Pondy Oxides & Chemicals is the leading secondary lead smelter in India. This south based company produces high quality lead and lead alloys to be supplied to battery and chemical manufacturers.
For more info check, http://pocl.co.in/
NUMBERS - THE LATEST
Market cap: 91 crores CMP on Day14 Nov2016: Rs 163 BV: 78
Revenue FY16: 464 cr Net profit FY16: 10 cr approx FV: 10
POSITIVES
1. The company achieved highest turnover and profit for the financial year 2015-16 since its inception
2. Profit after tax registered an impressive growth of 51%
3. Out of total revenue of 464 crores, export revenue was around 136 crores.
4. Great to see that Pondy is an environmentally conscious company. A picture speaks a 1000 words. Greenery on the Annual report is nice to see.
INTERESTING INFO
1. Pondy Oxides exports to multiple countries, and has made significant inroads into USA, Thailand and countries in Europe
2. Company has set up a hedging desk with a London based broker to manage its metal price exposure
3. Equity capital of the company is only around 5.5 crore. There are only around 55 lakh shares held by around 8000 share holders
4. Statement on the Pondy Oxides annual report of FY2016 = "You can't change the past but you can change the future, Recycle for a better future"
NEGATIVES - POSSIBLE RISKS
1. Company is subject to currency rate fluctuation as it imports substantial part of its raw materials.
2. Raw material availability and commodity price fluctuation is a risk.
MY TAKE
Pondy Oxides & Chemicals is a high quality company. This company is a leading player in smelting and producing secondary lead. The promoters and management have a commendable experience in this field with a track record of over 2 decades.
Company has declared exceptional results for Quarter ending September 2016. Revenue at 186 crores is almost up 80% year-on-year. Gross profit of 11 crores is almost 3 times higher y-o-y. Net profit of approx 10 crores for half year is almost equal to full year net profit last year. From current levels, this stock can easily multiply several folds.
Pondy Oxides is an obvious potential multibagger!!
Disclosure: I own shares in Pondy.
For commercial collaboration, consultation and JV ideas;
you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 100 - 500% profits. Obviously such returns take time. Probably 3 - 4 years or more. Short term volatality is the reality of the stock market and that will always happen. Short term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
For more info check, http://pocl.co.in/
NUMBERS - THE LATEST
Market cap: 91 crores CMP on Day14 Nov2016: Rs 163 BV: 78
Revenue FY16: 464 cr Net profit FY16: 10 cr approx FV: 10
POSITIVES
1. The company achieved highest turnover and profit for the financial year 2015-16 since its inception
2. Profit after tax registered an impressive growth of 51%
3. Out of total revenue of 464 crores, export revenue was around 136 crores.
4. Great to see that Pondy is an environmentally conscious company. A picture speaks a 1000 words. Greenery on the Annual report is nice to see.
INTERESTING INFO
1. Pondy Oxides exports to multiple countries, and has made significant inroads into USA, Thailand and countries in Europe
2. Company has set up a hedging desk with a London based broker to manage its metal price exposure
3. Equity capital of the company is only around 5.5 crore. There are only around 55 lakh shares held by around 8000 share holders
4. Statement on the Pondy Oxides annual report of FY2016 = "You can't change the past but you can change the future, Recycle for a better future"
NEGATIVES - POSSIBLE RISKS
1. Company is subject to currency rate fluctuation as it imports substantial part of its raw materials.
2. Raw material availability and commodity price fluctuation is a risk.
MY TAKE
Pondy Oxides & Chemicals is a high quality company. This company is a leading player in smelting and producing secondary lead. The promoters and management have a commendable experience in this field with a track record of over 2 decades.
Company has declared exceptional results for Quarter ending September 2016. Revenue at 186 crores is almost up 80% year-on-year. Gross profit of 11 crores is almost 3 times higher y-o-y. Net profit of approx 10 crores for half year is almost equal to full year net profit last year. From current levels, this stock can easily multiply several folds.
Pondy Oxides is an obvious potential multibagger!!
Disclosure: I own shares in Pondy.
For commercial collaboration, consultation and JV ideas;
you can contact me via zorbayogi9@gmail.com
Important Note: Potential multibaggers are those stocks which have potential to give 100 - 500% profits. Obviously such returns take time. Probably 3 - 4 years or more. Short term volatality is the reality of the stock market and that will always happen. Short term movements(upside and downside) are impossible to predict. Only invest funds that you will not need for the next 3 - 4 years. As long as you buy a stock for the right reason and are convinced about the future prospects of the company, there is no need to worry if the share price goes down and stays down for a period of time after you buy; provided you have followed the cardinal stock market mantra BUY LOW.
