Posted by guest blogger and virtual Portfolio Manager Arjun Ashar, a Chartered Accountant and founder of Arjun Ashar Capital Management. He can be contacted at firstname.lastname@example.org. Do check out his 5L Virtual Portfolio.
On this platform, I do not wish to burden the reader with information about the company like its financial statements, shareholding pattern, corporate announcements etc which should be easily available from the company’s or NSE/BSE website. I assume the reader has already read and understood the annual report of the company along with the quarterly results and has preliminary information about the company that can be easily obtained from the company website/ annual reports.
I would only discuss my views on certain aspects, which I feel are important.
The best information about any listed company is all publicly available on its website, annual reports, stock exchange filings etc. That is all one needs to make a reasonably informed investment decision.
My outlook for Parekh Aluminex
- The product range of the company (ie aluminum foil containers) is gaining widespread usage as mobility of people increases and also due to changing lifestyles.
- The valuations of the company are attractive with a Price-Earnings ratio of less than 3 at the current market price of ~ Rs.68.
- The company has a low debt equity ratio of 0.33 as at 31st March 08.
- The company seems to have expanded capacity over the years in a prudent manner and utilisation of installed capacity has improved over the past 3 years. In my view, the increase in installed capacity and sales which was achieved while keeping the debt equity ratio low is commendable.
- A prolonged recession could mean lower sales for the industry if railways, airlines, takeaway restaurants witness a further slump in passengers and patrons respectively.
- The capex plans of the company need to execute smoothly in terms of getting operational and witnessing optimum utilisation. The low debt equity ratio would enhance margin of safety in this regard.
DISCLAIMER: The author is not a registered stockbroker nor a registered advisor. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.
[Kaushik Gala: To add to Arjun's disclaimer above, this is not a recommendation to buy or sell. Moreover, given that this stock is relatively illiquid, extra caution is necessary.]