Saturday, March 22, 2014

KIRLOSKAR OIL ENGINES LTD - BUY




 
Just before the general election , many investors are searching for stocks which may out perform if a stable government came to power .Since the uncertainty about the outcome  is higher we should think about the opposite side  too. What I means is , we should select stocks which will not under perform if the next government is not a a stable one ,too.Considering both these situations and the recent run up in many sectors like Engineering,Infrastructure ..etc ,it is not an easy task to select a good stock for this purpose.But still there is few stocks available at reasonable valuation which may out perform in a positive election outcome but will not fall much even if there is any negative outcome.This week let us look into one such stock – Kirloskar Oil Engine.

Kirloskar Oil Engine (KOEL) - is the flagship company of Kirloskar group . Company is the leader in diesel engines,agricultural pump sets and generators.Company’s operations are broadly classified into four divisions – power generation,Large Engines,Industrial engines and agri related.Company is a trusted name in power generator business with its most popular brand ‘Kirloskar Green’ Genset .In this series company manufacturing gensets with ranges varies from 5 Kva to 3000 Kva. Large engine division catering mainly shipping industry and marine applications and  manufacturing propulsion engines (Product range 1060 KWm to 3020 KWm ) .In the agriculture division company supplying diesel engines and pump sets  ranging from 3 hp to 130 hp. Company also making industrial engines in 20 hp to 800 hp category for industrial applications in mining,material handling ,construction,fluid handling ..etc. Even if many of these industries were in bad shape due to policy paralysis and general recession ,company reported consistent performance . After establishing leadership position in large gensets ,company recently introduced portable gensets in the lower KVA range.Company  also taking efforts to increase its export which increased 20 % in last year.

                                                                               KOEL is a company with strong balance sheet and good return ratios .It is a zeo debt company with good operating cash flow . Company declared 250 % dividend last year .Promoters holding close to 73 % stake and another 14 % held by large investors.In last FY ,company reported a top line of Rs.2357 Cr and a net profit close to Rs.200 Cr .

                                                                         Recommending Kirloskar Oil Engine as my pre-election pick @ CMP Rs.182 .Stock listed in both exchanges.


Link to Company website HERE 


Disc: It is safe to assume that I have vested interest in KOEL

88 comments :

  1. Sir,
    Kindly let me know the difference between standalone and consolidated. I am not able to understand even after doing google search.

    ReplyDelete
    Replies
    1. Consolidated result includes the result of Subsidiaries

      Delete
  2. Thank you sir for the great research & value pick usual. God bless you sir!

    ReplyDelete
  3. Thank you for wonderdul pick sir. Sir whether swaraj engine is advisable against kirloskar oil engine. Pls share your view.

    ReplyDelete
    Replies
    1. It don't think both are strictly comparable. Swaraj Engine's growth depends mainly on the Tractor sale of Mahindra and LCV sale of SML Isuzu where KOEl 's product portfolio is large and diversified.

      Delete
  4. It's quite interesting for the blog readers to get known about LOW RISK and STEADY GROWING companies and I believe KOEI comes in that safe bets.
    But I'm willing to have your view from your old suggested low risk stocks,which were YES BANK,FORTIS HEALTHCARE,TATA CHEMICAL,M& M AUTO.
    On current market basis,Which one stock would you recommend for fresh entry?
    Thanks VP Sir

    ReplyDelete
  5. dear sir on your recommendation i buy 100 share of sunshiled chemical at Rs 65 today it is 120 should i sell is please let me know

    ReplyDelete
    Replies
    1. No ,HOLD it if you are ready to take average risk.

      Delete
  6. I bought 2500 shares of orchid at 56.60....But at CMP...I am losing my faith...can I exit it now...or shud i wait for one more quarter...

    ReplyDelete
    Replies
    1. If you lost faith in any company it is always better to exit at the earliest.

      Delete
  7. Sir whats your take on saksoft its hovering around 71 to 84 I bought it at 81 as per your research kindly guide me.