Very important note: The objective of this blog is to share knowledge and info about multibagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your home work, own analysis and make your own decisions.
Few questions...will be glad to have answers..
ReplyDelete1. Is my investment secure for 1-2 years if I allot 25% portfolio to this stock.
2. How much % can it rise from here.
3. What should be CMP with current fundamentals and Is it wise to invest after 15 % spike seen today.
4. Exports contribute 30% revenue. How much USA domestic conservative policy affect revenue in long term.
Thanks
Sure, Anurag. Good questions!
DeleteAnd quite a few of them :-)
1. Regardless of how much you allot, your investment is as safe as it is in any other stock. Promoters here own approx 51%. Company is growing, profit making and dividend paying. So it is safe as any other good quality company. With a huge upside potential.
2. This is a undervalued stock of a high quality company. Upside potential is huge. Very difficult to tell how much. Doubling is certainly possible.
3. In a projection where you can make 100% profit, worrying about a 15 - 20 or even 25% spike is not necessary.
Timing is possible in the market, but perfect timing is not possible :-)
4. Pondy supplies raw materials to the battery manufacturers. As long as they provide quality products in a competitive manner, not sure if current political waves will impact this.
Wish you good profits.
best regards!
Thanks a lot..
ReplyDeleteThis was really helpful for new investor like me.
One last question before I had it all answered..
Nile has also given good results...what do you think which one will be better for long term pondy or nile?
Most welcome, Anurag.
DeleteMy knowledge of Nile is very limited.
As they say, A known devil is better than an unknown (especially when it comes to stocks)
So, as my selection of Pondy is well poised to give me wonderful profits, there is no reason for me to look for other options.
Once my investment in Pondy multiplies, and the share price enters a bubble zone, then I can look at the next option.
Wish you good profits in Pondy
(if you have already bought it)
CheerS!
Thanks a lot...
DeleteYour recommendations plus advice are really helpful...
I bought it and now patiently waiting.
Cheers
Most welcome, Anurag.
DeleteYour patience will definitely be rewarded.
All the best!
Enjoy the profits, my friend.
ReplyDeleteHowever remember;
Whenever a stock enters bubble territory, it is very important to sell before the bubble bursts :-)
For example:
When I write blog on Prakash Constrowell it was around 90 paisa - 1 rupee per share.
Then the stock moved higher and higher like a fabulous multibagger. Lot of people reading my blog bought it in the range of 2 - 3 rs. Some even at 4 rs. Until then they were all doing great.
But when the stock moved beyond 14 rs. it was clearly in a bubble territory.
Lot of people contacted be around 15 - 20 levels and I asked them all to SELL. Some sold and may be some did not :-)
The bubble lasted for several months, giving great opportunity to sell.
Then the bubble burst. Now it is around 9 levels.
So make sure to sell before bubble bursts :-)
Based on the spectacular Q2 results;
In case of Pondy Oxides, the journey has just begun. Only when it crosses 750 - 850 levels, we can say that it is in a bubble territory.
Wish you good profits in Pondy.
Enjoy the journey!
CheerS!
Greetings Yogi
ReplyDelete1.From the analysis of pondy it appears that the company is doing well... Does it mean that the company has strong fundamental in stock jargon? Is it the only factor that the share prices of pondy are on the upswing these days?
2. How to determine that the prices are in the bubble burst region?
Greeting Praveen,
DeleteStock jargon "strong fundamental" means good company fundamentals. In other words, the basics of the business that the company is in, is sound. Therefore 90% of the aspects that I have covered in the blog indicates, not just good fundamentals, but excellent fundamentals.
Share price does not go up due to one single factor. However the recent run-up from 160 to 200 in just 10 trading days, and that too when the over-all market is down in the dumps, is because of the exceptional Q2 results that the company has declared. Stock is on a strong footing and up-move will continue.
Stock entering a bubble phase also is determined by multiple factors. In the current scenario, there is no bubble evident any time soon. Ups (rally's) and Downs (corrections) will happen from time to time. But bubble is very far away.
best regards!
Hello Sir,
ReplyDeleteAs per my view 186 Cr Revenue and Highest ever profit margin of 3.71 percent is due to Expansion of capacity being operational at their andhra plant. I am expecting a Revenue of 600 Cr with 20 Cr as Net Profit.
If Company achieves that we could see a Marketcap of atleast 300 Cr at 13-14 PE.
@ 300 Cr Marketcap price Would be around 520-530.
Correct me if i am wrong. What are your expectations??
