of over 12% as of today. The current index value masks a greater fall of over 27% to a low of 5,085.56 in August, 2013. This represents an unsatisfactory overall performance for those who invested in small caps at the beginning of the year. In our earlier report, we made two assumptions towards the end of our report to form a conclusion as to prices then:          ...
Post a Comment
Read more

On The Radar: India's Small-Cap Equities (Concluded)

We have been running a series of articles titled ‘Under The Radar: India’s Small-Cap Equities’ beginning in December 2011 - and followed up twice - with the last article in December 2013. We would like to conclude this series after updating the small-cap index level and returns, comparing it to our expectations ex-ante, and analysing the current scenario.  Following this, we have also outlined where we may take this blog in the future. The small-cap index closed at 11,087.07 on December 31 st , 2014.  This compares to a level of 6,150.65 in our last article – resulting in an advance of over 80% to date. This is a handsome absolute return by any standard, particularly compared to Indian government bonds, which yielded around 8-9% for the period.  This justifies the conclusion at the end of our previous article that “small-caps in India offer among the most attractive bargains during any time since 2006 and certainly in the entire Indian stock market today...
1 comment
Read more

Nelcast

Nelcast manufactures iron castings for use in the automotive industry. The company plans to expand into supplying to manufacturers of earth moving equipment and trailers.  It also intends to focus on exports and supplying to OEMs. The company reported declining operating profit margins on moderately growing revenues – reporting about 30cr of operating profits on revenues of about 500cr in the last financial year.  It operated with a moderate net debt load. The business is dependent on the fortunes of the auto industry, which is cyclical.  Moreover, it faces stiff competition from players in the unorganised sector and new foundries that have come up.  It is exposed to metal price rises and a strengthening INR since it’s a net exporter.
Post a Comment
Read more