Eon Electric Analysis-Part 2

Hello Investors once again,

As I blogged in earlier post, I am positive on Eon Electric as it is terribly undervalued. In this post, I will show some analysis based on their numbers. 

Lets first take the company Advanced Metering Technology Ltd. (ATML).

The company yesterday posted the numbers. Everyone knows the amazing returns share market has in last 1 year and so has the Mutual Funds. The company posted Other Income of more than Rs 6 crores which was. So, even though the market were bleeding real RED today (DOWN 722 pts), the stock was able to close 20% UP. This is the small things that matter to see if the investments done are worth.

Now these companies Eon Electric and AMTL has nice investments already done in Mutual Funds and in fact the value of these funds investments are larger than the company's market cap. 

Looking at Fundamentals now. The promoters have been increasing the holding in the company in last few quarters. They now hold 60% of the company which was 55% in last year.

Sales has been decreasing but over Rs 100 crores in last 5 years.

Pros: 

• Company has reduced debt.
• Company is virtually debt free.
• Stock is trading at 0.19 times its book value
• Market value of investments Rs.174.39 Cr. is more than the Market Cap Rs.66.73 Cr. 
• Promoters increased stake.

Cons:

• The company has delivered a poor growth of -12.08% over past five years.
• Company has shown losses in previous quarters.
• CMD V. P. Mahendru had very optimistic numbers which he has failed to achieve in past.

Products Pros:

• Attached brand value.
• Internet activeness and the brand following .
• Ease of availability of products.
• Sold at higher Price than competitor's price as they with better quality (as mentioned by management personnel).
• Available on all leading e-commerce sites.

Products Cons:

• Branding costs more and so Expenses will increase.
• Marketing Expense will increase.
• One of the JV failed which is why they stepped out of it.

Verdict: So, looking at all the current scenario's quite happy with the price of the stock that it is available at. The chances of the stock moving upwards is much more and go down is much lesser. Once the brand is established, runup will be amazing from here. So recommending this one for Long Term Investment. If the investors find a turnaround story here, the share's original potential will be unlocked.

Links: Videos related to Eon Electric: Eon Electric Videos

||| HAPPY Investing |||

Investment Idea: EON ELECTRIC Ltd

Hello Investors,

The company which I am gonna refer today is Eon Electric Ltd. It has a strong strong background and it has always been the frontrunner in Indian Electric Industry. The company was formerly named as Indo-Asian Fusegears. The company was a collective business of family with a brand name and it has had an amazing decades of business. The business finally got divided for diversification and gave birth to 2 new companies ,

1. Eon Electric Ltd. : First company to open a plant of LED lighting in India.
2. AMTL: Advanced Metering Tech Ltd.

Key points to consider in Eon Electric Ltd. :

1. The company has got amazing investments done in Mutual Funds which is approximately that of the company's market cap.

2. Company has promised a High revenue target but what I have witnessed is that the management was too optimistic and failed to deliver as promised. This has made me suspicious and cautious regarding this.

3. Company has always reached a milestone of opening a first plant of any new technology available in electric industry. e.g. CFL, LED, etc.

4. Diversification of Business: 

• Batteries/Chargers, 
• LED Lightings, 
• Wires and Cables, 
• Fans, 
• Geysers. 

5. Joint Ventures with many Lighting companies.

This post is to show how much undervalued this companies are. This quarter, ATML posted results, nice jump in standalone numbers. Double the csales and the standalone numbers showed EPS of Rs 1.4 vs Loss of Rs 3.41 last year, same quarter. Other Income of the company is around Rs 6.5 crores. Company has market cap of just Rs 66.00 crores and its Investment is rs 96 crores.

Now, people might not have heard the name of AMTL but Eon Electric is the company which has tried to expand foots across whole India.

My First Encounter: I came across it first when I bought a battery for my Samsung mobile. The shop owner showed 2 companies, One was but obvious ERD and other was EON. I chose Eon as it was cheaper and warranty period for both the batteries were same and I was going to sell that phone anyway. After I reached home, I searched over the internet to see how the company is and the review of the EON battery products. This is how I found this share. 