Thanks for your valuatble research.
Your thinking is in the right direction, Suyog :-)
DeleteRevenue of 600 crores and net profit of 20 cr is reasonable expectation for FY2017. So market cap of 300 crore is well within realms of possibility. Realistic, and not too ambitious.
For companies like Pondy Oxides having an upper limit will stunt our profit potential. The company is on a strong footing both based on current situation and future scenario. So this stock can go anywhere.
We can hold this as long as it does not enter the bubble territory or something goes wrong with the company fundamentals. And these things we will know, only as and when they unfold.
How ever if some one wants to play it safely, then they can book profit at 100 or 200% depending on their risk appetite and ability to run the stock marathon.
Wish you good profits.
CheerS!
Hi Zorba,
ReplyDeleteTill what price it is good to buy Pondy Oxide?
Good question, Sangeetha!
DeleteWhether we invest (long term) or trade (short term); we must approach each transaction like a journey with a 'start point' when we buy and 'end point' when we sell. In each and every case, your start point and end point determine how much profit you can make.
Especially when you find a good company like Pondy Oxides, it is always good to be an early bird.
People who would have bought Pondy share at 80 - 90 levels few months back, are already sitting on 100% profit.
Few days back when I wrote the blog it was at 160 and then last week it touched 210 in just 4 - 5 trading sessions.
For example, let us anticipate that Pondy will reach 400 at some point in time in the future. At that time, person who bought at 200 will be sitting on 100% profit and person who bought at 300 will be making 25% profit.
So there is no perfect buy price or sell price. How well you manage these two will determine whether you make 100, 200 or 25% profit.
Anyways it is quite obvious that 200% profit is better than 20% profit. Still, 20 or 200, profit is profit. If you can do 200, then excellent. Even if you do 20, it is not bad.
All the best!
Hi Zorba Can you comment frture of - Aksharchem
ReplyDelete
DeleteSorry, Koteswara
No idea about Aksharchem!
But if you have enough patience, Pondy is a good option.
CheerS!
Thanks for the great find. Few questions for my learning.
ReplyDelete1. Promoter SHP of Pondy has reduced last 3 quarters. What should I take away from that?
2. Who are their competitors in the Indian market to make a comparison study?
3. What portion of Pondy sales comes from Auto vs rest of the sectors?
Thanks again for your wonderful blog in helping small retail investors
Good questions, Sandesh.
Delete1. The change in SHP is minuscule. Probably less than 2% and that is because of realignment of the 2 families that demerged the business. We should only be concerned when promoters sell substantial quantity of shares.
2. The only large competitor is Nile in the listed space. So this is almost like a duopoly business. Due to environmental restrictions entry barrier is quite high.
3. Large portion of Pondy sales comes from Lead. That is smelting of secondary lead and making of ingots for use in batteries. And vast majority of these batteries are used in automobiles. Some also in UPS.
All the best and wish you good profits.
Whenever u recomend@29 I am buying the stock is moving eg gitanjali, career point etc if I am not buying the same will go up I am holding gitanjali 1000 nos@ 72/_ pls advice what I can do
ReplyDeleteDear friend.
DeleteStock market is a patience game. To make money here you need lots of patience.
When a stock will go up and by how much it will go up (or down) no one can predict.
Only question you should ask is:
1. Is is a good stock pick ?
2. Have I bought at a low price ?
Answer to both questions is YES.
Gitanjali is a good stock and your price of 72 is a reasonable price that you have paid.
Now all you need to do is to wait patiently. And the best approach for this is to ignore the stock for several months (or may be even years)
Some day you will make a good profit.
All the best!
hello sir....what about gp petroleum?? will it be a multi bagger ?? i mailed u several times...no reply....whats your opinion?? plsssss tellll
ReplyDeleteGP Petro is a good stock, Akhelesh.
DeleteIt could become a multibagger in 2 - 3 years.
However Pondy could become multibagger in 1 - 2 years.
Cheers!
Hi sir
ReplyDeleteWhen are you expecting to release next script?
DeleteJust yesterday, I posted, Bhavin.
Stock is Ram Ratna Wires.
Check out :-)
cheers!
Hello everyone,
ReplyDeleteSeems like pondy has Made a Base at 240-250 levels. Lead Prices also seems to be bottomed out after it fell from 170 Levels to 135. Lead will start its upward journey. Moreover we can expect a EPS of Atleast 40 Rs for whole year. With that Pondy Should touch 350-400. Results will be trigger now for fresh upmove.
Good thinking, Suyog
DeleteThough Pondy business has a long and successful history, from stock perspective, it is still in a nascent stage. Long way to go from here.
