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Thursday, June 03, 2010

Universal Cables: Divident stripping + Value buy



Universal Cables:
CMP: 79.90
Market Cap: 184.81Cr
Sales March 2010: 515.66Cr
Gross Profit: 66.05Cr
Net Profit: 27.14Cr
ROCE March 2009: 12.17%
Debt to Equity March 2009: 0.73
Long Term Det to Equity March 2009: 0.15
Company website: http://www.unistar.co.in/

Started in 1962 and part of the MP Birla group. The company is one of the largest power cable manufacturers in India producing low voltage, medium voltage and Extra high voltage (upto 500KV)
It also manufactures capacitors and Optical fiber cables. The company in recent years has concentrated on improving its bottomline and concentrated on high margin Extra High voltage cables. This quarter March 2010 company has reported a net profit of 11Cr which is its highest ever quaterly net profit reported by Universal Cables.

Conclusion: Universal cable is a strong established player in the Indian Power cables industry. The company has also distanced itself from other players by entering the higher margin extra high voltage power cable business. Considering its current discounted valuations and improving results we can consider investment in Universal cables at these levels. Divident payout is Rs 2.50 with record date of June 21,2010. So investing now will also provide us the cushion of 3% return within next 19 days.

2 comments:

Culutre blog said...

Hi Whatsup
I have a fundamental question... may be very silly. If in a typical company, the promotors increase their shares very little but FIIs increase more with Public holding reduces, is it a good sign? Similarly if both promotors and FII increase continuously their share with Public holding reducing, is it a good sign? Is there any difference in both these cases where in the second case promotor is also active heavily.

thanks
Venu

What'sUp Prahalad said...

Venu:
As a fundamental value investor .. what we need to look at as our only friend are the numbers.. the financials..

The promoter buying/selling.. FII buying/selling.. are indicators but the real driving force has to be the numbers.. the reported sales profits.. profit margins..

So its important to concentrate on the numbers and to keep the emotions on check..

As the saying goes "Beauty is in the eyes of the beholder.." and the mind can easily trick you to be attracted to a stock .. just because you own it..

=happy investing