Saturday, October 23, 2010
Monday, January 14, 2008
Now, why am I mentioning the structuring of all these coins?
Well, I'm sure you'd have drop an ink pen by mistake at some point of time in your life. What happens? If undistrubed, it always fall nib-headed. Why?
You'd have heard of or seen in movies, people falling freely from big heights e.g. in bungee jumping. They always fall with their head rushing for the ground. Why?
The reason is that these are the heaviest parts in the body of the falling object. Nib is the heaviest part of most fountain pens' body. Head is the heaviest part in human body.
Similarily, the heaviest part of a coin's body should head towards the ground in case of a free fall. The centre of mass of the matter on either side of the coin falls at the centre of the coin. However, its value on both the sides is different. Higher the mass on one side, higher is the probability of getting the other side of the coin as the outcome of the toss. So, coins having a larger picture on the head side, should show you the coin's tail as a more frequent outcome. And the coins having a larger picture on the tail side, should show you the coin's head as a more frequent outcome.
In a nut shell when we toss a coin next time, we should bear in mind that there does not exist an equal probability of getting a head or a tail.
"In statistics, a fair coin is an idealized randomizing device with the two states which are equally likely to occur."
For this purpose, there are three possible solutions that come to my mind:
- Device a coin with exact proportion of masses on both sides, and take utmost care that it is kept away from the wear and tear
- Assign probabilities to the two sides of the coin in inverse proportion to their weights, and multiply te outcome of the toss by its respective probability. The final decision in this case would be an aggregate probability of both the outcomes.
- Toss the coin really hard, so that the centrigugal force does not let the unequal weights on the two sides come into play
The third option is widely used by all of us. However, most of us do not know that this is the art of making an unfair coin fair!!!
Wednesday, December 26, 2007
Some notable assets
- Started divesting its enzymes division to Novozymes in 2007
- Launched BIOMAb EGFR™- India's first anti-cancer, therapeutic Monoclonal Antibody-based drug for treating solid tumors of epithelial origin, such as head & neck cancers, in 2006
- The first company globally to manufacture human insulin, INSUGEN®, using a Pichia expression system, in 2004
- Biocon's proprietary bioreactor, the PlaFractor™, has a US patent
- The first Indian company to be approved by US FDA for the manufacture of lovastatin, a cholesterol-lowering molecule
- For the period between April 2006 and March 2007 Biocon has undergone 41 successful compliance audits by various national and international customers and regulatory authorities.Various other awards and recognitions.
Technical Analyst, Deepak Mohoni is of the view that one can hold Biocon for long term.
Mohoni told CNBC-TV18,
The stock had been declining till mid 2006 because of its low net working capital followed by decline in PAT. It may no doubt move up in near future, given the supernormal growth calculated above continues for a longer period.
However, the observation that it does not go with the index seems hazy to us because it has a beta of 0.58 which is quite high. So with so high markets, if the risk associated with the index in 2 months time is 80%, that of this stock is 46.5%, which is a fairly high figure.
The stock may no doubt pick up in the near future; but the intrinsic value as given by the ‘g’ calculated above is quite low to make it fall. Well, it may be a good bet after a correction.
Tuesday, December 18, 2007
Petro Chemical Industry
Andhra Petrochemicals - An overview
With the strengthening of the Rupee value, imports are becoming cheaper and the Company’s products may be exposed to competition from imports. Further, as per the agreement with HPCL, the price of Propylene, the main raw-material, is due for revision. To meet the situation Andhra Petro Company is implementing cost reduction measures in power utilisation and in other possible areas of operation.
On checking the notes to accounts of the company, it was seen that the firm had Miscellaneous Receipts so that amount equal to 0.1455cr in year 2006 - 2007 was not included in the operating income as it was not part of company’s operations.
Tax is calculated on PBIT at the rate of 35% which was calculated on the basis of average of the last 4 years tax rate.
After calculation of the FCFF for the firm, the valuation of the firm has been done .As this firm is going for an expansion plans for worth Rs. 3.2 billion .So this firm will most likely follow a 3 phase growth model.
Growth story has been estimated on the basis of trailing 12 months values and is found to follow a three phase model,
1. Supernormal growth of 17.97% for 5 years
The firm is valued at Rs. 62.03 per share provided it maintains the current growth story, which it is most likely to. Hence, the stock at Rs. 36.8 per share currently looks quite undervalued.
Industry Structure and Developments
The year 2006-07 witnessed all-round improvement in the performance of the Company. Production of Oxo-Alcohols was 42,408 MTs and sales achieved were 42,808 MTs. Gross Income for the year rose to Rs.312.41 crores from Rs.227.58 crores in the previous year. The company has posted an all time high Profit (Before Tax) of Rs.54.84 crores. The improved performance and profitability are mainly due to better sales realization and reduction in cost of power. To secure savings in power cost, the company has installed and commissioned 2400 KVA uninterrupted power supply system and discontinued the continuous operation of D.G. Sets. The system was in operation for the period from September, 2006 to March, 2007 which resulted in reduction in power cost to the tune of Rs.8 crores per annum on annualized basis.With the strengthening of the Rupee value, imports are becoming cheaper and the Company’s products may be exposed to competition from imports. Further, as per the agreement with HPCL, the price of Propylene, the main raw-material, is due for revision. To meet the situation your Company is implementing cost reduction measures in power utilization and in other possible areas of operation.
Let us look at the petrochemical market as a whole, in order to estimate the value this stock should be at to be in tandem with the market figures.
Valuation through Multiples
Comparing with the industry average of petro-chemical business, the company should be valued at 16x multiple of its present earnings or at 8x multiple of its book value, which gives it a price target of Rs 68-71 per share. The share is currently available at Rs 36.8 per share on BSE making it undervalued. We recommend a strong buy for the share with a medium term target of Rs 56 per share, and a long term target of Rs. 71 per share.