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August 7, 2016

Intrasoft (123stores) Journey and detail analysis by SKP Securities Ltd

Hello Everyone ,
Today , I am going to share a link to very good detail analysis done by SKP Securities Ltd on IntraSoft Technologies Ltd, but before that I would like to describe IntraSoft journey so far .
I had also given detail analysis of Intrasoft at Link1  Link2  Link3
But of course, I had my own limitation of time and skill . So , in that context SKP Securities Ltd's research report on IntraSoft Technologies Ltd is too good .

So far, It is a fruitful journey. It was more of luck than my skill. We bought into range of Rs 45- 52, we saw price of more than 500-570 within a year. I don't know how many of you were able to hold this multibagger. Most of the readers might have sold at less than 2-3x. If stock buying (multibagger) is an art, then holding (selling) it is fine art. I mean more difficult job. Even, I had sold some quantity on three occasions.

1. When, a stock become 10x within a year, then It brings pleasure along with the pain of imbalance of the portfolio. I don't see anything wrong in even selling the multibagger if the multibagger stock becomes too much percentage of your portfolio and cross your comfortable threshold . I had to sell 20% around Rs 500.
2. When, company did some writing off, which I have already described in details at (http://value2wealth.blogspot.in/2015/12/intrasoft-technologies-temptation-to.html). I had to sell 60% at around Rs 560. But, bought 30% again around 400 as mentioned in this article.
3. This idiot has learned the art of holding multibagger from Ian Cassel and Basant sir (Basant Maheshwari). I didn't get the biggest return if my life in Intrasoft but I got it in "THE THOUGHTFUL INVESTOR" book by Basant Maheshwari. I paid just Rs 999 and got many folds returns (http://www.thethoughtfulinvestor.in/). When, It became 10x-12x in short time, I have designed exit strategy, above two points were part of that. But, the third one was a typical value investor or even other fundamental investors don't do it that was stop loss. I decide so sell 10% if it reaches 300, another 10% at 250 and so on at every Rs 50 fall. So, I had to sell 10% at as low as Rs 290.

After all these selling and buying again , I still hold around 40% my original holding .

Journey of Intrasoft is around 20 months. Generally, I don't evaluate success and failure of stocks in less than 3 years period. Still at least 16 months away from that point, but we booked profit at various occasions, then I can describe it was successful stock pick. Again Exception! . Ideally, I should evaluate it after at least whole economy cycle is completed. It has seen bull market but not seen a bear market. In a bull market, even my Dadi's (grandmother) portfolio of small cap and mid cap (purely based on god names in stock names) can easily beat major indices. One learns a lot in bear market instead of a bull market.

All the selling in Intrasoft like for fund raising or Intel selling it's stake has been well absorbed by the Market .  Intel selling was on the card because it was a strategic investment instead of pure investment. If one compares last bull market with this bull market, then one will find that last bull market FII investing in small cap and mid cap was very high. This time that is not the case. On the other hand FII's invested around 8.42 % in Intrasoft. The only missing link is domestic Mutual Fund houses. It is really difficult for MF industry to invest in this type of e-commerce story.However, I hope someone brave will soon enter into it.

Another major boost IntraSoft received by entry of UTPAL SHETH and his wife NIPA UTPAL SHETH by "TRUST INVESTMENT ADVISORS PRIVATE LIMITED" . Utpal Sheth is the Co- founder of Trust Group. He is also the Senior Partner and Chief Executive Officer of Rare Enterprises ( Rakesh Junjhunwala, Rekha Jhunjhunwala ) . Utpal Sheth is the man who convinced Rakesh Jhunjhunwal in 2002 to buy truckloads of Titan at Rs 2 (Adjusted) and the rest is history because in the next few years, Titan gave him an incredible 20000% (200 times) return in 14 years. This is power of compounding in good secular growth companies .    http://rakesh-jhunjhunwala.in/so-who-helps-rakesh-jhunjhunwala-pick-multibagger-stocks/ .





One more boost came from recognition 123stores getting started in USA E-Commerce Industry . It has got second position in Internet Retailer of the Year Award 2016 in "E-Retail Growth Award" .
https://www.internetretailer.com/2016/06/08/wayfair-named-internet-retailer-year .

Saatva Inc was first in "E-Retail Growth Award" category which is making wave in US retail Industry by disruption to many biggies . Saatva Inc is a manufacturer of luxury mattresses and sell direct to the customer online. Of the luxury mattress brands, Saatva is the disruptor in the market, changing a very traditional business and innovating on behalf of the customer. Saatva is Co-Founded by Ricky Joshi . If you get time,then please read story of Saatva disruption online . Very interesting .


