Q&A: Alkyl Amines, NFAT, Turnaround Companies, Half Yearly Balance Sheet

Modified: 30-Jun-20

The current article in this series provides responses related to:

  • Queries on Alkyl Amines Chemicals Limited and net fixed asset turnover (NFAT)
  • Importance of conference calls and investor presentations
  • Queries on turnaround stories & BIFR companies

 

Alkyl Amines Chemicals Limited and net fixed asset turnover (NFAT)

 

Article: Analysis: Alkyl Amines Chemicals Limited

Hello Sir,

Sorry, I had to go in your past article to understand more about ratios. I loved the way you have explained. Sir does it mean that if the company has CFO>PAT which means its operational efficiency is good. But if the company is still increasing its debt it is only because of poor NFAT even after the company has increased its NFAT at 2.9 as explained above. 

How did you come up to the conclusion that debt is increased because of its poor NFAT even after it is more than 1?

Read: How To Analyse Operating Performance of Companies

Author’s Response:

Hi,

Thanks for writing to me! I appreciate that you are going through the past articles and are reasoning out with different concepts to conduct the stock analysis.

In the case of Alkyl Amine, the debt seems to have increased due to the debt funded CapEx. As per the latest data available for FY2007-16 in screener export to excel:

FY2007-16 PAT: INR 223 cr. and CFO: INR 373 cr. Therefore, the profits have been converted into cash without any issues.

However, during the same period of 10 years (FY2007-16), the company has done CapEx of about INR 206 cr., Paid interest on its debt during this period of about INR 125 cr. and paid dividends of about INR 58 cr., leading to a total outflow of about INR 390 cr.

As a result, we notice that the debt of the company has increased from INR 82 cr. in FY2007 to INR 111 cr. in FY2016.

Hope it clarifies your queries!

All the best for your investing journey!

Regards

Dr Vijay Malik

 

Importance of conference calls and investor presentations

Hello sir,

I wanted to know how to use conference calls and other investment presentations on BSE as a part of our research. Do they matter a lot or is there any other way out?

Author’s Response:

Hi,

Thanks for writing to me!

Conference calls and investor presentations are essential to understanding the current status of business/ongoing projects etc. They are also helpful in understanding the short-term tweaks in the overall company strategy, which the company might do to tackle intermittent problems etc.

Read: How to Monitor Stocks in Your Portfolio

All the best for your investing journey!

Regards,

Vijay

 

How to get half yearly balance sheet

Hi Vijay

Thanks for sharing your knowledge, it’s really a great work. One quick thing- I was not able to get the half-yearly balance sheet available in downloadable format? Any suggestions where to look for?

Author’s Response:

Hi,

Thanks for writing to me! I am happy that you found the article useful.

Companies publish half-yearly balance sheet is presented in its summary format as a pdf document along with the Sept quarter results. Currently, I do not know of any source, which might provide it in excel format. In case, you come to know any such source, then please intimate us as well.

Read: Understanding the Quarterly Results Filings of Companies

All the best for your investing journey!

Regards

Vijay

 

Investing in turnarounds & bankrupt companies

Dear Vijay Ji

How to look at companies coming out of BIFR and successful turnaround stories?

Author’s Response: 

Hi,

Thanks for writing to me!

I personally do not invest in turnaround companies and prefer to invest in companies which show a history of stable growth.

All the best for your investing journey!

Regards,

Vijay

P.S.

 

DISCLAIMER

  • The above discussion is only for educational purpose to help the readers improve their stock analysis skills. It is not a buy/sell/hold recommendation for the discussed stocks.
  • I am registered with SEBI as an Investment Adviser under SEBI (Investment Advisers) Regulations, 2013.
  • Currently, I do not own stocks of the companies mentioned above in my portfolio.

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