    ReplyDelete
    Replies
    1. Due to appreciation in rupee many export oriented cos under performing in past few weeks . The outcome of election may decide the trend of rupee further. If the coming govt is weak HOLD such stocks otherwise shift to other sectors

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    2. Sir Shall i hold BASF?

      Delete
  8. Thank you for wonderdul pick sir.

    ReplyDelete
  9. Dear sirji
    What an idea before giving advice you accumulate the shares and afterwards you know. I have seen the some of your recommendation I.e. cravtex SMS pharma v2 retail apar Ind panacea n many more. We can expand list more. Initionally stock shoot up n then u know as happen with us. Biggest insider trading style.

    ReplyDelete
    Replies
    1. thatswhy he is doing free service... atleast he is giving some good stocks investing desison depends on u... if its so good idea why don't u also start a blog and do it.....then u will realize how much hard work it needs

      Delete
    2. If you find a good stock what will you do .Will you buy it before recommending to your friends or buy it after recommending the same to your friends if that friend's purchase can influence stock price , ? .In the past many times I clearly mentioned that I will buy shares before recommending it openly (within the permitted limited of insider trading norm prevailing in India ) if I have money .On the selling part I have a long term view and in 99 % cases my selling (if any ) will happen only after seeing company's growth in the next few quarters.In any market people will come to book profit after the rise of certain level and then the stock will correct .You have pointed out the name of few stocks here which recommended recently but at the same time hide many others like Laopala,Kaveri Seed,Advanta ,Garanules India,Sunshield Chem,Rhodia India ,BASF,Persistent Systems,Caplin Point Lab,Alphageo ..etc which already given multiple returns . So it is not a big secret or so and I explained it many times in the past.But As far as possible I will adhere the Insider trading norms prevailing in India .

      Delete

    3. sir, Negative comments are a must for smooth functioning. In my personal opnion this blog is good for investors.K hari

      Delete
    4. dear sir
      if you are really good than try it at market hours not on holiday..than everybody will know what is going on.......

      Delete
    5. Please let me know where I claimed " I am really good " ?. If you are a new reader ,for your information ,earlier posting done during market hours and changed the same to Saturday after the repeated request of readers to do the same on Saturday in order to get enough time to study the company .

      Delete
    6. Sir,

      Please ignore such comments, Like they say do not feed the trolls.
      You are doing a great service to us and i have learnt alot from you.
      Thank you.

      Delete
    7. Sir,

      Posting on weekends is the right thing to do. Please ignore such comments and don't even bother to post them. No point in discussing the same thing again and again.

      Thanks,
      Sunil

      Delete
    8. Dear VP
      U r doing good job. Putting lots of hard work in research. Its up to investor find further and decide before investing. What is ur view on Hindustan Oil Exploration which I am holding at Rs.130 for long.

      Delete
  10. Sir,
    I am wondering why Kirloskar Electric posting of 1st Jan 2012 is not showing on your blog?

    Did you remove that as it has fallen way beyond ?

    thnx

    ReplyDelete
    Replies
    1. Not intentionally deleted any posting .If I do the same ,many postings about stocks which trading below recommended price are still there .But few months back there was some technical issues .I think it was a common issue with the service provider .Thereafter till now many functions are not working properly .Earlier the search option was perfect which was searching the message part also but now it is searching only the postings and not the messages .I have sent few mails to the blogger team but not received any reply so far. Old data loss along with this issue is a point to check and I have certain limitation in it being not a techno savvy person.

      Delete
    2. Hi... Some of your picks are under performing for long time. Some are in years. I never seen any sell or exit calls from you if you recommended stock not perform well for long time. At the same time you are telling not to blindly invest in a stock for 2 or 3 years more. So pls give us your sell or exit or book loss calls if you think the stock is not good to hold. Pls reply..

