“The company is able to pass on the increase in prices with a monthly/quarterly lag. They have been able to maintain EBIDTA margins YOY inspite of fluctuations in crude”. “This company has been able to consistently deliver EBIDTA margins of 10% in last 3 years”. I had come across these statements multiple times. Considering how… Continue reading Credit Series- Myth on EBIDTA
This company has been consistently delivering excellent performance for the last 5 years inspite of challenging business environment with multiple business events including the crude movement on which its prices are dependent. Increasing sales YOY, margins remaining stable and leverage ratios well within the acceptable levels. Further on one side rating has been upgraded but… Continue reading CREDIT SERIES-7- Look beyond the good numbers
Numbers if don’t match there is a story to be uncovered. Other key number to look at other than financials is the regular MIS in form of stock, book debt statement and creditors statement. Listing some common practises which helped understand the business better and identify signs which helped decision- Compare the difference between the… Continue reading CREDIT SERIES-6- MIS-match in numbers
Take a look at the below numbers. Good, Bad or ugly seeing years 1-3 ? On face of it, will fall in last two categories on first glance. There were lot of factors playing at same time in it- Extraordinary income and expenses. Fluctuating sales. High borrowing vs sales. But also what this company continued… Continue reading Credit Series-5- Everything looking bad is not always bad.
Case –II – Stock Market Data Market movement of share prices and market cap is one of the most intelligent indexes especially if it’s a homogenous business and there is adequate free float. So there was this company which was into lending for a certain asset class. Key performance indicators of the lending business –… Continue reading CREDIT SERIES-4- MARKET INTELLIGENCE
If market intelligence points to something, explore that further We have all been caught with surprise on a number of occasions when an account always repaying on time suddenly starts delaying. So my experience is that it is something which starts showing signs in other areas as well before it starts in the delay mode.… Continue reading CREDIT SERIES-3- MARKET INTELLIGENCE
Case II – Related party numbers and merger/de merger stories This company is into supplying capital goods to various industries. Their factory, biggest in Asia on some parameters and being covered by a prominent international news channel on their documentary. This business had two parts – one pure material supply and another material supply+installation+other services.… Continue reading CREDIT SERIES-2- Numbers are numbers