Consumer Implied Growth Rates

This is a followup to our previous blog where we had presented the implied growth rates in some companies stock prices. Given the good response that we got, we have decided to run a small screen on implied growth rates every week on Thursdays. Please do send in your requests if there is a specific company/space where you want us to run this. The only rule for this screen is Same macro assumptions for all – WACC of 12%, terminal growth 3% and 10 years of growth. In the last blog, we used 15% WACC, but that seems high in the current context. Nonetheless we want to treat all companies to a similar discount rate and macros for sake of simplicity. One can obviously go back to our site and use it to test for more company specific Cost of Capital and other parameters to assess the fair values. For this blog we have chosen a mix of consumer companies, showing the variations between various segments there.

December 7th 2018

DCF Back In Vogue ?

I was just putting in place our Excess Returns based valuation model tools for the financials companies, when my developer, who is btw a finance novice, asked if it was only a theoretical valuation for the company! We all know that there is a wide gap in theory and practice anyways, especially in finance. So it came as a pleasant surprise when I met a fund manager who was extremely interested in knowing about implied growth rates at current prices and another who actually chased us to improve the outputs that we show in DCF. So what is happening here, some of the best guys in finance looking at the most basic and boring of the concepts in finance? Well this usually happens when frenzy takes a break and Buyers sit back and think on what they are actually paying for the stock of any company. Although largely academic in nature, markets do eventually revert back to reasonably accurate assumptions as per DCF values. After my interactions, I asked a team mate to perform a basic Implied Growth Analysis on a few companies. Here is a short summary of it. While a WACC at 15% might be high for some people, I for one thought that most stocks were sitting at pretty heavy growth expectations.

December 6th 2018

Quarterly Results , A Chore That Is Now Easy To Do

Another results season and another set of broker downgrades of Nifty EPS have gone by. I thought the downgrades came a month too late. The markets had already fallen, and the downgrades were only a post-facto reporting of what had already happened. To most informed investors it would not have been any news. Even now I think just following the headlines maybe misleading. For one, while at aggregate level PAT growth maybe missing, the revenues for most players have actually been good, so in some sense it is the margins that have taken a hit and not core growth. Secondly, as is usually the case, there is significant divergence in performances of individual companies – Most commodity companies have benefited from better prices, yet Vedanta’s performance has been weak. Reliance has seen nearly 50%!!! revenue growth (y/y) and telcos have been hurt.

November 21st 2018

It Is The Commodities We Need To Worry About

I have been thinking a lot about this – if as an economy we (as in India!) benefited from the low commodity prices over the past 5 years, would it not be an issue for us if commodity prices sustain at the current levels. For example, Oil prices broadly averaged US$50/barrel in 2015/16/17, Aluminium averaged US$1700/ton and similarly for other commodities. Both these commodities have now significantly higher prices (Oil at US$75/barrel and Aluminium at US$2100/ton).

October 26th 2018

BRIGHT PROSPECTS FOR SPECIALITY CHEMICALS

Indian Speciality Chemicals industry is worth USD 30 billion and forms 20% of the Chemicals Industry. Indian speciality chemicals grew 2x global speciality chemicals at CAGR of 13% over FY10-18 and is likely to grow at 14% per annum. It is expected to accelerate to 17% driven by domestic growth and stable exports. The growth drivers of Speciality Chemicals are 1. Increased End use Domestic Demand, 2.Strong Export Demand, 3. Mergers and Acquisitions on rise, 4. Cost Competitiveness, 5. Availability of skilled labour and 6. Investments in R&D. INR depreciation is also driving developed nations to shift/ start their operations in India.

October 15th 2018

INDIAN CHEMICALS IS THE NEW SIZZLE

India is 3rd largest producer of chemicals in Asia, 6th largest in the world and chemicals sector contribute to around 8% of GDP.  India is steadily moving up the rank as global economic power and becoming business magnet for investment. High domestic consumption, Diversified industry, Ease in doing business and Increased Export demand from developed nations are the key drivers for success of the sector. The economic influence of the sector is promising for the future.