FY-14 IntraSoft had GMV of 148 crores. Now, after current quarterly result TTM GMV is around Rs 825 crores. Big jump! . It is on the right path, and it will be consider a serious US e-commerce players once it crossed the 200 million dollar mark of GMV. I never met management, if someone used to raise one liner concern, then like others I too used to have doubts if business really exist or not. Here, www.marketplacepulse.com played a major role in convincing existence of real business.
Dec 2015, It had one year rank of 72 on Amazon USA, today it has year rank of 29 (https://www.marketplacepulse.com/amazon/usa/stores123). Huge jump! . Isn't it? Currently, It has 14 one month rank which is quite significant considering Amazon USA has quarterly revenue of $17.6 billion in last quarter. If 123stores becomes the top ten, then it can be considered as Indian proxy to Amazon USA e-commerce. Secondly, Amazon USA is trying to promote, market places sellers and trying to increase marketplace seller shares. Marketplace sellers shares were around 44% in Q1 2015, it is now 49%. https://www.marketplacepulse.com/articles/new-record-49-percent-of-amazon-sales-in-q2-2016-came-from-marketplace-sellers


You can get good detail analysis done by SKP Securities Ltd on IntraSoft Technologies Ltd at http://www.skpmoneywise.com/admin/Docs/Research/1798605170_InftaSoft%20Technologies%20Ltd_SKP%20Securities%20Ltd.pdf

IntraSoft Technologies Ltd again posted good quarterly result on high base. There always going to be execution risk in every business, but I hope this journey continues to be fruitful in Intrasoft.

Have a nice day ahead!

P.S.
One reader reminded me , "You have missed Porinju sir" . How can I miss him ? He is the person who recommended at very low price(in fact, he had given recommendation prior to me)  and helped it to cross first hurdle of 3 digit figure . I am not sure if he is still holding or not . As per me , Porinju sir is not Warren Buffett of Value Investing in India but he is very close to Walter Schloss of Value Investing in India .

Disclaimer :  Please treat this post as starting point of your research and not conclusion to invest in any discussed stock. As always , please take the advice of a SEBI qualified financial adviser which I am not . 

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7 comments:

  1. Very good update sirji. Happy friendship day and keep posting "to be" multibaggers

    ReplyDelete
  2. Dear V I , some good stock ideas is KTK bank, Cupid , NBCC , Snowman , Wonderla ,Vikram Thermo ,Eastern Treads Ltd, Gulf Petro plz analysis this stocks which is quite good business at there so advise your for this stock.

    ReplyDelete
  3. Wonderful post! We will be linking to this particularly great article on our website. Keep up the great writing.
    government valuation

    ReplyDelete
  4. Sir your view on OLYMPIA IND LTD Annual Report ???

    ReplyDelete
    Replies
    1. Hi Pramod,
      First of all thanks for following my blog .
      Even though business model of Intrasoft and Olympia is different , however both has huge market ahead to address . Even though e-commerce is highly competitive, There are very few organized player in their space . Both has great future ahead , both companies managements have do basic right things and avoid silly mistake especially avoiding minority shareholder unfriendly practices .

      Current market cap of Olympia Industries Ltd is around 46.5 crores at price of 136.30 and if we include even dilution of 25% of warrants ( since they have received 25% money and rest will at conversion) then as per this calculation , diluted indicative diluted mcap is 55.5 crores and if you consider full dilution right now then mcap is cores 82 . But , I like to consider dilution for small cap which are hungry for money only after two quarters when money comes to company , that time we mostly assumes that raised money is utilized , and should reflect in results . So , right now for me correct mcap is 55 crores neither 46.5 crores nor 82 crores .

      Amazon will touch around 1 lakh crores GMV in next 4-5 years , Cloudtail GMV will be max 25000 crores (due to 25% cap). Currently, Cloudtail is 12x bigger than Olympia (by feedback count) . So , probable sales of Olympia would be 25000/12 = 2083 crores . This ratio is going to improve in favour of Olympia Industries due to due to 25% cap on Cloudtail , which is not yet full implemented . If it becomes 8x then Olympia Industries can have yearly turnover of 25000/8 = 3125 crores . So , this will be not exact figure but stock market is all about guessing/estimating future profits and no one can perfectly guess it correctly . So , Olympia can have sales in range of 2000 to 3000 crores form current 200 crores in next 4-5 years if Amazon India archives 1 lakh crores GMV . It is long term story , and not going to create wealth in next 1-2 years .

      I am slowly buying and waiting for further correction to buy more of Olympia Industries Ltd.
      I am planning for detail write up on Olympia Industries Ltd in next few days , probably this weekend .

      Delete
  5. :) what a analysis...me too long term investor me too waiting for lower level to accumulate this Gem for long term. Thank you so much sir for replying on my comment

    ReplyDelete
  6. hello , nice evaluation.. kindly spend some time for me to answer below
    do you see uniqueness in Olympia industries ..I mean even i can tie up with Amazon with some capital where i sell only quality brands or high quality non brands at zero or thin margins and i request for positive reviews as i am giving quality material at cheap price.i will think of meagre profits only after reaching considerable business 200cr.so how Olympia can survive..i can understand about intrasoft that thier software is strong enough to handle hell lot of business and with quality.but olympia i am not getting convinced.. your help might clear many kid investors like me who check your atleast couple of times a week

    ReplyDelete

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I am not an Investment advisor and do not provide this service via this Blog. The Blog is a personal diary and the stocks discussed on the blog represent my personal views and analysis. They are not recommendations to buy or sell stocks. I do not intend to recommend any stocks for financial or non-financial gains and may or may not be holding the stocks discussed on my blog.

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