Pritish Nandy Communications Limited

( Market price INR 9.5 as On 11th Oct 2013, NSE at 6096 )

1.       Promoter stake :

a.       37.91% of share held by promoters as on 30^th June 2013 .

b.      Additional 5 lac shares added by promoter group in the month of Oct raising the promoter stake to 41%.

2.       Promoters Pledge share:

a.       None of the promoter’s shares are either pledged or otherwise encumbered.

3.       EPS and PE Ratio

a.       EPS

                                                               i.      Year Ended 31^st March 2013 : - 3.74 ( Negative)

                                                             ii.      Quarter ended June 2013  :  +.30 ( Positive)

Note: Company is going to release a big budget movie in the month of Feb on Valentine day (Shaadi ke Side Effects) starring Farhan Akhtar and Vidya Balan. This gives us a transparency into the future earning which may lead to improved EPS.

4.       PEG Ratio : Following will have an impact on Price Earning Growth ratio

a.       Apart from Shaadi Ke Side Effects, two more small budget movies are pending release probably next year.

b.      Company also has 100% subsidiary which is into wellness industry, PNC Wellness Limited.

                                                               i.      Moksh and Moksh zip are two brands of PNC Wellness Limited.

                                                             ii.      Both brands intend to grow into retail chain of high quality wellness facilities cornering all ends of the wellness market.

                                                            iii.      Moksh has won several awards in the past like Best Holistic Centre in Mumbai Award from BIG Brands Research in 2013

5.       Book Value of Share

a.       As on 31^st March 2013 Book Value is INR 56

b.      Current market value of share is INR 9.5

c.       Company trading at almost 17% of its book value

Conclusion : PNC at current price is a good investment to make keeping in mind holding period of 9 months to 1 year.

Status of previous Analysis

·         Reliance Broadcast Network Limited

o   Market price as on blog date (27^th June 2013) INR 31

o   Market price as on 11^th Oct 2013 is INR 52.50

o   Appreciation of INR 21.50 (Return of 70%)

o   Company Delisted at INR 70 in the month of March 2014, appreciation of 125% from the date of the blog i.e. 9 months.

·         Phillips Carbon Black Limited

o   Market price as on blog date (25^th Aug 2013) INR 36

o   Market price as on 30^th April 2014 is INR 61

o   Appreciation of INR 25.00 (Return of 70% in 7 months)

PHILLIPS CARBON BLACK LIMITED

( Market price INR 36 as On 22nd August 2013, NSE at 5400 )

1.       Promoter stake :

a.       52.26 % of shareholdings held by promoters .

b.      It has remain constant past couple of years

c.       FII, DI holding around 35%. Public holding approx 12% only

2.       Promoters Pledge share:

a.       None of the promoter’s shares are either pledged or otherwise encumbered.

3.       EPS and PE Ratio

a.       EPS

                                                               i.      Year Ended 31^st March 2012 : - 6 ( Negative)

                                                             ii.      Quarter ended June 2013  :  -15 ( Negative)

Note: Negative EPS is cyclic due to high raw material cost and slowing demand of Auto/Auto ancillary industry ( Carbon Black is the raw material for tyre Industry which depends on growth of auto industry)

4.       PEG Ratio

a.       8^th Largest producer of Carbon Black in the world, targeting to be the 3^rd largest by 2015.

b.      Detailed Expansion plan already laid out

                                                               i.      50,000 Metric Ton Carbon Black in Kochi commissioned in May 2013

                                                             ii.      Carbo Chemical Plant in Orissa by Q2 2014

                                                            iii.      Greenfield Carbon Black plant of 140,000 MT in Chennai

                                                           iv.      Carbon Black plant of 110,000 at Vietnam

5.       Book Value of Share

a.       As on 31^st March 2013 Book Value is INR 170

b.      Current market value of share is 36 Only

c.       Company trading at almost 20% of its book value which is dirt cheap.

Conclusion : Challenges/risk associated with high input cost, under- utilization of plant capacity and slowdown in the auto/auto ancillary industry has already been factored in the market value of the share and it looks to be available at cheap price with very restricted downfall in share price. Moreover keeping in mind the expansion plans this is a good stock to add to ones portfolio with a time horizon of 2 years.