October 7th 2018

FILTER THE NOISE AND REANALYZE YOUR PORTFOLIO

Seeing the massive drop in markets over the past few days, I wondered if this situation presented any opportunities. While India story remains still strong for me, Investing has been tough over the past couple of years, simply because I feel that valuations are irrationally high, which has forced analysts to justify unduly high earnings expectations. Hence a correction like this presents a good opportunity to revisit the stocks. So I fired up my DistrictD account and looked up models on my portfolio companies. I adjusted the business drivers to reflect any changes to the recent developments. Checked if the quarterly performance was in any way different from my full year expectations. Did my fair valuations and even did DCFs for some. I avoided companies where Fuel Costs or Cost of Funds is important part of cost structure. Did a simple exercise where you detach yourself from all the market hullaballoo and just see how the core business is doing and what is the fair value for it under reasonable and achievable expectations. At the end of this simple exercise, I built a screen with my upsides and valuations that gave me insights into which stocks to hold onto, which ones could be sold off for better opportunities, or where there were irrational moves which I do not necessarily agree with. Overall, it helped me de-clutter my mind and focus on certain key stocks withing my portfolio in these uncertain times.

September 26th 2018

ANALYSE MARKET DYNAMICS LIKE A BOSS

The past few weeks have been about currency wars, trade wars and a lot of things moving about and on within India itself. As a result stock markets have also been moving around. This does indeed present opportunities for investors – “buy into interesting stocks which have corrected a bit?” or “play into the export theme?” or “sell when there is still a good price?”. Either ways the dynamics of market are what keeps the juices going for us.  We believe that humans aided by technological tools can analyse much better and deeper than either a purely human driven approach or a purely algo driven one. So we feel any analyst aided by their intellect and using DistrictD web models and tools can analyse the market dynamics like a boss. The models allow them to do varied analysis such as calculating the impact of INR depreciation on IT companies, Or the impact of Rising fuel prices on Airline companies profitability; Or commodity prices on any of the metals/mining companies etc. Stock buybacks, fund raising, cost of capital and several other themes can be analysed using our models. 

September 7th 2018

CUSTOMER TEACHINGS, PROBLEMS AND US

Most of what I previously wrote was from our point of view, our vision, our ideas etc. However this is one from the other end. Over the past year I have interacted with nearly 500 professional investors, fund managers, brokers, analysts, bankers, consultants across all sizes of institutions. I saw them as my advisors, mentors, clients, friends and took in whatever they had to throw at us. Went back to our desks, updated our plans and solved the problems that they gave us.

September 9th 2017

THE TECHIE FUND MANAGER!

Indian equity markets have grown at a rapid pace over the past 2-3 years. Domestic flows have gone up several fold over this time frame as the new generation is finally waking up to capital markets as a viable end for their savings. This shift in the asset allocation from banking system, real estate and gold towards financial assets such as stocks, insurance etc has meant that equity markets have seen strong flows. This liquidity flow coupled with rising stock prices has meant that suddenly fund managers are saddled with lots of money and expensive valuations. This has led to a peculiar problem for modern fund managers in India, how to deploy this large pool of money that is coming in and where to find new ideas from. Further the number of investible companies have been growing steadily, fueled by number of IPOs and growing small-cap/mid-cap companies that are now making the cut.

March 12th 2017

MARKETS AND COLLECTIVE WISDOM

In a previous post we talked about our handmade(!) financial models. But just because we have put in the effort to create these models, doesn’t mean we stop there. To our mind the models are only the starting point. We are building a large set of tools that will help users to make better sense of the data by Comparing it across dimensions such as companies, users, time, industries, geographies and more, Valuing it better using not only standard benchmarks, but also custom made ones, Estimates of market expectations at overall as well as granular level (think – volume growth expectations). Better trend analysis of expectations and actual performance – both markets and own … and as our product matures, there will be a lot more.

January 13th 2017

FINANCIAL MODELS AND THEIR NUANCES (PART 2)

Continuing from our previous post on Financial models… In this post we talk about the other two components of Financial models. The reason we have separated these posts is to differentiate the “Science” from the “Art”. We believe that Historical data and the Business Model represent the science of investing. They are quantifiable and objective in nature. Whereas the Assumptions for future drivers and valuations are more of Art. Future assumptions are always subjective in nature and can be debatable – perception for the future outlook of businesses can vary between investors, management and other stakeholders. Similarly valuation is a fluidic topic and is a subject of great debate and argument between investors.

