Archive for category Stock Screeners

Smart Money Managers (VC/PE/Hedge Funds) – India Stock Market

a) I wanted to compile a list of smart money managers (from the VC/PE/Hedge Funds space) along with their portfolios (most probably, not complete portfolios) in the Indian Stock Market. This list is copied straightaway from Devesh Kayal’s tweets (since I hate twitter search and that search usually doesn’t lead anywhere, I have compiled this list on a more user friendly and searchable forum).

Name of the Fund Stocks held
Sequoia Capital e-Clerx, DHFL, PI Industries, Pratibha Industries, TD Power, Hindustan National Glass, Ess Dee Aluminium, Infotech Enterprises, Lovable Lingerie, Edelweiss, Mannappuram, SKS Microfinance
Nalanda Capital Exide, CUMI, Page Industries, Havells, Shree Cement, AIA Eng, Mindtree, Ahluwalia Contracts, Supreme Industires, Kewal Kiran Clothing, Berger Paints, Voltamp Transformers, Ratnamani Metals, Triveni Engg, Kirloskar Oil Engines, Mastek, Vaibhav Gems, V-Guard Industries
Barings PE Manappuram Finance, Muthoot Finance, Mphasis, TD Power, Balmer Lawrie Investments, Shilpa Medicare, KS Oils
Standard Chartered PE Redington India, PI Industires, Innoventive Industries, Man Infracon
ChrysCapital HCL Tech, ING Vysya Bank, Hexaware, KPIT Cummins, NCC, Gammon India, Pratibha Industries, Ahmednagar Forgings, Simplex Infra, Shriram City Union, Titagarh Wagons, Spanco, JMT Auto
Amansa Capital Cholamandalam Investment and Finance, Max India, Whirlpool India, Greaves Cotton, Rallis India, ENIL, Gujarat Pipavav Port, Blue Star, Kirloskar Oil Engines,  Edelweiss Capital, CUMI, OnMobile Global, Tube Investments of India
Arisaig Partners Colgate, Nestle, GSK Consumer, Marico, Godrej Consumer, Britannia, Jubilant Foodworks

Of course, we need to express caution before rushing to buy these stocks. For one, some of them (like Mastek, Vaibhav Gems, SKS, KS Oils) have been disasters. Two, these funds buy a bunch of stocks. Even if some turn out to be duds, overall their portfolio might come out as a winner. Selectively buying from this list without any research would lead to poor results. Three, this list of companies might not be a complete list, and some of these funds might also be following a long/short strategy. Summary? Don’t buy any of these stocks without further research. This is just a good indicative starter list for research.

b) If you liked the stocks above, and would like to know more VC/PE funds which are focused on India, here’s a list – – let me know if you compile a stock list from some of these VC/PEs. For one, here’s a link to Citigroup’s India portfolio (includes Citigroup Venture Capital India investments) – Link

c) Here’s a list of hedge funds focused on Indian markets (I couldn’t get any stocks list from this hedge fund list though)

The four largest hedge funds focused on India are HSBC GIF India Equity Fund, Aberdeen Indian Global Equity Fund, JP Morgan India Fund and Fidelity India Focus Fund. Of course, it is just a matter of googling the Top 10 holdings for these funds, so I will dispense away with it.

Now, for some reading links for the weekend –

d) We all go through a stage where we tend to read a lot of books, lot of authors with different styles etc. on investing, spend a ton of time and money going through these books, making notes etc., but haven’t yet had the guts to make an investment? Well, here are three good links which talk through that –

e) We all need to improve ourselves in almost all respects all the time(that’s a fiendishly global statement, isn’t it?). Investment process is probably the easiest of the lot. Here’s a short note from the wonderful Greig Speicher on 10 ways to improve your investment process. Very good read.


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Graham Formulas – Modification for Indian Markets

I have certain thoughts on a couple of Graham formulas that are widely used by value investing folks, especially for the Indian markets. Please feel free to post your comments to correct my understanding.

a) Graham’s Formula

I have seen multiple investors use this formula quite blindly and call a stock undervalued/overvalued depending on whether the Graham price derived from this formula is greater than or lesser than the current market price. Graham published this formula in 1974 and took only US data. The formula per se states

Price = (EPS* (8.5+2*g)*4.4)/AAA rate


EPS = TTM EPS for the past 12 months

8.5 = P/E multiple for a no-growth company

g = the company’s long term earnings growth estimate (5 years)

AAA rate = current prevailing AAA bond rate

4.4 = The average yield of high-grade corporate bonds in 1962.

