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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: FIFO_kid2 who wrote (75660)	5/18/2024 9:33:38 AM
From: Harshu Vyas	Read Replies (2) \| Respond to of 78958

Speaking of India, I found a really cheap power producer, OPG Power Ventures (listed on the LSE), trading well below book (book value of £173m, market cap of £45m). In the last year, it's up about 40%. In the last five years, it's down by 40%, too. Company is essentially run by the family. Problem is that they're heavily reliant on coal and there have been coal shortages that India has experienced. Now, is this a younger Buffett type pick? I mean, it's as commodity as it gets with a balance sheet margin of safety. And compared to recent earnings, valuation seems reasonable. Enterprise Value roughly equals market cap (because cash roughly equals debt). If we run EBITDA-to- EV, we get a percentage of about 35%. So cheap in relation to book and cheap relative to (non-GAAP) earnings. GAAP earnings are decent FY, but the HY results are subject to fluctuations. FWIW, YE March '23 earnings were £7.3m, March '22 £6m. Revenue declines look worrying but are answered in the annual report as a focus on profitable generation only (leading to lower volume with higher production costs). Of course, you have to careful surrounding India because, whilst there's lots of potential for growth, there's probably lots of shady stuff going on that we, as outsiders, won't be fully aware of. How much information can be taken at face value? Just because I'm a bull for the Indian economy over my lifetime, does not mean that it's easy to pick the right stocks as an outsider. Additionally, there's already quite a lot of hype surrounding India, partly coming from the West and also internally. Means you have to tread extra carefully. Furthermore, it seems the Indian government want to reduce their reliance on coal and shift to renewables. It'll probably take a long time to achieve but it's something you have to watch.