January 13th 2017

THE FANTASTIC STORY THAT IS INDIAN EQUITY MARKETS

Despite this we have only models for less than 20% of the listed companies in India. There are still many industries that are not covered even now and even many companies in the sectors that we have solved. This just goes on to show how large and vast the Indian equity markets are. Every few months new IPOs of very interesting companies come up. We are making it a habit of putting out models for IPO companies before the IPO – to allow investors to make their own unbiased decisions (after all one has to invest looking in mind the future and not the past performance as given in the prospectus). – This means the task is only getting tougher and bigger for us. But spare a thought for investors, who need to know, remember and process this ever increasing information pool.

January 13th 2017

THE NUMBERS GAME (PART 1)

DistrictD is about fostering and developing upon new ideas and thoughts and then debating on them. As such the investor community has always been a chatty lot, any information or idea travels through the community like wildfire. Qualitative information, snippets, management talks etc play an important role in defining how the markets behave and what is being bought or sold. However the underlying key aspect that eventually drives everything in markets are HARD NUMBERS.

January 13th 2017

FINANCIAL MODELS AND THEIR NUANCES (PART 1)

Financial models are tools used by analysts to estimate the future financial performance of any financial asset – be it equities, bonds, or complex derivatives and securities. Just like in fashion industry where a model is used to show the look of a fashion garment and value it, in finance, they are used to see how the cash flows of the asset will look like and then value them. In essence a financial model shows the analyst the future cash flows/profits etc of any financial asset.

January 13th 2017

THE NUMBERS GAME (PART 2)

In the previous blog we talked about information gathering. Information can be in any form and shape – quantitative and qualitative, pictures, anecdotes etc. Then why was the post titled “The Numbers Game”? The reason is that in markets, it eventually boils down to numbers. The markets are a haven for number lovers, there are so many numbers that entire streets, buildings, communities and now even district(d!) are now dedicated to house them. The first step post collecting the information is to see which pieces are material, i.e. have a bearing on the share price. Once the information is segregated, the most important ones are typically 1) the forward looking ones, i.e. which give us insights about the future and 2) the ones not yet factored into the market pricing. If you believe in the Efficient Market Hypothesis you would only rely on #2 to make investment decisions. Personally speaking, I believe that markets are 95% efficient (I don’t have data to back this claim though), allowing value hunters/stock pickers with enough scope to find value should they try hard enough.

January 13th 2017

THE UTOPIAN DREAM

We wonder Why do retail investors lose money each time? Why do analysts cover only top 100 companies, whereas there are so many hidden gems beyond that? Why is critical information held in silos or with certain cliques for profiteering? Why is investing the domain of only a few elite?

January 13th 2017

Platform Updates - Sep 2024

As the Q2 FY25 results season begins this week, we have utilized the full month of September in expanding our coverage of companies.

October 7th 2024

Platform Updates - Aug 2024

In the month of August, we enhanced our coverage by adding over 50 companies financial models.

September 4th 2024

Q1 FY25 update - Nifty50 performance

This quarter Q1 FY25, we have updated over 750 results and more than 500 raw transcripts and summary are available for users of Q1 FY25 Earnings call.

August 9th 2024

Quality of Financial Models (FY24 Update)

Just like every year, we did analysis on our financial models performance and here is the detailed sector-wise analysis of our coverage of 1026 companies.

June 21st 2024

Raw concall transcripts on same day…

As Q3 FY24 begins, DistrictD launches machine generated raw concall transcripts.

January 16th 2024

FY 23-24 : IPOs update

Almost 27 IPOs have been listed on the exchange and DistrictD is happy announce that the financial models of these IPOs is available on the platform.

September 28th 2023

DistrictD Platform updates & quick read on Q1 FY24 performance

In the last two months, we were focusing to update the results of Q1 FY24 in a timely manner and simultaneously we maintain our data management work at our company filings section.

August 22nd 2023

Introducing new widget - Corporate Actions

We are happy to introduce Corporate actions widget on the platform. Now, you will be able to access the information of Bonus, Splits, Dividends and Rights Issue in a single widget.

August 18th 2023

Quality of Financial models (FY23 update)

Just like every year, we did an analysis on the deviations in Revenue/EBITDA/EPS between FY23 actual numbers and our base model estimates. The analysis was performed on 983 companies this time, for companies which have March Year-end.

June 16th 2023

DistrictD progress during FY 22-23

DistrictD, as a team have done a remarkable job on providing latest updated data on over 1040 companies. With that, enhanced Industry page by providing detailed information of over 19 industries.

