Laziness pays and how!

As always, please accept my apologies for being irregular in my blog postings. What does one write about when there’s absolutely no sign of good news on the economic front? Rising interest rates, inflation, political uncertainly, slowing down in GDP growth rates, and of course, the thing that worries us all, corporate profit growth slowing down. Yikes! And it can only get worse! One question that frequently get asked in Investor websites is whether we are entering a prolonged bear run and the answer from experts is a resounding YES! And we are talking about 3-5 years of pain to go!
But these are actually great times for the bargain hunters. We have great companies available at ridiculous valuations! Refer to my blog post (The reluctant fundamenalist) dated the 20th of April, 2008. The companies referred to in that post have maintained their performance and have actually become much cheaper to buy given the blood bath in the markets! Lethargy does have its merits! Laziness pays and how!
This time, I would like to write about a great new story! TRF a.k.a. Tata Robins Fraser ltd. CMP 599. This company was started as a joint venture between Tata Steel, ACC and Robins Engineers. The company primarily focused on the material handling needs of Tata steel. They have reduced their dependence on Tata Steel and have grown to become one of the leading material handling equipment manufacturers focusing on the mining, ports and power sectors. And with the increasing government interest in developing these sectors, the top line growth of this company is assured. Just chew on the projected numbers! Three time capacity increase in steel production, around 150,000 MW in power generation capacity to be added, traffic handling capacity of ports to be doubled. All these present phenomenal opportunities which TRF seems uniquely positioned to take advantage of. The projected revenue for FY 10 is set to double from its current figure of Rs 370 crores. This translates to a projected PE of 4.3 for its FY10 EPS. And the market cap to sales ratio is an absurd 0.78. (Which means you can buy a company with annual sales of Rs 100 for just Rs 78!)
The only catch in this story being that this company is heavily reliant on steel as a raw material and steel prices have been going north. But generally such companies have been able to pass on the increased raw material prices onto their customers and shouldn’t be adversely affected.
Disclaimer: This article has borrowed content from the write ups in the Business Standard dated 14th July 2008 and DSJ dated 20th July 2008. This blog post is an attempt to bring those ideas to a forum that doesn’t read these sources.