Galaxy Entertainment - Great potential Multibagger

The F&B food-service industry provides both direct and indirect employment to millions of Indians. Latest industry estimates place direct employment at 5 million workers. The industry also makes a significant contribution in terms of tax revenue to the government. It currently contributes $220 million to government coffers, which has the potential to reach $770 million, according to industry analysts. According to the National Restaurant Association of India (NRAI), the F&B foodservice industry is growing at a rate of 5-6% per annum with revenues amounting to $8.6 billion.



 Galaxy Entertainment is a concept stock from my side. There is nothing to suggest that the company should be trading in a multibagger perspective. But, yes, if someone takes a call on the core business, I feel this is one lifestyle product that should be part of one's portfolio. Pantaloon, at one point in time was available close to Rs 50-60 and it became a true multibagger.

Now the same promoter of that group is actually promoting this particular stock which was bought back in 2007 by other promoters of the company. The  firm changed submits mid 2007; one of the biggest and most experienced sorted out retailing chains, Pantaloon, purchased 15.73% stake in it(now it holds around 31% stake).It additionally amalgamated Pan India Restaurants with itself which had nourishment courts. Pantaloons is by Future Retail group  ( Biyani Family ). Mumbai-based land firm Phoenix Mills holds a 34 percent stake in Galaxy.

 
( Kishore Biyani from Future Group )


Galaxy Entertainment Corporation(GECL), a public limited company is India's premier professionaly managed leisure and entertainment organisation. It operates South Asia's largest state of the art premium family entertainment centre. This entertainment centre at Mumbai comprises Bowling and other game facility, bars and banquet halls.  The company owns Sports Bar, along with 38  resto-bars across the country.

SBX: The Company continues to enjoy the premium brand equity with SBX, as the expansion plan is on track and efforts to innovate and delight consumers continue. The Company continues to focus on increasing its reach geographically and tapping new areas with high potential.

 

Food Stop: The Food courts still play the role of mini anchor tenant in a mall. As shopping malls evolved, so did food courts. The latest designs are geared towards entertainment, relaxation and leisurely dining. As a result, people of all age now go to malls specifically for what food courts offer. Out of the total spend of any family shopping basket, the total spending on eating out has gone up significantly.

Shanghai Street: The Chinese QSR format has been a success with people of all ages. Low cost setup is an added advantage and offers faster roll out of the model.

Punjabi Adda: The Punjabi and North India food counter model designed for the food courts are tasting success across all the locations that they are being operated.

On words of Sunil Biyani:"The Indian food service industry is growing on the back of increasing income and changes in food consumption pattern.Besides, food courts are driving this industry as malls are expanding to smaller towns.Food-courts play the role of anchor tenant in a mall. Along with complimenting businesses such as books, games, fine dining restaurants and movies,they provide good recreational space to the customers.However, there is a huge vacuum and the latest offerings are geared towards entertainment, relaxation and leisure dining. We plan to open 22-24 food-courts this fiscal at an investment of 10 crore".It currently runs 11 food courts, and has tie-ups with various malls to operate and manage food outlets through a minimum-guarantee-plus-revenue-sharing model.

I was looking at it from a US economy perspective where these kinds of lifestyle sports bar businesses actually become multibaggers both in the US, UK and in Australia. There is nothing to suggest as of now to buy the stock from a short-term perspective. The stock can bore the investor for another one-two years but this is one stock which we would be definitely looking at because Pantaloon promotes the company and they will definitely chalk out some good plans.

If I see the Phoenix Mills property arrangement that they have got with the Ruia?s, all the future expansion will come to Galaxy Entertainment. Thus, this is one stock, which will definitely hog the limelight. I was just looking at their projection in terms of percentage to the total lifestyle business that the company can get. Even if I mark through a 4.5-5% potential for the company in the next five-six years, the stock can easily trade Rs 400-500 but that is a longer-term call.