April 1st 2023

DistrictD Platform updates over last month

We have updated the financial models of companies having FY ended on December. Corporate actions adjustment have been done in the few models. We are going to enhance our coverage by five companies by the end of this month

March 15th 2023

Quick read on Q3 sectoral fundamental performance and updates on DistrictD

We have updated Q3 FY23 results over 950 companies in a timely manner. Updated the December ending companies models and launched Tyre Industry. We also did modifications in our company's market classification, now revised as per the SEBI provided by AMFI.

February 16th 2023

Over 330 Q3 FY23 Results updated, added Shipping Industry page and more...

In the last two weeks, we updated over 330 Q3 FY23 results, uploaded over 200 Concalls and Earnings presentations and added Shipping Industry page on the platform. We have also updated model of Shriram Finance Ltd for latest announced merger of Shriram City Union Finance Ltd and Shriram capital with Shriram Transport Finance Ltd.

February 1st 2023

IT Services Industry, Latest announced Q3 FY23 Results and more…

We enhanced our Industry page coverage to 17 Industries, revamped Zomato Financial Model, track and updated over 30 models after closely observing their first two quarters performance FY23. Meanwhile few latest listed IPOs financial models is also added to the platform.

January 17th 2023

Enhanced Screen

Elections got announced few days back, yet will remain as The News on every channel for the next two months. An event like that will allow media to generate more news everyday – opinion polls, voter surveys, panel discussions just to create derivative content and milk every event to its fullest. In our context, the primary event of interest is quarterly results, which provides us with a glance into the performance of our companies. So the problem we are trying to help resolve with this blog is – Are we making the most out of the information the results season provides us? To help process this, we had prepared the quarterly results screen. Based on user feedback, we have improved the screen now. In this iteration of the screen we have improved it broadly on two counts: Increased the data fields in the screen – included EBITDA growth, CMP/M.Cap, More valuation parameters and target price set by users. We also added a row on average of the universe selected. Enhanced UX – User defined color coding of key fields as Green and Red to highlight and identify strong and weak performers across large company sets. I have been positive on the chemicals sector in India over the past year or so. So I checked the screen below – and interestingly companies which beat our forecasts (see YTD% achieved, green cells v/s red cells) actually saw better share price performance than others.

April 4th 2019

Fundamentals, Test Match

Hope you grabbed one of the biggest opportunities in the last couple of years. Markets got very jittery (from weak) around Sept last year and remained so till Feb this year. No one can say for sure what it will be like going forward, however in hindsight it seemed like the best opportunity over the past couple of years. I am sure the stock pickers had their picks – many stocks have bounced back (nearly doubling back from lows), several others failed to recover. A lot of investors I met over the past couple of years tend to think that fundamental analysis is just looking at the past financial data and making screens on them. I for one believe that there is more to it. Some of it is do with the innate ability with which you look at businesses and how they can make money. It is like a test match – long, patient, difficult but immensely satisfying for the purists. And like all matches there are risks associated including (but not limited to) things such as weather changes! DistrictD brings to you your own fundamental analysis gear, which can help you in your test match. Some of the stuff we have done over the past year and have in works are in PS below. Also just felt like sharing an interesting read on customer servicing from a fellow entrepreneur. @Jatin Gujrati – hear you on this. PS – Key features we have added last year Company Models increased from c.300 to c.800 now Datasets – Quarterly results, Shareholding patterns, Business factors – Geographical presence, Products and services, Operational and financial Metrics etc. Color coded quarterly results analysis screen Better productivity tools – Notes – Upload attachments, Calendar (Added corporate actions, earnings con call updates), Important links to transcripts, presentations etc, Daily email updates on followed companies. Upcoming features Industry level datasets and quarterly business metrics Advanced stock filtering – across various financial, valuation, business metrics Working on consensus (still !!, yes it is taking some time)

April 4th 2019

Consumer Implied Growth Rates

This is a followup to our previous blog where we had presented the implied growth rates in some companies stock prices. Given the good response that we got, we have decided to run a small screen on implied growth rates every week on Thursdays. Please do send in your requests if there is a specific company/space where you want us to run this. The only rule for this screen is Same macro assumptions for all – WACC of 12%, terminal growth 3% and 10 years of growth. In the last blog, we used 15% WACC, but that seems high in the current context. Nonetheless we want to treat all companies to a similar discount rate and macros for sake of simplicity. One can obviously go back to our site and use it to test for more company specific Cost of Capital and other parameters to assess the fair values. For this blog we have chosen a mix of consumer companies, showing the variations between various segments there.

December 7th 2018