Saturday, October 27, 2012

EASTERN GASES - CHANGING POLICIES , CHANGING FORTUNES ?









Changes in government policies always impacting industries and companies.Eastern gas is a stock we discussed  last year almost at the current price level.Since the policy of government on LPG subsidy changed substantially and some positive developments already happened in the company ,looking into it once again.

                                                 Reduction in then number of subsidized cylinders giving more opportunity to private sector players in this sector .Eastern Gases ( BSE Code 590080) is one of the very few listed companies from this industry and it is an important point to note that this company increasing  profits in past five consecutive years even in the previous unfavorable business environment.This Kolkata based company engaged in the distribution of commercial LPG in 17 and 33 kg cylinders.At present company supplying Cylinders in West Bengal, Bihar and Orrisa from its own bottling plant situated at Durgapur under the brand name ‘EASTGAS’ .Company also supplying bulk LPG for industries .Recently company started its first auto LPG dispensing station in West Bengal and planning to start a pan India network for the same.In the changed environment company also studying the viability of home cylinder distribution too  not only in Eastern region but in south and Central India .For expanding their business  they are now going to start few LPG bottling plants in this area .For the FY 2012 ,Company posted a turnover of Rs.135 Cr which is more than a 9 fold rise from FY 2008. The changed government policy is expected to bring a better level playing field for private sector players compared with the previous situation and in future we can’t rule out a chance for complete cost based price fixing policy as it happened in the case of Petrol few years back. At present subsidized  home cylinders are illegally diverted for commercial purpose in a big way .As a next step government is expected to introduce a  system for directly crediting the subsidy amount to the bank account of consumers .This method will put an end to the diversion from home to commercial use .In such a situation people will be forced to use home cylinder only for that purpose and commercial cylinder for commercial purpose .Such a situation  will definitely help private players who already established infrastructure facilities for distributing commercial cylinders.

This is a stock for investors with enough patience at CMP of Rs.19

Link to company website HERE

Link to latest Annual Report HERE 
 
SHRI MATRE POWER & INFRASTRUCTURE LIMITED (FORMERLY -

SHRI SHAKTI LPG LTD ) BSE CODE - 531322



Another listed company from this sector is Shree Sakthi LPG which distributed LPG Cylinders under the brand name Shakti Gas earlier .They almost stopped the distribution activities due to the subsidy issue ,but still maintaining all infrastructure facilities .We can’t rule out re starting of their operations going forward.Recently they decided to write off all their losses by reducing the face value of the stock.An interesting point here is that this company is still  a debt free one.This stock is currently trading around at a throw away price of below  Rs.2 /-.I have not dig deep into this stock and mentioning it for your information purpose only ,hence ensure necessary due diligence before acting on.One more point - both stocks are illiquid.

Link to company website HERE

Link to latest Annual Report HERE 

51 comments :

  1. Hi VP Sir,

    Thanks for the pick. What do you think about Dhanuka Agritech? Can the management be relied?

    Subra

    ReplyDelete
  2. Sir, I am your new follower, already started to follow your recommendations. Have bought some Indo Amines Ltd stocks and now am planning to buy Eastern Gas as well. Thanks for your good work!

    ReplyDelete
    Replies
    1. Dear Sanjeev

      I am just expressing my stock ideas here.Before taking any investment decision ,do your own study and get convinced .My suggestions are based purely on fundamental basis and positively correlated with business growth of the company .So analyse the growth periodically and never expect any gain overnight .

      Delete
  3. dear sir ji,
    thanking you for your effort to help us i reques you to put firward your views on the following.
    1)unichem lab : the reason i was planing to invest in this stock is primarly becouse of its result nearly 85% growth and historically its price moment was in accordance with net worth so i guess its price should in accordance with its net worth should be above 1000rs.
    2)dynamatic technologies:though the company is mainly traded in pumps and compressor segment,but its mainly into precission engeinnering and aerospace.taking into account the aerospace segment(leaving the rest),sir dont you feal that the company is teaded at discounted price.as its the only supplier to AIRBUS from india(some product).and the indian governmants offset clause in defence deal.ie,in few time around the 126 MRCA deal will be cleared and there are many more deals for the defence force.

    for me your views are very precious.it in past has helped me make stragically important and profitable decession.please answer

    with regards
    anshuman

    ReplyDelete
    Replies
    1. Unichem is a good stock and worth buy for long term.In case of Dynamatic,due low liquidity it may suitable only for high risk investors .

      Delete
  4. Dear Sir,

    Do you track Investment & Precision Castings and what do you think about this stock?