      Delete
    3. Yes sir,
      I am also in the same thinking as we do see your profit booking calls but not sell and exit calls.
      Its confusing as does it mean hold for another 2-3 whcih is 6 years or sell to avoid more losses.

      thnx

      Delete
    4. No doubt some are under performing due to various reasons.If any one of my readers who purchased any stock on my recommendation sending e-mail to my mail id ( given at the top of the blog itself) I am sending proper reply to them what to do on that .If I put an open recommendation to sell a stock which my readers are holding in quantity and illiquid ,that may create lower circuit and on share price fall normally many others ( non readers ) may also come for selling .If a stock falls ,on technical terms , people will only sell it even without checking the reason of fall .In such a situation open SELL recommendation may create more problems for for my readers in case of an exit.One more point is ,if you are a share holder you have some duties too and need not wait for spoon feeding by some one .You should track the stock you owned and analyse the happenings in the company and take decision accordingly if there is any negative fundamental change happened.Don't think it is 100% others duty to make money for you and only sitting and enjoying the show is your duty.

      Delete
    5. very Nice thinking , dont give SELL call openly , give sell call only through mails.
      Thanks Sir

      Delete
    6. Thanks a lot for your reply. I didn't think in your angle. We all know if you put Buy call on any stock then next day it's hitting upper circuit. At the same time Sell call also will hit the lower circuit. I didn't think about the impact on Open Sell call from you. It's great and appreciate your care about all other common investors. Hats off to you sir.

      Delete
    7. Ashok

      This is an issue of small caps especially in case of low liquid stocks. In case , company grow as expected there will be no issue for an exit because more and more people will be interested later and volume and price will gradually increase and liquidity will be comfortable .For Ex. take the case of Kaveri Seed.When I first recommended this stock its price was around Rs.250 on FV 10 share but the volume was negligible less than few 1000.Now its face value splitted to Rs.2 and 5 shares issued for every 1 .Now this FV 2 share itself trading around Rs.600 with good volume.

      Unfortunately in some cases companies may not perform as expected .In such a case my readers may caught at the wrong end and difficulty to exit may only increase due to an open SELL call .This is the real reason for avoiding open sell call in many times and not any issue to accept faults /mistakes or wrong judgement. I hope you can understand the situation.

      Delete
    8. Sir... I understood... Thanks a lot for your detailed explanation.

      Delete
  11. Sir, should one hold Themis Medicare? I'm a long-term investor.

    ReplyDelete
    Replies
    1. Company's recent tie-up with Novartis is expected to bring result in next few quarters . Hold it for the time being.

      Delete
  12. Hi VP sir,

    What do you think about Orbit Exports? Is the management reliable?

    ReplyDelete
  13. Sir, I would like to take long-term position in Orient Bell. The profitability has come down. What could be the reason for it? Do you think, the company can manage high debt situation in light of fall in profitability?

    ReplyDelete
    Replies
    1. Main reason for lower profitability is the recession in construction sector itself.In addition to that just before the recession creeping in company acquired the Bell Ceramics funded mainly through debt ,which also affected negatively.In addition to that company importing certain products from China and the rupee depreciation also affected negatively.Only now rupee reverses .Any revival in construction sector will help the company to improve its business .Earlier I recommended this stock and later requested to book loss for those having no plans to hold it for long term.

      Delete
  14. Hello sir,

    What do you think about Tree House Education?

    ReplyDelete
  15. Sir, what is your opinion on Eon Electric?

    ReplyDelete
    Replies
    1. After selling its major business it is now starting afresh .Will take time ,for investors with enough patience only.

      Delete
  16. Sir, m waiting your comment on Manjushree Technopack, if u track.
    thanks

    ReplyDelete
  17. Sir Good Morning
    Kirloskar Oil Engines is having a solid balance sheet, however since last 3 years sales is flat at near 2500 cr and no investment in capex.
    In addition it may also face competition from Honda and Chinese companies etc. also..
    Wanted your views on the same
    Regards and thanks for great blog

    ReplyDelete
    Replies
    1. Yes but should think about the situation of economy in past three years too.Company's products are closely linked to the industrial growth story and last three years were extremely difficult for all companies operating in related sectors .Even that tough time company could maintain its positive trend even though not a big jump in business and keep a strong balance sheet.In case of competition ,it is quite common in any business and Honda is competing in very few segments with KOEL especially in small genset and pump segment .I think the the 'Kirloskar' brand and its marketing and service network is strong enough to compete with other players .

