After various attempts to analyze various companies which failed because there were a lot of complications I finally hit on Shree Cements, I have been hearing a lot about it recently.

It’s been covered in my Corp Val class and my Equity Research class where I am covering the cement sector. An industry speaker who come for a guest session in Equity Research was also coincidentally covering cement sector and he was all praise for how Shree Cements manages itself.

So with all enthusiasm I opened the annual report and I am really surprised. This is the most transparent annual report I have ever seen. The report displays the sales in quantity and doesn’t try to hide behind a maze of numbers for showing revenues. The report shows the quantity of demand and supply in cement by region. This is very important when analyzing a cement business because the demand for a brand is very region determined. The high costs of transportation don’t let cement bags be sold at far off states.

If my valuation comes out higher than the stock value right now which is highly unlikely because of the high stock price of 7360.30, a lot of my money is going into this stock. The stock already has the Modi’s bull run factored in and doesn’t look like there is a major upside now.

Their corporate governance reports and transparency is sure to get FIIs pumping money into this firm, for FIIs those factors are more important than the profits. Maybe I should invest in this company.

The bad part of this valuation is I’ll be using the 2013 annual report as the 2014 report is not out yet.

New Projects- A clinker manufacturing unit of 2MTPA is being set up by June 2014 which I am going to assume will start around that time because of Shree Cement’s track record. The 4 MTPA cement mills are going to be commissioned in 2014 so I am going to assume they will be completely operational from 2015

My first valuation and my value is completely definitely wrong. My value for a stock of Shree Cement should be Rs 2168 but the present value is Rs 7500. Obviously they know something that I don’t. I will get back to correcting it and then updating how I got to the solution.

Here is the link to my excel sheet

Welcome to my Blog!

I admit it. I am just copying what Professor Aswath Damodaran has done in his blog http://aswathdamodaran.blogspot.in/ . The theme is the same,I exchanged the blue background color with orange to avoid copyright infringement, I am in fact using the same blogging platform Blogger. The only difference is while Damodaran is considered to be the authority on valuation and has published the standard texbook for valuation throughout the world, I am simply a student of finance who is reading his textbook and trying to follow what he teaches in his online lectures. He's one of the main reasons I started this blog as he really simplified valuation for me and made it a highly interesting subject.

What I will be trying to do in my blog is value Indian companies in a similar fashion as how Damodaran does it when there's an IPO/PE/VC deal for a major firm and he values it and explains how he's gone about it. I searched around for a blog which covered Indian firms in that fashion but didn't find one so this is going to be a feeble attempt from my side to do that. I am welcome to criticism and I will be committing blunders initially but only with your feedback can I learn.

Onwards with the journey!!