Marketing: The company even advertised in Cricket matches one of them is India Srilanka 2012 Series. Marketing at such huge levels definitely shows the company's seriousness towards the growth. Company has amazing potential and it really needs much better valuations.

Details: 
Eon Electric's Market Cap: Rs 67 crores.
Its investment valued presently: Rs 97 crores. 

As per Vaniya Budhdhi, if I invest here, I am getting a company's share totally free + 30% increment in my money invested just by considering its investments. If the company sells its investment in Mutual Fund, my money will be recovered. 

Also, the company has tied up with big real estate players like Anjara and I appreciate the move towards this place. There has been no lag in Marketing of company's products. The company is following the footprints of Havells company and have also hired management personnel from Havells. In future if everything goes well, I see the company competing with such big players.

Reviews: People have been satisfied with the products that company is selling. The company  are also selling the products online via e-commerce sites

Company has numerous JV's which is making it more complex for me to analyse. But surely this is the stock that has to be kept on radar. 

At this valuations, around Rs 42.00, I will categorize this stock as 'LOW Risk' with 'HIGH Returns' Opportunity.

Check the company's website: www.eonelectric.com
Check Facebook's page of Eon Electric : https://www.facebook.com/EonElectric




For more info regarding pros and cons and detailed report check my next post: Eon Electric Review
 
Suggestions and discussions are welcomed.

Analysis of Stock - Part 2

I dont know why but the site www.blogspot.com was not allowing me to save whole article in one post. So have to add another post which is continuation of 'Analysis of Stock'.

After checking the Fundamentals and Griwth History of the company, we need to check the current fundamentals of the company. Following part will explain which and how those parameters are to be analyzed..

Promoter Holding:

Now that it has passed the test of the Growth concern, check whether the promoter holding is good. Check promoter holding of last few quarters, whether they have bought, sold or kept their holding intact. If they have bought the shares, it’s a good sign. If they have sold the stock, it is not a very good sign. 

Shares Pledged By Promoters:

We need to consider Pledged Shares while checking Shareholding Pattern. Please search Google for more details regarding Pledged shares. It should be negligible (Best if there are no pledged shares). Also positive if the Pledged shares percentage is decreasing.

This page will show the total number of pledged shares. In Neo Corp’s case, they have reduced the number of pledged shares. So once again, that’s positive.

FII's/DII's Holding:

Invetsments by FII’s and DII’s adds better sign for the company.

Public Shareholding more than 1% :

Check the Top Public shareholders, if any Ace investors have invested. It is also taken as a positive sign.

Study Balance Sheet and Cash Flow:

You need to study it as I can’t explain it here. You need to learn it from the internet or some books. Check if the company gives dividend when they have cash with them.

Check the Company's website:

The basic info regarding any company nowadays is displayed on its website. There are many companies which don’t even have website or has very poorly managed website which is not updated for years. I don’t like the companies which doesn’t update the website and keep up-to-date information. Website need not necessarily be fancy but the basic developments happening should be listed there. You also can find the clientele there (Clients list). If its all good , move ahead.

Check the Corporate Governance:

Many companies have black background associated with it due to the stock operators like Ketan Parekh, Nirmal Kotecha etc. or some other issue, like IPO listing fraud. Check the clarifications of the company regarding any issues if they have encountered this type of issues and check if the issue is resolved.

Most Important Parameters:

You can check Dividend history on chart directly.

For all the parameters below, you need to study well and this may take time. Better to get it analysed by expert if you are unable to solve it. This parameters will tell whether the share is worth buying.

• Lower P/E than Industry P/E is a very good sign to BUY.
• Check the Book Value of the company. If the Book Value is higher than the current Share price, its again good indication to BUY.
• Price/Book if less than 1.00, shows that the share is undervalued.

There are many other rules. Not all of them matters, it varies depending on share.

If you find a share that have all the things positive, 

Congratulations!!! You have found a multibagger. Share that stock as much as possible so that all the investors can take benefit of the research done by you.


If anyone wants the copy of this file (Manual) in Microsoft Word format, click link below to download  
ShahStocks Stock Analysis Tutorial