So the scaling up of business is occurring at a fast speed.Its citing at a mcap of only 46crs.The organization's business of gaming and restaurants contributed 17crs on last fiscal.So around 2.7x of its trailing revenues.We are discussing a business with a lot of edge of safety.Valuation savvy too,at 2.7x trailing incomes ,in examination to the aforementioned deals,sounds really cheap.Scaling up of business with family of Biyani,nearly zero obligation organization with high negative working capital and heaps of money streams makes it a fascinating purchase at present levels.There's no recorded tantamount peer,hardly any coasting stock to discuss too.Even above normal numbers can make the stock move truly high.

Galaxy Entertainment is one stock, where I feel that the stock can easily trade in that Rs35-40 mark currently but if someone actually looks into the prospects of the business this is a true multibagger from a very longer-term perspective.

Cmp 22
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Buy Kitex Garments around 510, its base low. ( Results announced very early, much before the rest which is a positive sign of a good result )
At CMP of Rs.516.25, KGL is trading at 14.2x its FY16E EPS of Rs.38.3 which is at an attractive valuation (PEG of 0.3x only). With 25% sales CAGR (FY15E- FY18E), debt free status by FY18E, strong margin improvement (1000 basis points by FY18E) with sales from its own brand and licensing of private labels and strong return ratios (50% plus roe and 40% ROCE), We expect stock to trade at 20x its FY16E EPS of Rs.38.3. I assign a BUY rating on the stock with a price target of 700+ in next few  weeks which is more than 40% upside from current levels.

My Trading rules - Very Important for traders

Rules You must follow in in order to be a successful trader. 

Rule Number #1: You Must Keep A Trading Journal 

• Write down why did you enter the trade 
• Write down you emotions.
• Put all good trades in one column 
• Put all bad Trades in another
• Remember - A bad trade is not when your wrong about the direction of the trend. A bad trade is when you don't stick to your plan. 
• Name the bad Trade Column - " Demons To Kill "

Rule Number #2:  Plan to Trade and then Trade the Plan

• You must be disciplined - Even with a trading Plan. 
• Keep a well scheduled planned time to study the markets. 
• Keep A positive Attitude no matter how much you lose. 
• Master your emotions And you have Mastered the Zero Sum Game.

Rule Number # 3: Trade High Probability Traders

• A high probability trade is a trade where there's no doubt in your decision. 
• But even those trades dont always work out, So dont place a stake based on your confidence. 
• Have you ever taken a loss? Forget it quickly. Have you ever taken a profit? Forget it even quicker!  
• Dont let ego and greed inhabit clear thinking and hard work. 

Rule Number #4: Risk Management

•  Never ever without any expectations risk more then 5% on any given trade. 
• Only Trade with genuine risk capital, and be aware of the risk of losing. 
• Avoid taking small profits and big loses. 
• This will keep you in the game - Ignore these rules  and you will fail. 

Rule Number #5:

•  Read this page before Each and Every Trading Session. Print it out and stick it on the wall. 
•  And NEVER EVER GIVE UP! ~ You can do this ! 

Also one can read my other blog about Lifestyle and self development:

http://successinsmallefforts.blogspot.in/2014/11/1-exercise-exercise-is-huge.html

My Trading Lessons

• Trade what you see, Not what you dont see. 

• Prices will do what they do, its our job as traders not to predict anything - but react accordingly. 

• No ones opinion counts. The Markets will do what it will do. Just follow the prices and dont worry. 
• Its Important to not have one's opinion about the market get in the way of maximizing profits. Follow the trend! 

• My personal view is that the economy shoudnt influence by trading decisions. 

• I learned not to be swayed by other, but to trade my own view. 

• If everyone is worried about the same thing, it has most likely already prices into the stocks/ market it concerns. 

• Dont Listen to the news. The Market dosent care what you or anyone else thinks. 
• 
  
• Markets have and continue to outsmart some of the brightest. 
• 
  
• The most important thing ive learnt is that you need to trust yourself. 
• 
  
• Trading without a carefully  constructed plan is a sheer folly. 

• Markets are not casinos where you throw a quarter and expect luckily to get rich. Trading is a business and as a business you need to have a plan and follow it religisously. 