    ReplyDelete
  5. please if u have time can u advise on sunteck realty

    ReplyDelete
    Replies
    1. Anything is possible in stocks operated by promoters and operators.

      Delete
  6. HI VP SIR

    SEQUENT IS GOING TO DECLARE SEPTEMBER QUARTER RESULT ON NOV.7

    ReplyDelete
  7. Sir,
    I bought heg from a long term perspective but I have few apprehensions about it.
    Firstly the demand from steel sector in the near future is not very encouraging .So the scope of improvement in EBITDA is very minimal and also it won't utilize its full production capacity.
    The rupee appreciation won't help its case as it exports most of its products.
    So what is the one thing which will make us remain invested in this stock?

    ReplyDelete
    Replies
    1. Dear Sourabh

      Your apprehensions are valid if you are looking only for NEAR future.

      Delete
  8. HELLO,

    WHY ARE YOU RECOMMENDING ILLIQUID STOCKS. I THINK YOU WANT TO MAKE THEM LIQUID:). WHY DONT YOU KEEP US UPDATED ON YOUR PAST RECOMMENDATIONS. PLEASE DONT SUGGEST ILLIQUID STOCKS IN FUTURE. WE ARE HERE TO MAKE MONEY SMARTLY AND NOT STRUCK IN ILLIQUID STOCKS AND SUFFER. PLEASE BE INVESTOR FRIENDLY AND NOT INVESTOR ENEMY.

    ReplyDelete
    Replies
    1. d not use this forum friend. it nt for such fool people. it is for smart investor nly. vp ji remove this enemy.

      Delete
  9. First of all , I request my readers to use only small letter to express your comments ,normally CAPS means shouting and I don't think It is necessary here.More than that I have no problem for my eyes to read small letter words.

    Coming to the point,my only concern is the future of the company and not its liquidity .Any investor can see the past volume in BSE website and you have freedom to buy or not buy based on your liquidity preference.You said you want to make money 'SMARTLY' .History proves,investing in high quality low liquid stock is one of the smartest way to make money for those having capacity to take risk.If you are not that kind you have freedom to avoid such stock and no one compelling to buy any illiquid stock. When more and more people know about a stock ,liquidity will normally increase .As you are aware ,I am doing this without charging anything while working in another job and it is not practical to update every stock mentioned in past three years due to time constraint .I am replying for most of the mails received in the above given mail id regarding the current opinion about past recommendations.

    You should understand ,investing is not kidding and each investor should track the stock he invested ,seriously .Don't think someone will spoon feed every time and it is his duty to to make money for you by providing informations time to time.

    ReplyDelete
    Replies
    1. Very Well said.
      As per my observation some people are treating your blogs and trading picks . They buy the stock on Monday and sell it on Friday to make the money available for next stock recommended on Saturday.

      Delete
    2. True Deepak,but it is stock market and we are helpless .Only time will tell about the wasting opportunities for just few bucks.

      Delete
    3. Hi Anonymous,

      Please understand that VP is expressing his views in stocks based on future potential . You are no one to suggest your views on some body else's blog. I would recommend you to start your own blog on your own favorite topic. Let the blog work around the funda of liquid stocks.... Wait and see how the world respond to it .In this (VP) blog the blogger clearly mentions the consequences of renting his opinions for the ones financial / investment decisions.If this is not in line with your philosophy , you have every freedom ; not to follow the blog.......

      RB

      Delete
  10. Hi Sir,

    Please provide your view on Fairfield Atlas. Since they have to reduce their stake from 84% to 75% or delist by June 2013, how can this affect it's price?

    Thanks,
    Sunil

    ReplyDelete
    Replies
    1. Not expecting de-listing,they may shed excess percentage

      Delete
  11. Dear Vpji

    I read in a paid site named HBJ Capital that Swiss Re is going to exit from TTK Healthcare Ltd.Is it true ?

    ReplyDelete
    Replies
    1. KSB Pumps posted a not so good result...what is your view on it..pls suggest as I had taken a huge qty after reading your blog

      Delete
  12. Swiss RE having no stake in TTK Healthcare ,then how they can exit from this ?. They hold stake only in TTK Healthcare TPA Private Limited (formerly TTK Healthcare Services PVT Ltd ) and not in the listed entity.
    Never take investment decisions with blind belief in any one.

    ReplyDelete
  13. India Gelatine MAY increase by 5% to 10 % tomorrow. [ not speculating, but it may add min 5 %...... ]

    ReplyDelete
    Replies
    1. Hope you are referring Gujarat Samachar's this week Recommendation ?