      Delete
  18. Sir suggest from where you are searching the information related growth of companies.

    ReplyDelete
    Replies
    1. If such a ready made facility is available anywhere how one can make money in stock market ?.More than that, knowing the past growth of a company will not bring success in stock market as an investor but try to estimate the future growth through deep study about the company,promoters,industry ..etc .Then only you can make market beating returns.

      Delete
  19. Sir i have 1000 share of Tvs motor @ 95 per share pls advice on the same n its future

    ReplyDelete
    Replies
    1. Sorry ,Since not tracking TVS motors not in a position to comment on it.

      Delete
  20. dear sir

    in just 3 hours kirloskar oil engine fundamental change and stock gap up by 10%. don't you make public fool. because stock had never moved like that in history.

    ReplyDelete
    Replies
    1. Dear Friend

      You have a lot to learn about market .Each and everyday at least 200-250 stocks hitting either upper circuit or lower circuit .What fundamental changes happening in all these stocks over night ?.

      Stock price movement on either side is a function of supply and demand which created due to various reasons. If a stock is deeply undervalued based on its existing fundamentals when people realise it ,it will move to the deserving price and then there will be a consolidation phase (due to the exit of short term players ) and next leg of movement will depends on the business growth of company thereafter .

      If you believe any stock is not worth at a particular price you have full freedom to not buy it and nobody is compelling anyone to buy or not buy .It is the duty of each investor to generate conviction based on one's own home work.

      Delete
    2. don't you think operators making money with your recommendations I think there is some connection between you and some operators.

      Delete
    3. After publishing the posting it is beyond my control .How I can say a particular parson or group should not make money ? . If you are believing I am an operator or someone related with me operating everything I am recommending - I can't change your belief.

      Delete
  21. what evr u recommend sir is always up 7-10% next day.
    brilliant analysis sir! cheers

    ReplyDelete
  22. Hi
    If you wants to be a"fool" , pls leave this blog

    Sadique

    ReplyDelete
  23. Please guys let's keep him motivated with good comments ! He is providing this service for free .. He resolves all our queries too !

    Cheers ! Let's all invest and earn

    ReplyDelete
  24. Sir sugar sector scripts are not running which factor is working...

    ReplyDelete
    Replies
    1. Just before the recent state elections ,many state governments raised the cane price substantially .In addition to that full de-control of sugar not announced as expected

      Delete
  25. Sir,
    The CMP of KOEL is 199 and not 182!.

    Can you please suggest some stocks from Auto ancillary sector that can be entered now?

    Thanks,
    Sunil

    ReplyDelete
    Replies
    1. Sunil,
      KOEL was recommended at Rs.182 on Saturday morning. There was a 2 hours market on Saturday and the stock went up 10% from Ts.182 to 200+

      Delete
    2. There was one hour special trading yesterday.

      Delete
  26. Dear Valupick;
    Excellent pick again ,KOEL is one of the best co to invest in.
    Am interested in nath bio genes ,sorry if am repeating question.

    Why concerned companies website is suspended,no investors corner ??? Is it safe co to invest in or one should go in SIP manner for the same.

    ReplyDelete
    Replies
    1. Till Friday there was no issue for their website ,it may be due to account expiry .Let us contact with them and inform the same .I hope ,the issue will be resolved in couple of days.

      Delete
  27. Dear Valuepick
    please share your observations for improvement in capex cycle of country due to which many investors rotating their portfolio in cyclic sectors like capital goods sector.
    Am really in doubt whether our macros improving.

    Is their need for aggressive reshuffling of portfolio to go out of defensive like pharma & IT.

    what is your comment on shilpa medicare stock.

    ReplyDelete
    Replies
    1. I too not expecting any dramatic change in short term ,but govt can do many things to sort out issues of mining ban, environmental clearance for large projects ..etc .Formation of new govt and their policies are crucial in these matters.

      At this point I don't think a complete exit from defensive sectors is necessary . I think monsoon is another important factor which will affect macros more than election outcome in long term fundamentally.