For Indian markets, I guess we can use the formula as-is, but for the number 4.4. Why do you want to use 4.4 when the average yield of high grade corporate bonds in India is around 10-14% currently? I have no idea why people use 4.4 here. If you do, please let me know.

I will tell you my approach here when I use Graham’s number.

EPS = Average (median) EPS over the past 5 years (10 years, if data is available)

7 = P/E multiple for a no-growth company

g = 25% of the past 5 year CAGR (I am pessimistic that way, and I can’t predict future growth)

AAA rate = currently use 10%

12.5 = Avg. yield of high-grade corporate bonds currently

So, the modified formula would work out to

Price = (Avg. EPS * (7+1.5*(25% of 5 yr CAGR)) * 12.5)/10

What do you think of this approach? I have used the logic of Graham, but not the 4.4 multiple that Graham used. Does it lead to over-stating the Graham price?

b) Graham Number

This formula is also widely used, although in my experience in Indian markets, the resultant values are a bit on the higher side.

Price = Sqrt (22.5 * Book value * EPS)

Let’s not use this formula blindly. Let’s think about – How did this formula come about?, How did he arrive at the number of 22.5? etc.

Graham thought that nobody should be paying more than P/B = 1.5 and P/E = 15 for a stock. How did he arrive at the number ‘15’ for P/E? Well, he thought that nobody should be willing to pay more than the AAA bond yield at that time. AAA bond yield at that time was 7.5%. Therefore, AAA P/E  will be 1/7.5 ~ 13.3, rounded up to 15.

So, Price/Book * Price/Earnings = 1.5*15

Price (squared) = 22.5 * Book value * Earnings

Price = Sqrt (22.5 * Book value * Earnings)

Now that we know how the formula was derived, let’s modify it to Indian standards.

Let’s not have P/B more than 1.25. Current AAA bond yield is 10%. Therefore, AAA P/E will be 1/10% = 10. That is we should not be willing to pay more than P/E = 10 for any stock. That modifies our formula to,

Price (squared) = 1.25*10*Book value * Earnings

Price = Sqrt (12.5* Book value * Earnings)

Again, for conservative calculations, I use average of the past 5 years (or 10 years) of data for Book value and Earnings.

The one grouse that I do have with this formula is that for commodity stocks, the Indian stock markets rarely value companies at more than 8-10 P/E. So, using this formula indiscriminately will lead to poor investments. Do look into company details, capital structure etc. before investing.

c) Simpler Graham

Some other investors screen their companies based on an interview by Graham in 1976 titled “The Simplest Way to Select Bargain Stocks” where he stated that

i) P/E should be not be more than 7x-10x

ii) Equity/Assets ratio > 0.5 (in other words, D/E < 1)

Again, P/E screener should be changed for the Indian scenario.  Graham stated that the yield on stocks should be atleast 2 times the AAA bond yield (to compensate for the risk). Back then, the rates were 7%. So, the yield on stocks need to be 14%, which in turn means P/E not more than 7. If rates dip to 5%, then P/E not more than 10.

In the Indian scenario, AAA bond yield is 10%. Stock yield should be 2*10% = 20%; and therefore stock P/E should not be more than 1/20% = 5. So, for the Indian scenario, the rules change to

i) P/E should not be more than 5x-7x

ii) Equity/Assets ratio > 0.5

P.S: Of course, one of the biggest rule of Graham was diversification. He used these quantitative formulas on a portfolio of 30 stocks and invested in them. Some turned out to be multi-baggers and some duds, but as a portfolio beat the market. So, if you are trying to use these formulas for investing in one or two stocks, kindly do due diligence and use these formulas with discretion.

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Undervalued Companies – An Approach

a) I am experimenting with the approach stated below (which I am pretty sure I’ve read somewhere but can’t recollect where). Let me know your views.

The interest rate offered on a AAA bond in India is around 9.75% (SBI AAA, issued in Feb 2011). Now that we have all that interest increase jazz, let’s assume that if any firm would issue a AAA bond today, the interest rate would be around 10.7%. Post-tax, the return would be 7.5%.

Imagine there is some company somewhere in the Indian stock market which delivers around 30% post tax return. That is, its Return on Capital Employed is 30%. Since this company has utilised the capital 4 times better than a AAA bond (4*7.5), it should ideally command a price 4 times the price of a AAA bond.

