Trade4target give more knowledge about PEL
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| Premier Explosives Ltd |
1. How does one construct a portfolio which can provide 25-30% CAGR returns year after year?When to exit is something which confuses me a great.
Ans:Buy my recommended companies and allocate not more than 5% in each of them.A basket of 15-20 stocks is enough to get your desired returns.Why to exit actually if the growth is there?I see a lot of guys exiting my older recommended stocks like symphony and avanti feeds to buy the new ones.This is one of your biggest mistakes.The secret to win from markets is to have the best ones and sit tight with them till their growth is intact.You just don't need to buy the new ones as you already posses the best money making companies.I myself hardly bought any recent recommendations as am fully invested on the older ones which ensured an amazing overall portfolio return so far.
2. Then do we exit once the target gets achieved?Also have seen you recommending companies only after they have doubled/tripled/became 5x.If those were provided earlier,we could have made so much more.
3.
What is a target?Its just based on historical figures showing what its worth over a period of time.
Trade4target is a company which can achive a target for investors. Frankly speaking there's no target folks.Just hold with trailing stop as long as the growth of the company persists.Minimizing losses and maximizing profits is what you should strive for.A company which moves up and consolidates higher gives me the required clarity.There's so much to speak about,say from opportunity costs to MF's or FII's interest.A higher PE means investors confidence whereas a low PE company simply signifies lack in confidence.Buy at low and sell at high ain't in vogue.It should be buy high to sell much higher.A higher valuation also boosts the confidence and productivity of the promoters/management as they are biggest gainer of the rising stock valuation.
Some more words:You need to pay wealth tax if the value of personal assets you own exceeds 30 lakhs.Nah,don't be concerned.Stocks, which are one of the best assets ain't even considered as an asset in our country.My association with you guys last from a quarter to some years.Its not the money which satisfies me but only when I see the members trying to learn and doing the required due diligence before zeroing on a stock,that's such a wow feeling.So earn and try to learn too.Happy investing folks.
Presently, PEL has 4 main divisions:-
1. Commercial Explosives
2. Detonators & Accessories
3. Special Products Division – Solid Propellants
4. Service Contracts – ‘Operation & Maintenance’ Contracts.
Commercial Explosives: The Company is manufacturing a diverse range of commercial explosives for mining and infrastructure requirements at its 6 manufacturing units.The company is a dominant player in its segment.The explosive industry is fragmented while the main customer is a monolithic (Coal India).Others include the likes of Singareni Collieries,Neyveli Lignite,NMDC,Karnataka Emta Coal Mines and the Cement companies.The other listed players from this space are Keltech Energies Ltd. & Solar Industries India Ltd.The ‘Industrial Explosive’ division of PEL did sales of Rs.67crs vs 48crs.Production of explosives increased to 20,703 tonnes from previous year's 16,367 tonnes.The company should be able to maintain 15% operating margins as the management refuses to bid for those tenders where a threshold margin of 15% is not assured.With signals of revival of global economy and expected industry-friendly policies, Indian explosives industry is expected to post 8% CAGR over the next few years on robust growth plans of user industries like mining and infrastructure .
DETONATORS:After adoption of NHN technology last year subsequent to the accident, during the current year Detonator plant produced 53.27 million pieces which is 17% higher than 45.44 millions produced during previous year(sales value of 33crs vs 29crs).Demand for detonators, which are sold through trade channels,continue to be weak.Revival in detonator demand is expected in Q3FY15.The company is confident of raising the production further in 2014-15.
SERVICES DIVISION :O&M –Premier has been operating and maintaining the solid propellant production facilities of prestigious agencies, namely ISRO’s satellite launching station, SHAR at Sriharikota, Andhra Pradesh and Solid Fuel Complex (SFC) at Jagdalpur in Chhattisgarh.At SHAR, the company has deployed 330 of its staff under the 10 year contract for O&M services which commenced in 2007.The company also has O&M contract at SPROB. At this facility about 60 of the company’s staff are deployed.More than margins,O&M is a significant technology transfer as PEL is learning to run complex facilities and than setting up such units on its own. Such contacts are called GOCO (Government Owned, Company Operated). These contacts have annual price escalation clause which leads to steady increase in revenues.The segment contributed 15crs of revenues in the fiscal fy13-14.
SPECIAL PRODUCTS DIVISION:Premier has been manufacturing solid propellants from 2003.Since then Premier has been adding facilities to manufacture solid propellants at Peddakandukuru in Nalgonda district of Telangana. The company has been catering to the needs of tactical missiles like Astra, Akash, LRSAM and rockets like Pinaka.PEL is the only private sector entity in India manufacturing solid propellants & other specialized products for the defence sector.Solid Propellant manufacturing is a Sunrise Industry in India.Premier produces Explosive Bolts, Pyro Actuators,Smoke Markers, Cable Cutters and many other products including Blazer Plates for the Indian defence services.Premier also is the only private entity producing oleoresin based tear gas grenades used for mob control by law enforcement departments. The company had developed this product in collaboration with Defence Research Development Establishment (DRDE), Gwalior..The defense related business of the company has grown more than five folds(from 5.2crs to 26.7cr) in the period of fy10-fy14.Defence Off sets is a big opportunity for PEL.The management believes that the defence & space business will exceed the Bulk Explosive & Detonator business within the next 5 years.
Concerns:The company wrote off investments worth around Rs.13Cr. during FY09 & FY10. These investments were made in FY07 in JV’s in Turkey & Georgia. The management claims that’s the foreign partner duped it. It is possible that the management duped the shareholders as this a very convenient way of siphoning off funds by Indian promoters. After all who is going to Georgia to check out the details.PEL is fighting a case against its Turkish partner & is expecting a write back.This 'writing off' investment aspect kept me away from the counter for long.It was after a long interaction with few of the big investors which finally made me recommend it.The recent entrance of reputed investors like Dolly Khanna and Vijay Kedia further convinced me.
