This is the sixth post in our quarterly update series. In each post, we pick four stocks from our watchlist and share the latest updates on these businesses. These are not buy recommendations but we find these businesses interesting and we may build position (or buy more of those that are already in our portfolio) in them in future under these two conditions —

  1. Their business continues to do well and,
  2. They are available at valuation which we find reasonable with sufficient margin of safety.

You can see the earlier updates here.

Below we have four more companies that we’re tracking closely. We have made notes from their quarterly updates and the analyst conference calls.

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Please click on the read more button for more details on each stock.

Karnataka Bank Ltd

Karnataka Bank Limited, is an ‘A’ Class Scheduled Commercial Bank based in Mangaluru in Karnataka, India.

Karnataka Bank has been one of the well-known regional banks in India. They have been differentiating themselves with their early adoption of technology and use of superior management practices which have resulted in their operating profit per employee rising year on year. The NPA situation, though, continues to be a challenge for the bank.

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Balkrishna Industries

Balkrishna Industries Limited (BKT) is a tire manufacturing company based in Mumbai, India. Balkrishna Industries manufactures off-highway tires used in specialist segments like mining, earthmoving, agriculture, and gardening.

BKT has been a rising player in the off road tyres business for years now. They have indeed suffered from volume contraction and rising material costs but have been able to maintain a healthy EBITDA margin of more than 25%. It is critical for the company to continue growing their volumes as the huge investment in capex would put pressure on earnings in the next couple of years.

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Tata Global Beverages

Tata Global Beverages Limited (formerly Tata Tea Limited) is an Indian multinational non-alcoholic beverages company headquartered in Kolkata, West Bengal, India and a subsidiary of the Tata Group. It is the world’s second-largest manufacturer and distributor of tea and a major producer of coffee.

Despite the big variety of product segments that they operate in, their tea business segment is one that affects revenues the most. Tea business has been dropping in margins and profits due to rising costs and competitive pricing pressure from other players. Hence, volume growth and increasing margin are the two areas where the company is trying to focus on. The next few quarters will dictate whether their efforts in that direction are showing some promise or not.

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PI Industries Ltd

PI Industries is in the field of Agri Sciences having strong presence in both Domestic and Export market.

PI industries seems to be well on their way to comfortably be able to maintain their target growth rate of more than 20% each year for many years to come. Thus the company presents itself as a good opportunity for those betting on rising agriculture and agrichemicals both in India and abroad. However, valuation of the stock is a little too stretched at the moment. So, future returns from here on will be dictated by earnings trajectory going forward.

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We’ll continue publishing the notes from these calls on our website. If you don’t want to miss these updates, please subscribe to our newsletter.

And don’t hesitate to reach out to us if you have any questions.

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