• Failure to plan is planning to fail. Stick to your trading plan - Know your rules and follow them. 
• Cut losses and admit defeat when appropriate. 

• know my plan before making any trade and where im going to exit if im wrong. 

• Risky and reward must be evaluated before every trade. Lost opportunities are easier to make up then lost capital. 

• I learnt that I am my worst enemy when it comes to trading. 

• Luck and randomness plays a larger role in outcomes then previously thought.

• Separate trading biases from longer term goals. Sometimes you really need to SET IT AND FORGET IT. 

My Trading rules, Read this every morning before trading 

Must Read ~ Highlights from Zurich Axioms.

RISK:  Worry is not a sickness, but a sign of health.  If you are not worried, you are not risking enough.

a.    Always play for meaningful stakes.

b.    Resist the allure of diversification.

GREED:  Always take your profit too soon.

a.    Decide in advance what gain you want from a venture, and when you get it, get out.

HOPE:  When the ship starts to sink, don’t pray.  Jump!

a.    Accept small losses cheerfully as a fact of life.

b.    Expect t o experience several while awaiting the large gain.

FORECASTS:  Human behavior cannot be predicted.  Distrust anyone who claims to know the future, however dimly.

PATTERNS:  Chaos is not dangerous until it begins to look orderly.

a.    Beware the historian’s trap.

b.    Beware the chartist’s illusion.

c.    Beware the correlation and causality delusions.

d.    Beware the gambler’s fallacy.

MOBILITY:  Avoid putting down roots.  They impede motion.

a.    Do not become trapped in a souring venture because of sentiments like loyalty and nostalgia.

b.    Never hesitate to abandon a venture if something more attractive comes into view.

INTUITION:  A hunch can be trusted if it can be explained.

a.    Never confuse a hunch with a hope.

RELIGION AND THE OCCULT:  It is unlikely that God’s plan for the universe includes making your rich (or famous, of successful …).

a.    If astrology worked, all astrologers would be rich.

b.    A superstition need not be exorcised.  It can be enjoyed, provided it is kept in its place.

OPTIMISM AND CONFIDENCE:  Optimism means expecting the best, but confidence means knowing how you will handle the worst.  Never make a move if you are merely optimistic.

CONSENSUS:  Disregard the majority opinion.  It is probably wrong.

a.    Never follow speculative fads.  Often, the best time to buy something is when nobody else wants it.

STUBBORNNESS:  If it doesn’t pay off the first time, forget it.

a.    Never try to save a Bad investment by “averaging down.”

PLANNING:  Long range plans engender the dangerous belief that the future is under control.  It is important never to take your own, or other people’s long range plans seriously.

a.    Shun long term investments.

multibagger ~ draft 1

Cords cable ~ 40% up in 2 days already,
Nicco parks
Shirpur gold - expecting gold to hit 1300-1700 within couple of years

Stock Recommendations updates

Stock Recommendations

Every New Long term Investor, Please look at this Link

Orient Cement: Long term Defensive Bet

Every New Long term Investor, Please look at this Link
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The new policies on works and allocation of additional Rs70,000 Cr to infrastructure provides the cement industry with an advantage. Out of all the midcaps in the cement sector, Orient cement backed by strong fundamentals, high capacity utilization, and new expansion plans becomes an attractive buy at the current levels.



Orient Cement was incorporated in 1979 by the CK Birla Group and is among the most respected cement makers in India. The company is engaged in production and marketing of PPC (Portland Pozzolana cement) and OPC (Ordinary Portland cement). Its principal operating unit is located at Devapur (Telangana) and its grinding unit is located at Jalgaon (Maharashtra). Currently, the company runs with a capacity of 5MTPA supported by a captive power plant of 50 MW.

