I believe GNFC has competitive advantage which is sustainable.
The EPS growth which I analysed is predictable.
http://www.nseindia.com/marketinfo/companyinfo/eod/announcements.jsp?symbol=GNFC
Main activities are to produce and distribute chemicals, fertilizers, IT solutions, and electronic goods.The Fertilizers Co. of Gujarat Narmada Valley has a Urea plant which is the world's single largest stream plant and also an Ammonia plant which too is one of the largest in the world.
The various fertilizers manufactured by the Gujarat Narmada Valley Fertilizers Co. are:
Urea
Single Super Phosphate
Ammonium Sulphate
Muriate of Potash
Di-ammonium Phosphate
Calcium Ammonium Nitrate
The various chemicals manufactured by the Gujarat Narmada Valley Fertilizers Co. are:
Acetic Acid
Methanol
Formic Acid
Ammonium Nitrate
Calcium Carbonate
Methyl Formate
The advantage of fertilizer company is that
"though the price of fertilizer is 1/5th that of the global market, the goverment compensates the fertilizer companies by providing subsidy for the difference in the actual price and the price paid by the farmers. The farmer community is a major votebank that the political parties will hesitate to loose by displeasing them"
This is a advantage to the fertilizer industry as a whole.
The key issue is to find whether this advantage is durable. Another issue will be that when all the players in the industry gains then which are the companies which is going to benfit from it the most.
Source: http://www.scribd.com/doc/5061434/Indian-Fertilizer-Sector
Further the impact of NPS stage III policy according to ICRA is favourable to few companies like GNFC, NFL, GSFC and DCM Sriram Consolidated Ltd. View 9th page of http://www.icra.in/Files/PDF/ArticleFiles/2007-March-StageIIIUreaPolicy.PDF
Futher GNFC and NFL gain because of
1. full reimbursement of Tax inputs.
Notes:
Few years back the a company resolution was proposed to use 30% of the profits for charitable use. To a shareholder this is like another tax on income and an unfriendly attitude in play. The protection of the moat being a state owned company thus becomes a double edged sword for the shareholder. Though this proposal was defeated, the threat exists.
The lack of sustained leadership at the top management can be seen by the change of leaders. This is like a ship changing its captain during its voyage frequently.
Friday, October 31, 2008
Tuesday, October 28, 2008
COLGATE-PALMOLIVE (INDIA) LIMITED
Colgate Palmolive is the leading provider of scientifically proven oral care products at various price points. Products include toothpastes, topotpowder and toothbrushes under the "colgate" brand.
These have become the daily part of oral hygiene and therapeutic oral care in India
Under the "Pamolive" brand it has personal care products like shaving creams, lotions, face creams, baby powder and talcum powder etc.
Colgate brand has competitive advantage which is sustainable.
Inventory turnover is 19.9 for yoy 2008. EPS growth (5 year) rate is above 17 percent for yoy 2008.
Dividend for yoy 2008 is 13 rs for 1 re share.
The working capital for a turnover of 1553 cr is 7.59 cr and the net current asset is -104.68cr. The company is zero debt.
http://www.fourstocks.com/stocks/colpal/company_info/IncomeStat
These have become the daily part of oral hygiene and therapeutic oral care in India
Under the "Pamolive" brand it has personal care products like shaving creams, lotions, face creams, baby powder and talcum powder etc.
Colgate brand has competitive advantage which is sustainable.
Inventory turnover is 19.9 for yoy 2008. EPS growth (5 year) rate is above 17 percent for yoy 2008.
Dividend for yoy 2008 is 13 rs for 1 re share.
The working capital for a turnover of 1553 cr is 7.59 cr and the net current asset is -104.68cr. The company is zero debt.
http://www.fourstocks.com/stocks/colpal/company_info/IncomeStat
Monday, October 27, 2008
Bharat Electronics Limited (BEL)
About
Bharat Electronics Limited (BEL) is the largest defense equipment company in India catering to Defense services electronic requirement. BEL enjoys near monopoly status in supplying high-tech defense products like radars, sonars, communication equipment, electronic warfare equipment to the armed forces. Other division manufacturing civilian products supplies communication equipment to the telecom industry, voting machines etc.
The defence sector contributed to 76% of the revenue and the rest was from the civilian sector.
The company has a government mandated near monopoly for the defence sector business. In addition foreign vendors as a part of localization are required to source from BEL
Competitive analysis
BEL is one of those rare companies which have very substantial competitive advantages. These advantages are government mandated and I find it diffcult to see how these will go away. Across the world there is a preference for domestic companies for defence contracts, more so in india
Bharat Electronics Limited (BEL) is the largest defense equipment company in India catering to Defense services electronic requirement. BEL enjoys near monopoly status in supplying high-tech defense products like radars, sonars, communication equipment, electronic warfare equipment to the armed forces. Other division manufacturing civilian products supplies communication equipment to the telecom industry, voting machines etc.
The defence sector contributed to 76% of the revenue and the rest was from the civilian sector.
The company has a government mandated near monopoly for the defence sector business. In addition foreign vendors as a part of localization are required to source from BEL
Competitive analysis
BEL is one of those rare companies which have very substantial competitive advantages. These advantages are government mandated and I find it diffcult to see how these will go away. Across the world there is a preference for domestic companies for defence contracts, more so in india
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