PS : My previous analysis on Reliance Broadcast Network was done at INR 31 as on 19th May 2013 ( NSE at 6050) wherein i recommended it to be a good pick with potential of handsome return and as on 23rd August its trading on 45 ( jump of almost 50% ) NSE at 5470.

Reliance Broadcast Network Limited

( Stock Price INR 31 as on 19^th  May 2013, NSE at 6050 )

Let’s analyze this company as per the below mentioned basic parameters of investing.

• Promoters Stake : Promoter stake as on 31^st March 2013 is 70.29 % whereas promoter stake as on 31^st March 2012 was 65.37 %. Promoter’s group increased it’s stake by 5% in a creeping manner over a period of one year. This is a positive sign.
• Pledged Promoter Stake : Number of Shares pledged Zero.
• EPS and PE Ratio :
• EPS as follows
• June 2012      -2.5
• Sept 2012      -1.22
• Dec 2012       +0.05
• March 2013    +0.36
• PE Ratio is not relevant here as company had –ive EPS in the previous Quarter

Note : Company made lot of business investments in the past and these investments have now started showing up in terms of profits.

• PEG Ratio : Companies revenue is expected to grow at a good rate in near future due to digitization reforms in India. Following is the recent announcement from the company to respective stock exchange.
• Book Value of Share : 
• As on 31st March 2012 Book Value is INR 27.2, hence trading close to its book value.

Conclusion : RBN seems to be a good pick at current price and will give handsome return in coming years. RBN Delisted at INR 70

Following five basics to be kept in mind while investing in share market inorder to protect your investment and growing your hard earned money to create wealth.

Promoter Stake :

Higher the promoter stake greater is the commitment/ confidence in the business. Evaluate the movement of promoter stake over a period of time, if the promoter stake has increased over a period  of time then it’s a positive sign. Decline in the promoter stake needs to be investigated in detail.

Promoters Pledged Shares :

This is a very important aspect which needs to be kept in mind. Although the promoter stake in the company is very high but if majority of his shares are pledges with lendors then its a very risky scenario. In case of global melt down or recession the share price will decline and in case of pledged share the fall may be more drastic as the lendors may start selling the shares in the open market to protect their lending. This may even lead to complete erosion of promoter stake. One of the reasons of few stocks which were quoting at tripple digits in the past and now available at single digit is the selling of the promoter stake in the open market by the lendors.

EPS And Price Earning Ratio :

One of the most popular investment ratios, it can be computed as: Profit Post Tax/ Total quantity of equity shares issued = EPS

Market Price of the share/ EPS = P/E Ratio. This ratio highlights the connection between the market price of a share and its EPS.

If the current P/E ratio is low, as against the future prospects of a company, then the shares make an
attractive investment option. But if the company is saddled with losses and falling sales, stay away
from it, despite the low P/E ratio.

PEG Ratio :

PEG is an essential and extensively used ratio for calculating the inbuilt worth of a share. It helps you decide whether the share is under-priced, totally priced or overpriced. To derive the ratio, you have to associate the P/E ratio with the expected growth rate of the company. It assumes that higher the growth rate of the company, higher the P/E ratio of the company’s shares. Vice versa also holds true. P E Ratio/Expected growth rate of the EPS of the company. In general, a PEG lesser than 0.5 is a lucrative investment opportunity. However if the PEG exceeds 1.5, it is time to sell.

Book Value per share :

This ratio shows the worth of each share of a company as per the company's accounting books. It is calculated as:  Shareholders' funds/ Total quantity of equity shares issued = Book Value per share.

Shareholders' funds can be computed as such:                   Total assets (equity capital to the company's reserves) less total liabilities (money owed to creditors). Book value is an old record that uses the original purchase prices of the assets. However, it doesn't show the present market price of  the company’s assets. As a result, this ratio has a restricted use when it comes to estimating the market price of the shares, but can give you an estimate of the minimum price of the company’s shares. It will also help you judge if the share price is overpriced or under-priced.