In summary,

Post-tax return of AAA bond = 7.5%

Post-tax return on some company = 30% (4 times AAA)

Therefore, the fair value of this company will be around 4 times P/B.

I usually don’t invest in companies with RoCE < 20%. For experimental purposes, I am trying to find companies with RoCE >= 30% with P/B < 4. Since a company can deliver very high returns in any single year, I have taken an average (rather, a median) over the past 7 years (10 yrs would be even better,but I don’t have the data). Extra caution has been exercised to list out only those companies where there has been a continous increase in Book value per share. (Devesh did point to me that this would work only for non-cyclical companies. Also, credit to Moneysights and Valuepickr for the data and tools provided). Here’s a initial list – Thoughts are invited.

S.No Company CMP Median RoCE 7 yrs Current P/B Fair Value P/B
1 Sesa Goa 223.5 58.88 1.65 7.85
2 Voltamp Transformers 510 27.78 1.38 3.70
4 NESCO 594 45.47 3.67 6.06
5 Mangalam Cement 101 31.22 0.69 4.16
6 Goodyear India 313 31.21 2.51 4.16
8 Facor Alloys 3.75 33.3 0.53 4.44
9 DISA India 1453 36.5 3.8 4.87
10 Bharat Bijlee 718 33.58 1.44 4.48

Of the above list, I like Sesa Goa, NESCO, Goodyear, DISA and Bharat Bijlee. Sesa Goa especially seems highly undervalued according to this parameter (economic conditions, shipping downturn and all that – but is this entry price alright?).

b) This one is for momentum investors. And maybe I am the last person in the universe to realize this trick. Whenever a company declares a stock split or a bonus issue, the share price rises considerably (in cases I have seen, atleast by 20%). So maybe there is a theme here (or probably I am plagued by availability bias – not sure yet). Buy stock of any company (not any company literally – some basic checks on revenue, EPS, RoCE etc. are required) which declares a stock split or bonus (If you think about it, it doesn’t matter whether the company’s face value is Rs. 10/- or Rs. 5/- (2:1 split or bonus) or Rs. 2/- (5:1 split or bonus). The company earnings are not going to change. The only change would be increased liquidity in the market which has nothing to do with the company (but this is after the split, and not before the split) and yet the stock price shoots up. Maybe irrationality. Maybe its a corporate signal that dividends/earnings are going to increase in the future (how?).) No idea. Titan Industries, HDFC Bank are some of the prime examples. Alternately, NESCO share price rose on the split announcement and fell considerably once the split announcement got cancelled.

c) Wonderful read from Prof. Sanjay Bakshi, written way back in 1997 –

Name some companies in the current environment which fall in this ‘relatively unpopular large company’?


Disc: Invested in NESCO. Kindly do your due diligence before investing in any of these companies and all that.

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Indian Stock Market – Cash Bargains

Alright – even in this market (with Nifty P/E above 20, well above its historical average of 17.5), there are some cash bargains. What are cash bargains? Prof. Sanjay Bakshi defines them as “A cash bargain arises when the market value of a company goes below the amount of cash and other liquid assets in its possession, net of all current liabilities and debt.”

I found some companies satisfying this criteria and I have listed them below.

Company Cash per                   Share Debt per             Share Cash-Debt Current                  Price Discount
Aftek 28 9.73 18.27 13.11 39.36%
Amrapali Industries 19.81 0 19.81 6.9 187.10%
Eldeco Housing 187.97 31.75 156.22 138 13.20%
MPIL Corp 93 5 88 63.5 38.58%
Rajesh Exports 250 78 172 131.8 30.50%
Teesta Agro 63.37 3.58 59.79 10.75 456.19%

I have excluded companies which are burning cash. For example, ‘Punjab Communications’ was one such stock which was on my radar for a cash bargain, but I realised that they were having negative Operating cash flows (and Operating margins) for the past 5 years. Any cash on the balance sheet would soon be burnt. Hence, I have excluded such companies.

I have also excluded companies like MTNL which satisfied Cash Bargains criteria, but is a value trap (as Neeraj puts it very elegantly here and here).

I have also excluded companies with very high debt like JVL Agro (in this rising interest rate environment, its very dangerous to bet on any company with high debt!)