      Delete
    2. This comment has been removed by a blog administrator.

      Delete
  14. This comment has been removed by a blog administrator.

    ReplyDelete
  15. Sir,

    Request your comments on Confidence Petroleum in the same sector .

    Thanks.

    Manish

    ReplyDelete
  16. Hi,

    A big applause to VP,s Innovative and timely thinking EASTERN GASES .........

    Even if I will not buy this , this recommendation made me a true follower of your thinking..

    Robin

    ReplyDelete
  17. I have investment on Lloyd Electric..Can i hold ?

    ReplyDelete
  18. WHAT IS YOUR VIEW ON ROLTA ESPECIALLY AFTER THE RESULTS

    ReplyDelete
    Replies
    1. Careful man ..no CAPS ...its an etiquette that one shouldn't use caps lock one while writing

      Delete
  19. sir,
    How does the prospectives of vardhman textiles look to you for long term?

    ReplyDelete
  20. Dear VP,

    I am not reacting to todays price correction in Sequent. Just want to understand from you. This company is trading at three times the book value. (55-170). Debt of 165 Crores. A market cap of 390 against a reserve of 105. Return on capital employed is less than 9%. Extremely fluctuating EPS. Even if there lies a market for this counter, how do you foresee the company's performance if the future with a highly wavering financials?

    Premkumar Menon

    ReplyDelete
    Replies
    1. Dear Mr Menon

      I have clearly mentioned that Sequent is not a stock for people who are taking investment decisions based on theories,equations or past numbers.

      Delete
  21. dear VP,
    kindly give your opinion on VINATI ORGANICS.

    thank you

    ReplyDelete
  22. Dear VP,

    I had purchased India Gelatine at rs 85..Planning to hold for atleast 1 year..Any change in views??

    Thanks
    Amit Kumra

    ReplyDelete
    Replies
    1. India Gelatine recommended at Rs.66 and CMP is around 90.At this price it is a hold for me .

      Delete
    2. Ok VP...will hold for atleast 1 year..Thanks a lot!!!

      Delete
  23. Dear sir,

    Kindly advice whether it will be correct to enter at this level of your previous recommendations: heg, united phosphorus, premier explosives, tayorolls, & gpil, or any changes has happened, Thanks sir.

    ReplyDelete
    Replies
    1. No change, except in the case of Tayo Rolls

      Delete
  24. DEAR SIR,WHAT'S YOUR VIEW ON STORE ONE RETAIL AT CURRENT PRICE 36.PLEASE REPLY.........

    THANKS

    ReplyDelete
    Replies
    1. Not a fan of the business model of India Bull's Group

      Delete
  25. Dear VP sir
    Bambino agro recommended at 40/- and it has run with bull speed upto 56/- @5% UC. Then it took u turn and daily -5% till 48/-. To day it has waivery turn + & -.
    could you pls inform what is your view on this pattern of stock pricing movement?

    One more Heritage has touche 376 /- highest peak price, shall i hold or book profits. I read some where 30th results declaring date, and today on 29th it dropped by -6%.
    what could be the reason sir?

    with regards,

    with regards,

    ReplyDelete
  26. Dear Phani

    As you are aware investors are different kind in stock market and we can't control the emotions ,thinking and activities of them .Those who are not interested to take the risk of result will normally exit before the declaration of the same. I don't think taking a decision after looking what others are doing is the right one in stock market. If we have conviction in a stock Why we need to look to others activity ?.Bambino moved from Rs.40 level to 60 level in short period .Some one may think this is maximum and decides to exit ,what we can do in that ?.At that point some people may think there is further upside based on its future earning and came for buying .In such a situation short term sellers are absorbed by these type new investors and stock moving accordingly .I don't think there is anything wrong in these type trading patterns and I also believe small investors like us can't control stock price in this market where lot of people participating.

    ReplyDelete
    Replies
    1. Dear Sir,

      Thank you very much for the clarification.

      regards

      Delete
  27. Sir,

    Had posted query on 29 Oct 12 as regards to your views on Confidence Petroleum as it is in related field of Eastern Gases.

    Thanks.

    Manish.

    ReplyDelete
  28. Hi VP,

    Very recently I was introduced to your blog by one of my friends, You seem to study big and you seem to have a 75-25 Win -lose records. My best wishes!!!!

    Further, Eastern Gas seems a better bet but then do you justify their PAN INDIA diversification, is it authentic and are there no other listed players in the same field.

    ReplyDelete

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