Expansion plans to raise volumes

After five years, Orient cement has brought its expansion plants on track. Once operational in early FY16, the Greenfield cement plant in Chittapur, Gulbarga district in Karnataka would add 3MTPA to the capacity, taking cumulative cement making capacity to 8MTPA. The new 45MW captive power plant along with a 7MW heat recovery system would support the fuel requirements of the plant in Gulbarga. The presence of an arterial highway linking Bangalore with most centers in Karnataka, Tamil Nadu, Kerala, and Andhra Pradesh close to the plant, supportive captive railway slidings, ready availability of fly ash from captive power plant, and perennial water supply from Kagina River are some of the major advantages of this plant. The project cost of Rs. 1,718 Cr is proposed to be part financed through rupee term loans of Rs. 1,200 Cr and the rest would be financed by cash reserves. The commissioning of plant in Karnataka would strengthen the market access of Orient in its core markets and increase its market share. On the back of steady government policies and infrastructure developments, we expect the tremendous growth in demand. This would ensure a robust volume growth with a consensus estimate of 14% CAGR. With improving demand, we expect the prices to move higher, increasing the levels of realization per tonne. Over the years, despite the economic downturn, orient has managed to increase its capacity utilization to 85%.

Unique positioning to benefit sales and capture a larger market share

Orient cement has its manufacturing facilities located in Devapur (integrated clinker and grinding plant) and Jalgaon (split cement grinding unit) catering to two key markets – Andhra Pradesh and Maharashtra. Despite having a capacity of 3 MTPA (60%) in Telangana and 2 MTPA (40%) in Maharashtra, the sales in Maharashtra contribute to about 65% of its output since its Devapur plant in Adilabad district enjoys proximity to eastern Maharashtra. The Company expect infrastructure development, stable government at the centre, the resolution of the Telangana-Seemandhra dispute, and strong development initiatives in both the states to boost the demand in Maharashtra and Telangana. The Currently, the Devapur

plant in Telangana caters to markets in Andhra Pradesh, Maharashtra, Tamil Nadu, and Karnataka while the plant in Jalgaon caters to Maharashtra, Gujarat, MP, and Chattisgarh. The plant in Gulbarga is expected to cater to a wider market in Karnataka and Tamil Nadu.

Cost efficiency a major growth driver

Orient has historically been the lowest cost producer of cement. Despite higher volumes and increased diesel costs Orient has not seen much of freight costs. The well-placed Devapur plant with its coal resources from Singareni at a distance of 40 Km, fly ash from NTPC Ramagundam at a distance of 40 KM, and thermal power plant at distance of 20Kms constantly optimize the market mix for both the plants reducing their freight expenses. In FY14, Orient has initiated consumption of Pet coke in one of the four lines. The consumption of pet coke has enhanced the use of alternative fuels in the power plant boiler and reduced its coal intake and costs. Petroleum coke presents a viable alternative because of its lower cost since it is a by-product of the refining process. It has a high heat value and low ash content, which favor its use in cement kilns. As a result of the measures undertaken by Orient, the company has placed itself in a cost efficient mode compared with peers in south with attractive margins.

Low procurement cost compared with peers

Orient has meticulously placed its Devapur plant in close vicinity of the limestone reserves, crushing plant, and the grinding units. Hence, the procurement of limestone is done through the conveyor belt present between the reserve and their grinding unit, reducing freight cost.

Softer coal and crude oil prices to reduce expenditure further

Crude oil prices have plunged 60% from the 2014 peaks that they hit in June. Currently, crude oil is trading 40-50$ per barrel. With expectations of crude prices to sustain in the near term, freight cost of cement makers is expected to moderate further. Fuel and freight costs of Orient account for around 42% of the expenditure incurred. The moderation of their prices should further improve the company’s margin.

Financials

Orient cement reported nearly 36% rise in the third quarter net profit at Rs.31 Cr compared with Rs.23 Cr for Q3FY14 due to higher cement sales. Revenue rose to Rs 384 Cr during the quarter from Rs 341 Cr in the year-ago period. However, the prices realized in the third quarter were less than the prices realized in the previous quarter. Consequently, profits saw a marginal decrease. The company expects the demand to pick-up in the coming quarter on the back of increased spending in rural and semi-urban housing and improvement in orders from infrastructure projects.

Buy it in SIP