Sunday, April 22, 2018

Movie Review: Rangasthalam (Telugu)

Whole of the movie is centered on the events that happen in a village named 'Rangasthalam' which is situated on the shores of Godavari backwaters. Like in most of the villages, this village too has a President (played by Jagapathi Babu) who dons the role of a villain, who controls the village using violence and eliminates those who opposes him. One of the dialogues in this movie goes thus "There are many people in this village who don't have food but there is no one who don't have have a loan to repay" which reflects the situation the villagers are into. But they are not aware that their loan books are cooked up. Farming yields are not enough to repay the loans and the frustrated villagers suffer in silence and those who oppose get killed which are masked as suicides.

The protagonist of the movie, Chitti Babu (Ram Charan) is a jolly person. He is partially deaf. Others have to speak to him in a louder voice else he can't hear them. That has made him innocent and quite unaware of happenings in the village. But he has a gift of reading lip movements.

As the incidents turn out, Chitti Babu's elder brother Kumar Babu (Aadhi Pinisetty) finds out the frauds of the credit society. As he tries to make it public, events take a violent turn and Chitti Babu hits hard one of the President's men and goes into Police custody. Taking local MLA's (played by Prakash Rai) help, his brother gets him out on bail and decides to contest the elections against the President of the village. After initial resistance, they succeed in getting the acceptance from people. As the election day nears, Chitti Babu's brother gets killed despite the heroic efforts of the protagonist to rescue him. Chitti Babu's deafness becomes a disadvantage for him as he cannot make out the last words said by his brother.


Who killed his brother? What happens to the village thereafter? Is President the lone villain? Will Chitti Babu succeeds in deciphering the plots? That is for you to watch on the big screen.

Movie begins with a documentary style of story telling and gathers pace as it progresses. Very neat camera work throughout the movie and the way sequences of the movie are pieced together makes this movie interesting though the main plot is centuries old. Though you might have watched hundreds of movies with this kind of story line, this movie becomes unique with its presentation style and role plays.

I do not watch Telugu movies much but this one was impressive and I felt this was the best among the movies I have watched in the recent times. So I could not resist from telling you.

Wednesday, April 4, 2018

We are coming

Looks like all the back-door negotiations have failed and the trade war has become real and staring at us. It is not just US and China. It would spread to other countries including India. We are very much on the radar.

If you see short term economic benefits, US seems to gain from the duties slapped on the international trade. US is the biggest consumer while China is export based economy. This move should make the US Dollar stronger in the shorter term. But at the same time you should not fail to notice the courage displayed by China in slapping back US with equal amount of trade tariffs. China is not standing on the loose ground. China is making arrangements to pay for its oil imports in its own currency avoiding the usage of US Dollar. Whole world is noticing it. Though US Dollar gained against emerging economies, it is falling against Euro and Japanese Yen at the same time.

Message is clear and loud. If you can look further into the future, China has ambitions to make its currency an international one, at the cost of US Dollar. It would slowly get off the vast US Dollar reserves it holds as and when its own currency finds takers. If we assume that Donald Trump continues to remain same in his approach, US Dollar will see serious damage to its valuation in the years to come. Its supremacy in the global market might end and Trump can make it as soon as possible by increasing the intensity of rivalry against China and other countries.

If we assume that US Dollar is going to lose value, it will have a greater impact on India too. Exporters (from India to US) will see their businesses shrinking and becoming infeasible. Talent drain will reverse at a faster pace. India is a consumption major economy unlike China which is export driven. Though two major industries (IT, Pharma) of India will see an adverse impact, rest of India would see things getting better for them with this structural change in the economy. Our currency getting better against US Dollar will help our economy as trade deficits would become thinner and gradually disappear.

Right now we say we are $2 trillion dollar economy with a national income $1500 to 2000 per person per year. If Rupee is going be stronger by 20-30% against USD, our GDP and per capita figures will also be revised by that gain in Dollar terms (though not much has changed in Rupee terms). This will help close the gap between us and rest of the world (mostly with the developed countries).

On PPP terms, India already has a decent ranking and it looks like it will only get better from here, may be at very fast pace than expected earlier. Except China, we can say confidently to rest of the world "We are coming."

Saturday, March 31, 2018

Fundamental Stock Analysis: Sintex Plastics


Sintex is a household name. It was a synonym for the water tanks. They expanded their portfolio by venturing into PVC doors, pre-fab housing and also into automotive plastic components. After listing as a separate company, its stock is on a slide. In the last one year, this stock has lost 50% in the price.

Credit: Google Finance


The main reason for the fall can be attributed to negative revenue growth (though not very significant) over the last two quarters. If we assume last quarter’s earnings holds good (Rs. 0.88) as proxy for the entire year (0.88 x 4 = Rs. 3.52 yearly earning), it is trading at 16 P/E multiples and getting close to its book value of Rs. 51.