      Delete
  28. Sir, I am having 1000 shares in DCM Shriram with appreciation of about 50 %, shall I continue hold the shares, please give me your comment. regards Ramana.

    ReplyDelete
  29. Sir,its not your recomandation, But can i Ask your view on UNITECH.I purhased at 28

    ReplyDelete
  30. SIr i just found your blog today, it is vey usefull thanks you. i will follow your picks for here on.

    ReplyDelete
  31. Dear VPji

    'Please advise on marksans pharma based on current market price movement.

    also about Bombay cycle and motor agency bse listed company, whether is it safe to invest at current market price.

    Thanks
    Sunil Agarwal

    ReplyDelete
    Replies
    1. Hold Marksans

      .Not tracking the next one.

      Delete
  32. kindly put light on KSB Pumps, appreciated around 140rs as u recommended, Now whts shud i do??? Book profit or Hold????

    I m waiting eagerly for ur valueable reply....

    Thanks

    ReplyDelete
  33. Hello sir,

    I have 500 shares of Allahabaad bank @ 77. What is your view on this??
    Also if possible then please give your reviews on following stocks--
    -Ganesh Housing Corporation
    -Bombay Dyeing and Manufacturing Company
    -Shakti Pumps (India)
    -Ucal Fuel Systems
    -HDIL
    -DHFL

    Thanks,
    Kunal Tandel
    (Mumbai)

    ReplyDelete
  34. Dear Friends
    It has been noticed that some of the people started the blame culture in this godly blog. It is so simple. Did anyone force to buy any particular stock? NO. Then why blaming others. Above all making money is one of the most difficult process on this planet as far as we common people are concerned. Hence it is our duty to work hard for it. So let us utilize this blog to share good info, knowledge so that we all can learn and grow together. This blame culture will only cultivate negative energy which is not going to help anyone of us. Thanks. Sulekha

    ReplyDelete
    Replies
    1. "godly blog" - no other words suits this incredible blog. I only pray VP Sir lives far far beyond us.
      Ravi

      Delete
  35. sir,
    based on your recommendations, i am holding Cox & kings,Caplin Labs and superhouse...Sitting on good profits except superhouse....Will a stable govt & appreciation of rupee affect profitabilty of these companies...Thanks

    ReplyDelete
    Replies
    1. Rs.appreciation may affect to a certain extent .But no need to panic ,proper hedging can reduce that impact.

      Delete
  36. Hi Sulekha..I guess we should not pay heed to such remarks...there are always guys who are not happy with anything...if we give them weight ...they will gain more momentum...suffice is to say...when elephant walks...dog barks....hope this comment gets published....lol...

    VPji...keep on with ur great work....

    ReplyDelete
  37. Dear Mr VP,
    Kindly advise about the stock USHER AGRO LTD. They have four subsidiary companies. Promoters stake is low comparatively mutual funds and others. Recently promoters are increasing their stake. Even their profits are good annually and quarterly, the worrisome points to enter in this stock are:-
    1. More than 50% shares were pledged
    2. Total debt is 450 crores against equity of 38 crores
    3. Net profit margin is less, but on the sales volume profits are good.
    Looking for your final word to enter in this stock.
    On your recommendation, I earned good profits on Caplin Labs, Alphageo and Nath Bio-gene. Still holding these stocks.
    Regards
    MVReddy

    ReplyDelete
    Replies
    1. I am bit skeptical about the management of Usher.Another company from the same group is planning to come out with an IPO ,so we can't rule out some rigging if market turns extremely bullish.Not advising for real investors , only punters can play. It is not our cup of tea .:)

      Delete
  38. Dear VP,

    Does kIRLOSKAR ENGINES stand against Cummins, as if the economy picks up due to stable govt then Cummins stand to benefit the most. What is your view.

    ReplyDelete
    Replies
    1. Cummins already recommended more than once at lower level.

      Delete
  39. Kirlosker oil can i buy for long term for what target and time frame any risk in stock

    ReplyDelete
    Replies
    1. If you are looking for risk free investment ,better to avoid stock market.

      Delete

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