All the 6 companies in the list have low margins, low operating profit and may not have any competitive advantages at all (there are some reasons why these companies have been beaten down by the market). But they have been beaten down so much so that they are quoting below cash

I have not researched extensively on any of these companies except for the fact that each of these company financials are in decent order (i.e., they are not burning cash, and have most of the time generating positive operating cash flow). (I doubt though, that something is seriously wrong with ‘Teesta Agro’ and/or ‘Amrapali Industries’ (mgmt problems?), else why would they be quoting as such a tremendous cash discount?). (Aftek, I think is one of K-10 stocks, and hence quoting at a discount?)

Do any of you have any idea why these companies are quoting at cash discounts? Do you have a position in any of these companies?

As usual, the disclaimer applies. Please do your due diligence before you invest.

Disclosure: I have starter positions in Eldeco Housing and Rajesh Exports.

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Indian Stock Market–Debt Capacity Bargains

As I stated in the blog yesterday, this talk by Prof. Sanjay Bakshi throws up multiple value investing themes. One other theme is ‘Debt Capacity Bargains’.

This theme was originally propounded by Benjamin Graham in ‘Security Analysis’. He didn’t call it a Debt Capacity Bargain. Rather, he called it ‘The rule of minimum valuation’. The ‘rule of minimum valuation’ states that –

“An equity share representing the entire business cannot be less safe and less valuable than a bond having a claim to only a part thereof.”

He explained this rule with the help of an example (American Laundry Machinery). An excerpt –

“The purpose of this analysis is to show that at $7 per share for American Laundry Machinery stock in early 1933- equivalent to only $4,300,000 for the entire business- the purchaser was getting as much safety of principal as would be required of a good bond, and in addition he was obtaining all the profit opportunities attaching to common stock ownership.
Our contention is that if American Laundry Machinery had happened to have outstanding a $4,500,000 bond issue, this issue would have been considered adequately secured by the standards of fixed-value investment.
There would have been no question about the continuance of interest payments, in view of the powerful cash position revealed by balance sheet. Nor could the investor fail to be impressed by the fact that the net current assets alone were nearly five times the amount of the bond issue.
If a $4,500,000 bond issue of American Laundry Machinery would have been safe, then the purchase of the entire company for $4,300,000 would also have been safe. For a bondholder can enjoy no right or protection which the full owner of the business, without bonds ahead of him, does not also enjoy. Stated somewhat fancifully, the owner (stockholder) can write out his own bonds, if he pleases, and give them to himself.”

To get a more layman understanding of this debt capacity bargain/minimum valuation, we take the help of ‘The Intelligent Investor’ where Graham states –

“There are instances where an equity share may be considered sound because it enjoys a margin of safety as large as that of a good bond. This will occur, for example, when a company has outstanding only equity shares that under depression conditions are selling for less than the amount of the bonds that could safely be issued against its property and earning power. In such instances the investor can obtain the margin of safety associated with a bond, plus all the chances of larger income and principal appreciation inherent in an equity share.”

All this Graham-gyaan is fine, but what does it mean in really really layman term? (the basic logic is – hidden inside every stock of a debt-free company is a high-grade bond which can easily be valued).

Let’s break it down further, into discrete steps for clearer understanding –

  1. Search for debt-free companies which have displayed stable earning power in the past and are expected to continue to do the same in the future.
  2. Average the past earning power, say for the past 5 years (Approaches differ here. You can either use EBIT or Buffett’s Owner’s Earnings (Cash flow from Operations – Capex +/- Changes in Working Capital) Both will result in different results though. Safer to go the Buffet way!)
  3. Use a desired interest coverage ratio of 3x-5x (Prof. Sanjay Bakshi recommends 3x for highly stable businesses, 5x for cyclical businesses). I use 5x for all, just to be extremely safe.
  4. We can use steps 2 and 3 to find out what is the interest expense that the company can service (EBIT/Interest coverage ratio or Owner’s Earnings/Interest coverage ratio)
  5. Divide the interest expense arrived at in Step 4. into the current interest rate to determine debt-capacity of the company; SBI’s AAA bonds were issued recently at 9.5%. Let us be conservative and take an interest rate of 12.5% (a 15% would be even more conservative)
  6. Compare this debt-capacity with the current market cap, and if the Market Cap is less than Debt-Capacity, we can consider buying the stock.

I have seen another approach (I can’t recollect where) where the author follows the steps below in addition to the steps above –

7. The value of equity would be 75% of this debt capacity.

8. Add back the value of cash on the balance sheet.

9. Add the debt capacity, equity value obtained in Step 7 and add cash on the balance sheet. This would be the enterprise value of the company. If this Enterprise value is less than Market cap, we can consider buying the stock.