CMP
P/E
P/B
57.5
16
1.1

Credit: Trendlyne


Credit: India Infoline
If we look at balance sheet, we can notice that the company’s borrowings are at 40% of balance sheet size. It is not too high for the engineering sector companies. It seems reasonably healthy.


Trigger for re-rating:

What attracted me to this stock is the news of promoters increasing their holdings in the company. (Link: https://www.moneycontrol.com/news/business/stocks/sintex-plastics-technology-up-3-to-issue-warrants-to-promoter-2499495.html )

Promoters will pump in around Rs. 600 crores in the form of convertible debentures which will be converted into equity at the conversion price of Rs.90 a share. They have already paid 25% of the funds upfront. Company wants to use these funds to reduce debt.

This is a good news which I expect will trigger re-rating of the stock. Let us run our numbers to assess the impact.
  • Current Borrowings= Rs. 2,593 crores (Long term) + Rs. 894 crores (Short term)
  • Interest payment during last quarter = Rs. 73.47 crores (Avg. interest rate = 8.4%)
  •  Debt reduction = Rs. 600 crores
  • Yearly earnings increase due to reduced interest payment after debt reduction = Rs. 600 crores x 8.4% = Rs. 51 crores
  • Current outstanding shares = 58 crores
  • Increase in share base with warrants conversion = 6.6 crores
  • Total outstanding shares = 58 + 6.6 = 64.6 crores
  • Expected earnings per share = Rs.4.5 (approx. Rs. 1 increase due to debt reduction)

Conclusion:

Promoters increasing stake and that money being used to reduce debt will add Rs.1 per share to the earnings. At current P/E multiple of 16, it adds a value of Rs. 16 to each share. But there is an improvement to quality of balance sheet as debt levels will come down. That would demand a higher P/E multiple. Though industry P/E multiple is at 35, we can conservatively expect it to raise to 20.

Estimated future value per share = 4.5 (EPS) x 20 (P/E) = Rs. 90

Interestingly our estimate coincides with conversion price of debentures too. That gives a sense that our estimate is realistic. This means there is upside potential of 50% to this stock. It may take an year or so to realize that benefit.

Down Risks to estimate:

We have not assumed any further deterioration to revenue as business seems to be stable as per the management commentary and order book position. If our assumptions are challenged, so will be our estimate too.

Potential upside to estimate:

There could be further upside to our estimate if business comes out stronger than last quarter which looks more probable. And the company is venturing into automotive sector which has higher potential to increase earning further. That estimate is considered out of scope for this post.

Tuesday, March 20, 2018

5 Cultural Stages (TED Talk: Tribal Leadership by David Logan)

I have recently changed my job and was noticing the cultural differences between the organization I had worked for before and the one serving now. I was thinking what causes the difference in culture? Of course, it is it's people. But I wanted to get a better understanding how those people shape up the culture? This TED talk by David Logan gave the answers I was looking for. I found it impressive and interesting so I wanted to mention it on my blog.


David Logan shows how the tribes (a group of around 20 to 150 people) form and adopt a culture suiting their outlook towards life. He shows most organizations operate at Stage 3 which is incidentally the larger population too.
Source: http://www.triballeadership.net/business-culture/five-stages-of-culture
Having this knowledge allows us to identify what kind of tribe we are part of and why there are  cultural differences across the groups operating at different cultural stages and how to evolve and move forward. And this understanding also makes us more tolerant towards the groups in the lower stages of culture.

Friday, March 2, 2018

Book Review: Portrait of a Serial Killer by Khushwant Singh

This is a collection of 58 short essays written by Khushwant Singh over many decades published in various newspapers and magazines but not in a book form before. This book is divided into four sections, grouping the essays by People, Places, Indian Way and Politics.

In the first section about people, author writes about his meetings with Lata Mangeshkar at her home and a dinner with Dev Anand. There is a chapter on author's perspectives on Nehru as a writer and in another chapter he describes the life Amir Khusrau had lived being a courtier and being close to a saint at the same time. Book’s title ‘Portrait of a serial killer’ is a chapter in this section where in author constructs the life story and looks into how the mind of a serial killer works based on the information available about him.

Second section is about places. Here author gives summary of his experiences in visiting the places across India and the fascinating stories behind them. It has an interesting story of sudden appearance of numerous snakes in a village and how they find what had caused it. This section has chapters on Hyderabad, Agra, Amritsar, Haridwar, Delhi and villages in Madhya Pradesh.

Third section is about the way Indians think and behave. And the last section is about the political dramas and the stories as seen by the author. Here author dons the role of a journalist and the language becomes critical and he suggests how we should see things differently and act.

I thoroughly enjoyed reading the first two sections of this book. This book was on my night stand for a week as a warm companion to relax and put me to good sleep.


Khushwant Singh had many hats to wear – that of author, lawyer, diplomat, journalist and politician. He read and wrote voraciously and has numerous books to his credit. He died in 1994 at the age of 99. This book was a compilation of his works by his daughter and was published in 2015 on the hundredth anniversary of author’s birth.