We could well see a nice rally pre-result. Let us wait and watch.
Wish you good profits in 2017 :-)
It already Hit 385
DeleteAll Calculations Changed for Exit Price Assumptions for Pondy Oxides After Lead Prices Heading Life time Highs
ReplyDeleteI went into detail today for Exit Price Assumptions.
Pondy Oxides had a Capacity of 28800 TPA (LEAD SMELTER) after the recent expansion in andhra pradesh near Amara Raja Factory their combined capacity now stands at 58600 TPA. So going forward if we expect 90 Percent Capacity Utilisation (Current Capacity Utilisation of 75 %) we could Expect a topline of 800 Cr(Assuming Lead Price at 150 Rs). With 3 Percent NP Margin we can Expect a Bottomline PAT of 24 Cr. With 55 Lakh shares in issue we could Expect a EPS of 43 Rs. With 43 RS EPS at 14 PE Stock Price would be 602 and MarketCap of atleast 331 Cr... So its good time to look at te price when it touces 300 Cr Marketcap.
Current Marketcap is 190 Cr. Current Price is 343 Rs.
All Calculations Changed for Exit Price Assumptions for Pondy Oxides After Lead Prices Heading Life time Highs
ReplyDeleteI went into detail today for Exit Price Assumptions.
Pondy Oxides had a Capacity of 28800 TPA (LEAD SMELTER) after the recent expansion in andhra pradesh near Amara Raja Factory their combined capacity now stands at 58600 TPA. So going forward if we expect 90 Percent Capacity Utilisation (Current Capacity Utilisation of 75 %) we could Expect a topline of 800 Cr(Assuming Lead Price at 150 Rs). With 3 Percent NP Margin we can Expect a Bottomline PAT of 24 Cr. With 55 Lakh shares in issue we could Expect a EPS of 43 Rs. With 43 RS EPS at 14 PE Stock Price would be 602 and MarketCap of atleast 331 Cr... So its good time to look at te price when it touces 300 Cr Marketcap.
Current Marketcap is 190 Cr. Current Price is 343 Rs.
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ReplyDeleteHi ZorbaYogi,
ReplyDeleteI am new to stock market.
And i came across the name of this scrip for the first time around...November 2016. Until then i was not even aware of this blog as well as the company :)
I bought 6 shares at 180 on 16 Nov 2016 and sold at 198 on 17th Nov 2016.
Then i again bought 13 shares @179 on 21st Nov 2016 and sold at 202 on 23rd Nov 2016.
So i felt, 179 - 205 is the range in which this stock plays.
But now i see this stock @350+.
I am not sure if i should invest in this stock again at this level.
What will be the good levels to enter into this stock in "VERY" near future ?
And how long (minimum period) to stay invested in this stock to reap good benefits ?
Good thinking, Omkar.
DeleteFirst focus on generating a good corpus. Then you can always to long term investing.
All the best.
Hi bro,
ReplyDeleteTry to be a long term investor..this blog is made for med to long term investor..i am holding pondy from 202 levels & 700 qty..i will hold for min 1 year..to get tax free profit..after 1 yr i will decide whether to hold or sell anymore
Cool, i like your idea. And i have similar thinking, however, i am trying to generate some corpus, by short term trading (less than 6 months). After i have sufficient corpus i plan to invest for long term.
DeleteHi Bhavin,
DeleteIn general what you say could be correct. However when you are in the early phase of investment, building a substantial capital is more important.
I would rather make my money and pay a STCG tax of 15%
Once the corpus crosses 2 crores, then you can keep one CR for long term and with another CR continue trading.
All the best!
Excellent results by pondy. Is it still advisable to hold or not.
ReplyDeleteHi Parag,
DeleteI sold my Pondy shares around 580 and since then, it has not been on my radar.
All the best!
Pre-IPO Opportunity @ Nazara Technologies
ReplyDeleteWe have a mandate to sale Nazara Technologies Shares (Limited Quantity). Last Traded Price is 770 Rs. Price May change as per demand.
Intrested may contact on contact@strategicalpha.in.
To Know Potential in this only to be Listed Company in Gaming Space in India Follow Check below Link.
https://strategicalpha.wordpress.com/2018/03/30/nazaara-technologies-a-high-potential-wealth-creator-in-gaming-space/
Hello Zorba, How are you doing?
ReplyDeleteWhat's your take on Pondy oxides now after 4 years of your reco. After making a high of 731, the stock seems to have come near your recommended levels. Revenues & EPS have tripled.Are the growth, demand & fundamentals still intact for this company?