(I would personally stop at Step 6, although in my analysis, I have hardly found any company which does not fulfill Step 6, but fulfills Step 9.)

Note: This approach works beautifully in bear (more likely, severe bear markets) than any bull market. We might find shady companies fulfilling the criteria above in a bull market.

Let us look at what companies fulfill this criteria in the current market (I consider the valuations of the current market are on the higher side; you can call it a bull market/dead cat bounce in a bear market or whatever!)


No. Company MarketCap
1 Monnet Sugar 16.85
2 Simplex Realty 46.37
3 Suditi Industries 8.09

Of the three, Suditi Industries looks slightly better. But then again, as I said, in times of valuations like these, it is difficult to find debt capacity bargains. File this methodology away for bear markets. Diligently followed, it can make money.

Your thoughts on this methodology?

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Indian Stock Market– Value+Momentum Strategy

As I have stated before, I have been more than inspired by Prof. Sanjay Bakshi’s work and talks. I am researching on a couple of methodologies suggested by Prof. Bakshi in this talk (a must must read, if you haven’t already taken a print out and penciled important points!). In this post, I will try to elaborate on the Value+Momentum strategy from that talk.

Value+Momentum – The theme of this approach rests on a hypothesis which states that the Market realises the value of a stock in a relatively short period of time. For example, if Stock A is quoting at say Rs. 50/-, but its intrinsic value is Rs. 150/-; the Market might ignore Stock A for 6 months, 1 year, 2 years but when it does realise the price of the stock is quoting far below its intrinsic value, the approach to intrinsic value from Rs. 50/- to Rs. 150/- happens in a relatively short time. This approach can be broken down into two parts:

a) Value Stock which can defined as per Graham parameters (low P/B, low P/E, sufficient Margin of Safety etc). However, if we monitor the momentum for this stock (say, by returns or volume), we can put in more money into the stock once the momentum starts increasing so that the absolute gain increases within a short period of time.

For example, if we have a Stock B which we think is a Grahamian stock and is languishing at Rs. 50/- for about 18 months now, although its intrinsic value is Rs. 200/-. If we were to monitor the momentum of this stock (in terms of increasing volume/sustained uptick in the stock), we can put in more money behind Stock B say at Rs. 75/- and/or Rs. 100/- and/or Rs. 125/- and achieve more absolute returns with a higher probability in a relatively short period of time.

b) An approach from ‘What works at Wall Street’ as well as Prof. Bakshi’s talk. Prof Bakshi says “We have a low PSR, we have a highly leveraged balance sheet, we have a low absolute stock price and there are multiple triggers out there”. In ‘What works on Wall Street’, the theme is Low PSR (as Value) + Highest One year returns (Momentum). Prof. Bakshi goes on to say, if there is any kind of corporate debt restructuring announcement on such stocks, and if the management is trustworthy enough, such stocks can generate very good returns in the medium to long term.

What are some of the stocks that we can look at for this strategy (I illustrate with strategy b)) I turn to the ValuePickr screener to come up with stocks which have a PSR < 1, D/E > 3, exclude Financial Stocks and look at decreasing debt y-o-y for the last couple of years  (the stock list is only indicative – lots of other research needs to be done before even thinking of investing in these stocks) –

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Debt2Equity_LFY Industry P2Sales
1 Beeyu Overseas 3.96 Trading 0.59
2 India Steel Works 21.93 Steel 0.66
3 Rama Phosphates 3.18 Fertilisers 0.08
4 Saurashtra Cement 16.88 Construction Materials 0.11
5 Spentex Industries 5.82 Cotton & Blended Yarn 0.18
6 Suryalata Spinning Mills 6.1 Cotton & Blended Yarn 0.32
7 Venus Sugar 3.26 Food & Beverages 0.18

Comments? Suggestions on the approach? Any nuances that we can add?

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Graham’s Last Will Screen–List of Stocks

Benjamin Graham is probably one of the foremost gurus in Value Investing. His tenets have been proved true over and over, for the past 75 years. His ‘Intelligent Investor’ (II) is a must read for any investor. The more financially inclined can also peruse ‘Security Analysis’ (SA) although it is way more involved than the former one.

