VALUE-JAN11-Panasonic Carbon

8/7/2019 VALUE-JAN11-Panasonic Carbon

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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

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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






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


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.





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VALUE-JAN11-Panasonic Carbon