A quick note to tell you I’ve been interviewed by Kamla Bhatt about Moneyoga.

Here’s a link to the interview:
Deepak Shenoy: Entrepreneurship Is Overrated. Is It Really?

The interview is about Moneyoga, what we are, how we’re different, what we want to be, and some of my views on entrepreneurship. Do have a read and let us know what you think.

Kamla’s site has been featured in LiveMint’s list of 10 popular blogs for Indian investors and entrepreneurs.

Infy Q4 2008 results are out.

Sales are 4235 cr. (up from 3555 cr. last year same quarter, nearly 20% up). A QOQ increase of around 5%.

Net Profit is 1182 cr. (up from 1124 cr. last year, a 5% increase). QoQ the profit has been stagnant - last quarter was 1186 cr.

EPS has gone up to 20.66, from 19.96, which is a 3% increase or thereabouts. If you’re wondering why profit growth is greater than EPS growth, it means further dilution has happened due to more shares issued, which is through ESOPS in this case. Diluted EPS has actually grown around 5%, from 19.61 to 20.60.

Consolidated results: Sales 4542 cr. (up about 22% from 3772 cr. last year), Net Profit 1249 cr. (from 1144 cr., a 10% increase) and EPS up to 21.78 from 19.95, a 4% increase.

I would think this is fairly low, and initially I thought it was under the guidance of Rs. 21.38 per share but I was looking at standalone results. At a consolidated level they have beaten the guidance by a bit, but still, the picture is not impressive.

EPS for the year is Rs. 81.26, up from 67.59 last year. That’s around 20.22% growth.

At current prices of 1420 the P/E is 17.47. That may sound low, but let’s look at their guidance before we decide. More to come.

Reliance Industries Limited (RELIANCE) has made another discovery of gas in the Krishna Basin.

The commercials of this find are not known. For what it’s worth, the gas finds need to translate to income and only then will we know the extent of the profitability of these finds. Right now gas prices are high, but with a worldwide recession, will they come down to levels where it’s not profitable to get them out of the ground?

But RIL has other positives. The average price of crude has been above $90 in Q4 08, and that will contribute to their results - in Q3 they made about $15 per barrel as gross refining margin. Q4 should be a good 10-15% higher. That is likely to take their EPS to around 105-110 for the year. If they reconsider doing their forex transactions to reflect AS 11, they are likely to record another 500 cr. in profit, another Rs. 3.5 in EPS.

At current prices of 2350, RIL has about 21 P/E. They’re growing at more than 25% on EPS levels and that is likely to stay or increase as RPL kicks in, as the gas finds get commercialised, and as the retail bits of the business expand. Let’s wait for the results before we make a buy or sell decision, though.

Disclosure: Long RIL.

The Institute of Chartered Accountants of India (ICAI) has announced that companies holding derivative contracts must provide for losses on them on a mark-to-market basis. Prior to this announcement, the standard for derivatives (AS 30) was to be applicable only from April 2011. (”Recommended” from 2009).

AS 30 is still not mandatory, but ICAI maintains that if AS 30 is not followed, the losses must be mentioned separately by the company and failing that, by the auditors, from March 31, 2008 onwards. It will be interesting to see the auditors statements on public financial results this year.

I fully expect companies to dress up their results for this quarter. So it will be very interesting to see which companies have audit notes for non-compliance to AS 30. And where AS 30 has been used, to find out the extent of MTM losses.

KS Oils, a company I talked about as having huge insider trades (”Insiders Buy The Big Dip“), has just acquired 50,000 acres of palm plantations in Indonesia.

They will invest Rs. 230 cr. for this, over three years. Not huge, considering they will make sales of 1600 cr. for the year and a profit of 110 cr. or so (likely).

This should ensure lower supply cost. At commodity costs today palm oil is expensive, and margins will stay low if the prices continue to rise. KS Oils currently imports nearly all its oil. The plantation’s yield of 80,000 MT is about 2.5% of India’s oil imports, which is quite impressive then as an acquisition.

Additionally, duties on palm oil have been slashed recently, giving a higher edge. The acquisition should yield returns after around three years.

Ok so 1) Insider buying and 2) Acquisition. Anything else? 3) Institutional interest. Lot of institutional buying has happened in the stock, but at low prices. Don’t know what to make of that, yet. And 4) Power: They have a power division that gets money from Wind Energy.

Negatives: Input prices will stay high until the commodity cycle reverses. I also don’t understand the business, and it makes very small margins (<10%). All technicals are negative - MACD, moving averages, Relative Strength etc. There may be a better price point available. P/E still at 15 or so, which is not "value". (Though EPS growth is nearly 25%)

Disclosure: No positions. This may be a time for bargain hunters but this is not a bargain at this price. A bargain would be Rs. 40. But it is a momentum story, and if it needs to be picked up, the technicals should show signs, not just the (already sound) fundamentals.

Corporate India is betting on itself. The level of insider buying has reached dizzying heights in the last two months, with more than 20 announcements a day. Insider trading regulations require that promoters tell the exchange when they buy or sell shares, even if they buy 1 more share. Prominent insider buying noted in:

KS Oils: Ramesh Chand Garg, a promoter and chairman of the oil manufacturer, has bought nearly 4% of the company since Jan 2008, spending nearly 80 cr. according to my calculations. The price is at Rs. 62 or such, P/E around 15.

IndiaBulls: The brokerage and financial service provider has been hit hard, falling to Rs. 388 from 1,000 in Jan. Saurabh Mittal, Sameer Gehlaut and Rajiv Rattan, the three founders, have bought a HUGE number of shares since Jan, and my conservative calculations show they have put in nearly 300 cr. altogether in buying shares from the Market, since Jan. The P/E is around 14-16 on a trailing basis.

Man Industries: Ramesh Mansukhani has bought shares little by little, bit by bit. I haven’t calculated how much - this is probably not more than 20 crores - but it’s good to see. The share is at Rs. 108, P/E around 7.5.

Apart from these, REL is buying back shares (price of 1600 max), lots of small company directors are buying (but very small amounts). At Moneyoga we’re trying to get this all together so we can see significant purchases over a period of time.

Some information may be misleading - for instance Deepak Parekh of HDFC sold about 15 crore worth shares recently, but it looks like that is just an FBT offsetting transaction (he got shares worth nearly 50 cr. as ESOPs, for which he would be liable for FBT). But it’s interesting all the same.