Anyway, in this blog post, I am listing out stocks which have passed the Graham’s Last Will statement. What does the ‘Last Will’ mean? Well, the story goes that when Graham initially wrote II&SA, he came up with 10 criteria to find undervalued stocks, which over long term would comfortably beat the market. However, as the years passed by, Graham shortened the 10 criteria and just before his death (and hence Last Will), he came up with 4 criteria which he claimed would comfortably beat the market.

I have come up with the list of stocks using the wonderful ValuePickr screener.

Graham’s 10 criteria for picking up undervalued stocks (written way back in the 1930s and still serve as an extremely good guidance to pick up stocks) were –

1. An earnings-to-price yield at least twice the AAA bond rate

2. P/E ratio less than 40% of the highest P/E ratio the stock had over the past 5 years

3. Dividend yield of at least 2/3 the AAA bond yield

4. Stock price below 2/3 of tangible book value per share

5. Stock price below 2/3 of Net Current Asset Value (NCAV)

6. Total debt less than book value

7. Current ratio greater than 2

8. Total debt less than 2 times Net Current Asset Value (NCAV)

9. Earnings growth of prior 10 years at least at a 7% annual compound rate

10. Stability of growth of earnings in that no more than 2 declines of 5% or more in year end earnings in the prior 10 years are permissible.

Needless to say, when I ran these criteria over today’s list of Indian stocks, the number of stocks dwindled down to 0 by Criteria No. 5.

(I took the recent SBI Bond rate as the AAA bond rate. SBI bonds were being offered at 9.25% for a 10 year bond (I approximated the AAA bond rate to be 9% for easier calculations))

However, Graham in his Last Will (it’s actually called Last Will and Testament) suggested 4 simple criteria which would stand the test of time and comfortably beat the market (and thanks to Jae Jun’s incredible back testing skills on the American Stock Market (you can check out the performance using these 4 criteria on US markets; I would wager that similar performance can be observed in the Indian markets too!) – btw, Jae Jun is fantastic. You have to follow his blog). The four criteria were –

1. An earnings-to-price yield at least twice the AAA bond rate

3. Dividend yield of at least 2/3 the AAA bond yield

6. Total debt less than book value

7. Current ratio greater than 2

Well, I took these 4 criteria  and ran it on ValuePickr screener (and I did try to back test on ValuePickr, but couldn’t – I wasn’t able to get values for previous years on the screener) and these were the results –

Company Current Ratio D/E Div Yield% Earnings Yield % Industry
Alufluoride 3.22 0 8.82 25.21 Inorganic Chemicals
Amrutanjan Health Care 7.95 0 8.3 42.78 Pharma
Anuh Pharma 2.39 0.01 6.85 18.68 Pharma
Bhagiradha Chemicals & Industries 2.52 0.48 7.06 44.33 Pesticides & Agro Chemicals
Ecoboard Industries 3.6 0.41 11.35 19.36 Other Machinery
Flex Foods 3.27 0.41 6.42 21.62 Food & Beverages
Helios & Matheson Information Technology 8.92 0.57 6.5 33.8 Computer Software
Indage Vintners 4.34 0.71 9.76 121.36 Food & Beverages
K C P 2.57 0.72 33.17 154.44 Construction Materials
Nissan Copper 3.85 0.95 16.3 102.62 Non Ferrous Metals
Oriental Hotels 2.48 0.67 23.37 40.38 Hotels & Resteurants
Panoramic Universal 27.4 0.88 12.17 71.49 Computer Software
Rajkumar Forge 6.93 0.45 6.39 19.57 Castings & Forgings
Zenith Birla (India) 2.04 0.65 39.6 21.56 Steel

The deal with the results is that these stocks need to be moved out of the portfolio every year and re-invested in stocks which fulfill these criteria the following year (much like Magic Formula investing)

(Total debt less than Book Value gives the exact same results as D/E < 1 (obvious) – so, you can run this screen either way on other screeners)

Any thoughts on the stock above? Should we (or can we) refine this further? Any way to back test these criteria? Inputs appreciated.

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Importing Financial Data into Excel – Indian Stock Market

Siddharth Shukla of Thrify Investor fame (@shuklasiddharth – are you following him yet?) and I had a short discussion on importing financial data from various financial websites into Excel. Some websites do not have an option of downloading financial information from their portals directly into Excel (unless you do copy-paste and then reformat in excel to adjust for columns etc., which is very cumbersome. Come to think of it, even downloading into Excel is an issue, because for one company, you’ll have three excel files atleast (BS, CF and P&L) and you need to consolidate them into one excel for easier analysis – painful!). As it is, financial analysis is strenuous. We would not want the trouble of downloading and then formatting etc, do we?

