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Sectors in Focus

Major Corporate Developments This Week

1. HUDCO - Company executed MoU with Gujarat govt for investment up to Rs. 14,500 cr.
2. Ramky Infrastructure sells its subsidiary Visakha Pharmacity to Brij Gopal construction for Rs. 165.2 cr.
3. Suzlon secured a 300 MW new order for the 3 MW series from Apraava Energy.
4. Central Bank of India entered co-lending partnership with M/s. Kisetsu Saison Finance for MSME loans.
5. Adani Energy Solutions to acquire 100% stake in Halvad Transmission; To invest Rs. 3,000 crores.
6. SJVN gets 100 MW solar power order from Gujarat Urja Vikas Nigam.
7. Cupid - Columbia Petrol Chem Pvt. Ltd and Aditya Halwasiya acquired stake in the company.
8. Vishnu Prakash R Punglia won orders worth Rs. 899 crores from the Uttarakhand government.
9. Aarti Industries: Company enters into a nine-year contract with a company for supply of a niche agrochemical intermediate.
10. Canara Bank: Gives in-principle approval to start process of listing its mutual fund subsidiary Canara Robeco Asset Management Company through an IPO.
11. Punjab National Bank: Bank announced its approval for raising equity capital of up to ₹7,500 crore during the fiscal year 2024-25.
12. Swan Energy: Company approves raising Rs 4,000 crore via multiple instruments.
13. Exide Industries: The company has made an investment of Rs 40 crore in its arm, Exide Energy Solutions. The total investment in its arm now stands at Rs 1,820.01 crore.
14. South Indian Bank: The company approved raising Rs 1,750 crore via rights issue.
15. Sula Vineyards: The company's iconic Wine Tourism business set new records in visitor numbers revenues and tastings over the long Christmas weekend.
16. Shakti Pumps (India) received 2nd work order under the KUSUM-3 scheme from Haryana Renewable Energy Department (HAREDA) for 6,408 pumps. The total amount of the work order is for around Rs. 258 crores.

TechnoFunda Investing Quote from Legends

Seth Klarman’s wisdom urges you to see stocks as more than just volatile paper values. Instead, view them as slices of ownership in actual companies. This fresh perspective nudges you toward long-term investment strategies, ones that hinge on a company’s fundamental health and future growth potential, not just the whims of the market. Think of it this way: as an investor, you’re not just buying stocks. You’re buying into a business. You’re investing in its potential, its promise, its future. And if you’re savvy, you’re also thinking about how you can add value. Maybe it’s a strategic pivot, a brand refresh, or an operational overhaul.

📚 Book I'm Reading This Week ​​​​​​"Mastery" by Robert Greene In "Mastery," Robert Greene delves into the lives of historical titans like Darwin and Da Vinci, uncovering the blueprint for achieving mastery in any field. Through a systematic approach involving apprenticeship, active immersion, and ultimate mastery, Greene reveals how aligning passion with profession, embracing mentorship, and cultivating social intelligence can pave the way for profound expertise. "Mastery" serves as an insightful guide for individuals seeking excellence, emphasizing the fusion of intuition and rationality as a pathway to unparalleled achievement. List of All Books I have Shared →

TechnoFunda 101 - Power Capsules

Learn technical as well as fundamental concept in a simple way

Uncover Value with ROCE

Return on Capital Employed (ROCE) is a powerful metric that reflects a company's efficiency in generating profits using its capital. It's a critical parameter for evaluating a business's quality and a key indicator of management's prowess. ROCE goes beyond mere profitability, offering insights into the company's ability to utilize capital and indicating the possible presence of a competitive advantage or 'moat.'

So, what is ROCE? In simple terms, ROCE measures how effectively a company generates earnings relative to the capital it employs in a given year. The formula for ROCE is Profit before Interest and Tax (PBIT) divided by Capital Employed (Equity and Debt). The result illustrates how well a company uses its capital to create earnings.

Here's a fascinating example: imagine two companies, A and B, generating Rs 500 and Rs 750 in PBIT, respectively, on the same sales figure of Rs 2,500. One might assume that Company B is more profitable with its 30% profit margin, compared to Company A's 20% margin. However, when we factor in capital employed, the story changes. Company A, having employed Rs 2,000 of capital, boasts a 25% ROCE, while Company B, with Rs 10,000 in capital employed, has a relatively low ROCE of 7.5%. This example demonstrates the importance of ROCE in discerning which company utilizes its capital more efficiently.

Capital-intensive industries, such as airlines, textiles, infrastructure, power, retail, oil exploration, and hotels, tend to have poorer economic performance, as they require substantial capital investment for future revenue and profit potential. However, a capital-intensive business can still generate value for shareholders if it consistently maintains high ROCE over the years. These exceptional businesses often manage their capital through operational cash flows, reducing their reliance on debt.

When looking for wealth creators, investors should prioritize companies with low capital intensity and high capital efficiency (high ROCE). A high ROCE indicates that a company can reinvest a more significant portion of its profit back into the business, potentially leading to higher earnings growth.

To sum up, ROCE is a vital indicator of a company's financial efficiency and growth potential. By incorporating ROCE into your investment analysis, you can identify diamond-in-the-rough businesses with strong growth potential, making it an invaluable tool in your fundamental analysis arsenal.

🚀 My Content For This Week 🎬 YouTube: WHAT ARE ECONOMIC MOATS?​ 📋 Twitter: Vivek Mashrani, CFA @MashraniVivek Unlocking the Secrets of Economic Moats Join me on a journey through the fortress of sustainable competitive advantages from Warren Buffett's perspective! Let's delve into the essentials of economic moats and why they matter in the world of investing. #Investing #EconomicMoats 2:25 PM • Dec 30, 2023 1 Retweets 8 Likes Read 2 replies ​

🎙️ My Weekly Podcast For You

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Keep Compounding...

Vivek Mashrani, CFA Founder, TechnoFunda Investing

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