This post will explain a very simple method to import financial data (in fact, any data from any website, but financial data for this discussion) into excel seamlessly. I learnt this trick very recently. If you already know this trick, do suggest any improvements on this one (or accede to my request at the end of this post).

I will explain this with an example of importing Balance Sheet data of Infosys from Economic Times website. (I will go through each small step. Some steps might look too basic and hence increase the number of steps (there are only 2 main steps though). It might also look like these 21 steps is too long a process, but believe me you, the entire process will not take more than a minute or two).

1) The first step is to open up Economic Times website ( and type in ‘Infosys’ in the Stock Quote text box in the top right hand corner.

2) In the Search Results page that gets displayed, click on the hyperlink of ‘Infosys Technologies’

3) The next page details Infosys under different tabs like Summary, Prices, Financials, Reports etc etc.

4) Click on the Financials tab

5) The sub-tab of P&L, Cash Flow, Balance Sheet etc etc appear below the Financials tab.

6) Note the url. It is – If you observe closely, just before companyid in the URL, you have ‘profitandlose’. This indicates that Economic Times treats this as a Profit and Loss page of Infosys Techologies.

7) Since we want to download Balance Sheet data for this example, we will go ahead and click on BalanceSheet subtab hyperlink beside the Cash Flow subtab.

8) Once BalanceSheet hyperlink is clicked, notice the URL. It is – Observing closely again, just beside companyid in the URL, it says ‘balancesheet’. This indicates that Economic Times treats this as the BalanceSheet page of Infosys Techologies. We are in the right location.

9) We now minimize the browser (IE/Mozilla/Chrome/Safari – works for all browsers) and open Excel (for this example, I am going to explain it for Excel 2003. Works equally for Excel 2007 and Excel 2010)

10) In the menu bar, there is an option called ‘Data’.

11) Under that ‘Data’ menu, go to ‘Import External Data’. Another sub-side bar opens up which has options like ‘Import Data’, ‘New Web Query’, ‘New Database Query’ etc.

12) Click on ‘New Web Query’. A new pop up window opens up within Excel.

13) Now, we use the Economic Times Balance Sheet web page URL (step 8), copy that URL and paste it in the Address field of this ‘New Web Query’ pop up window. Hit ‘Go’

14) The Balance Sheet page of ET should open up in this pop up window. (If you get some error saying, ‘Scripts error’ etc., just press ‘Yes’ on the error window and go ahead – no impact)

15) Scroll down within this pop up window to the Balance Sheet table.

16) On the top left corner of the Balance Sheet table, there is an image of a little Arrow inside a Yellow box. Click on it. The Arrow will change to a tick mark.

17) Click on ‘Import’ (on the bottom right hand corner of the pop up window)

18) Excel will prompt you with a window ‘Import Data’ and ask you to specify where it has to import the data.

19) Let’s say it’s a new excel sheet and you want to import it in cell A1. Specify that cell as A1 and click Ok.

20) Excel will say, ‘Getting data’ etc (it must be pulling data now).

21) In a couple of seconds, Voila! You have the BalanceSheet data imported into Excel sheet without any effort J

You can do similar stuff for P&L, CashFlow and practically any page and enjoy your results.

Few Additional Points:

1) You can do this for Money Control too. They have 10 years of Cash Flow data which is obviously more useful in analysis than just the 5 years in ET.

2) I am not too sure about Consolidated vs Standalone results in ET vs Moneycontrol vs Valuenotes etc. Please check the same before downloading. The only condition is they should have different URLs (with Ajax and XHTML and what not these days, you can have a lot of data within/between tabs within the same webpage without affecting the URL – so please check). Between, it is always recommended to do analysis off consolidated results (unless you want to do a Sum of Parts valuation using Standalone results and then combining your analysis).

3) Siddharth’s tip – Smallcap/Microcaps usually don’t have subsidiaries. They only have Standalone results. MoneyControl’s results will work better since they have 10yrs of Standalone data if you are researching small cap/microcap stocks. (Warning: Please do check the Annual Report if these small cap/microcap have any subsidiaries before downloading data of standalone vs consolidated)


If anybody reading this is already an expert in Excel/Macro, I have a request (post a link if you have done this already). Can you create a web query file (*.iqy is the extension I think – I am not much of a techno person) that would prompt me to enter the Stock Quote/Ticker symbol from Excel and then this query pulls BS/CF/PL data from ET/Moneycontrol automatically and populate it in Excel (just like above)? (Steps 1-21 are really simple and repetitive for each page – macros should ideally work, as far as I know. However, entering the stock quote/ticker query is a challenge – can somebody crack this please – it would lift a huge burden for many of us).


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Interesting Reads: Enhanced Magic Formula and Regulation Changes

1. Enhanced Magic Formula: I recently came across the forum The Equity Desk. Lots of interesting ideas out there, along with some smart analysis.

One such analysis was done by ‘SmartCat’, which is probably an extension to Magic Formula (promulgated by Joel Greenblatt). I ran this extension by my list of stocks and found that, more or less, the results are almost the same as the Magic Formula. Yet, I do think this particular analysis gives a ‘higher level of comfort’ in terms of parameters used rather than just two in the Magic Formula. I think it’d be a great research paper if someone could use this enhanced Magic Formula to say, the BSE small cap/mid cap universe, and compare its returns with just the original Magic Formula for the same universe over the past 15 years and conclude if the results are similar/one model is better than the other. ‘SmartCat’ can probably write a book then 🙂 [Smart investment by the way – write once, reap cashflows for atleast the next 5 years 🙂 ]

{Between, can anyone point out to me any kind of results/research if Magic Formula actually works for the Indian markets? I’d be grateful!]

The original forum post (lots of good thoughts in response to this forum post too, do read them!]:

An excerpt of the enhanced Magic Formula investing by SmartCat:

Basically, this is a quantitative analysis of a set of stocks, based purely on their fundamentals. I’m only using the TED XI as an example – this methodology can be used on any portfolio to determine the best and the worst.
All the 11 stocks will be analysed based on –

P/E Ratio
Return on Equity
Last 4 years CAGR Sales Growth
Last 4 Years CAGR Profit Growth
Market Cap
P/BV Ratio
Debt to Equity Ratio
Dividend Yield
Last 4 Years CAGR dividend per share growth
Dividend Payout Ratio

Basically, we will be looking at parameters typically used by both “growth” and “value” investors.

Ranking Methodology:

– All the 11 stocks are ranked based on each parameter – say P/E Ratio to begin with. A stock with the lowest P/E Ratio gets the highest 11 points, while a stock with the highest P/E Ratio gets the lowest 1 point.

– Similarly, for other parameters like RoE, marketcap etc, each stock is awarded between 1 points and 11 points depending on where it stands compared to eachother.

– The scores are added at the end, and the stocks are ranked from 1 to 11.

Might not make much sense now, but as we go along, you’ll know what I mean.

Flaw in the Methodology:

Looks into the past rather than the future to rank the stocks.

If your portfolio has 50 stocks, then your highest point would be 50 and lowest would be 1. Do analyse your portfolio and let me know.

2) Regulation Changes: With lots of regulations coming in, regulations changing, I thought it’d be a good time to read up on some of the rules/regulations which are changing (feel free to add any new links in the comments): [GST, IFRS, DTC] [GST, IFRS, DTC] [IFRS, US GAAP and Indian GAAP]$FILE/Comparative%20statement%20on%20Indian%20GAAP%20and%20IFRS.pdf [[IFRS, US GAAP and Indian GAAP]


3) The list of ET Top 100 fastest growing companies 2010


4) Free Small Cap and Mid Cap Research links by BSE and NSE. Great starting points without worrying about the target price –


5) Aswath Damodaran’s Valuation Spreadsheets:

This entire web site makes for fascinating reading.

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Summary of Investment Criteria

So, what do all those posts mean? Give me the meat. Give me the funda. Summarize.

Ok, here we go. This is an initial list we’ll work with and fine tune it and update it as we go along (Frankly, haven’t had the time to read up on and understand the significance of Price/Sales ratio, PEG ratio, Current ratio, Interest cover, Dividend yield and what’s a good EPS growth number, Insiders holding (according to Walter Schloss, it must be greater than 50%). Will learn about these and update this criteria as we move along in life).

Basically, Fundamentally and all -lly-s, here’s the real deal (click to enlarge) –

Now that we have covered some basics of value investing, we shall proceed to screening stocks based on some of these criteria and see how the results turn up. I hope to have something by tomorrow. Happy Investing!

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