The SOIC Podcast
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SOIC (School of Intrinsic Compounding) helps Indian investors learn how to invest wisely through simple lessons, real-life examples, and case studies.
In each episode, you’ll get:
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The SOIC Podcast
Masterclass on How to Read Quarterly Results for Winning Stocks
In this episode, you’ll learn how to read quarterly results like a true fundamental investor. This masterclass is packed with case studies, insights, and tools to help you find strong businesses and winning stock ideas.
🔑 Key takeaways:
- Why tracking quarterly earnings is essential
- How to use investor presentations and conference calls
- Key metrics to focus on: Sales, EBITDA, PAT, margins, cash flow
- How to spot upgrades, downgrades, and market reactions
- Tools like spreadsheets and screeners to simplify your research
- Real examples from pharma, capital goods, retail, and tech sectors
- How to adjust for one-offs and read between the lines
Perfect for anyone serious about long-term stock picking!
Let me know if you want a similar style for the other episodes too!
Hi investors, welcome to SOIC. So in SOIC we have a saying that if you are a fundamental analyst, then you need to be a student of earnings. So now you have to be a student of earnings, or any company's profit growth. Why so? Because past profit growth tells us something, current profit growth tells us something and we have to calculate the future estimate by looking at past and current. That's why, generally, the quarterly results are one of the busiest times in an investor's life, because at that point of time we are tracking so many companies that you can get an idea in which theme, sector or business tailwinds are getting strong. So it becomes very important to track earnings or quarterly results. So in this video we will do a masterclass on how to read quarterly earnings to find winning stock ideas. So what we'll do in this masterclass is first, we'll discuss the idea of quarterly results and why you need to see companies' conference calls and investor presentations with quarterly results. Second, we'll discuss how you can attend con calls as a retail investor. What are the different forms to access con calls? What are the different forms to access corn calls? Third thing we will discuss is when we track results, what things do we see in it. We see gross profit growth, ebitda growth, pat growth, interest costs depreciation. Some new KPEX is missing. We see those things. We see cash flows. So what are the key things to track? And with this I will also give you a spreadsheet. Fourth thing in this video what will we do? What are the hidden insights that we can derive from a result? So I'll discuss along 30 to 40 case studies where we got signals earlier that if a company is upgrading its guidance, then we got to know. If a company is going at a bad time, then we got an idea. What is the market looking at? How can we derive that after looking at the results and conference call? That is something that is very, very important. And fifth key thing, which is connected to the fourth, we will see that whether the market feels the results good or bad, how do we know that? Stock price is an obvious reaction, but over a period of time it is an interesting mental model which I will discuss with you in this video. And finally, we will make a screen using stock scans to see how we can constantly filter the latest results and stellar results of the company. So this is the purpose of this masterclass on quarterly results, if you are excited for this video, do drop a hell yes in the comment section or just drop a love SOIC and make sure that you smash the like button With this.
Speaker 1:Let's start with it First. Let's start with it so. We will see two types of results on the screen. One is quarterly results and the other is annual results. So when we talk about quarterly results, there are four quarters in a year. So the financial year of India starts from 1st April and ends on 31st March. But it is natural to expect that the first quarter will be in April, may and June, because there are three months in a quarter, and there are four quarters in a year because there are 12 months in a year.
Speaker 1:So whenever you look at companies, jaise is company ka example leta hai, toh is company ke nagar. Aap dekhenge, toh is company ka jo quarter one of FI 25 tha. That is financial year 25. Wo ye wala tha. That is June 2024, quarter two tha September 2024 ka and quarter three tha December 2024 ka. Right? So this is Q1, q2 and Q3, and now Q4. Results will come after the end of March, when March quarter will end. Then, usually after 20 to 30 days, results are announced by companies and then their quarter 4 results will come like, if you see here so this is their quarter 1 of FI24, quarter 2 of FI24, quarter 3 of FI24 and finally quarter 4 of FI 24. So this is what we see quarterly. There are 4 quarters in a year. The quarter of June is always in quarter 1, the quarter of September is quarter 2, the quarter of December is quarter 3 and the quarter of March is quarter 4. So remember this thing I am first teaching basic terminology, then we will start reading, then we will start learning how to read quarterly results.
Speaker 1:Okay, when we are looking at quarterly terminology, then some people say how much is the sequential growth or how much is the quarter-on-quarter growth? So what does sequential growth mean? What does quarter-on-quarter growth mean? That from the last quarter, like we take the example of this business, so in this quarter we had a sale of 318 crores and last quarter we had a sale of 208 crores. So you can compare any business in sequential.
Speaker 1:Let me show you another business called PI Industries. In PI Industries we can see the growth in sequential by looking at the quarter-on-quarter. Last quarter the sales were of 2069 crores and this quarter the sales quarter were 2069 crores, whereas in this quarter the sales are 2221 crores. So the sequential growth of this business is around 6-7%. That means quarter-on-quarter 6-7% of the company's sales grow.
Speaker 1:Okay, when you open the screener, when you come to the quarterly result and plus, you will see a year-on-year sales growth. So what is year-on-year sales growth? That means quarter 2 of FY25, because it is September 2024,. So quarter 2 of FY25, what was the growth rate versus quarter 2 of FY24? So in quarter 2 of FY24, there were 2,117 crores of sales, whereas in this quarter there are 2,221 crores of sales, right? So this means you generally know that you did year-on-year comparison and in year-on-year comparison what did you see? That? What was the growth in the same quarter last year and what is the growth in the same quarter this year? So we call it year-on-year growth rates, whereas first we learned quarter-on-quarter growth rates.
Speaker 1:So we started this with. We started with basic terminology. We learn about quarter on quarter results and quarterly results. Now I will explain this in advance. So one thing you must remember is that the quarterly results of the company. If you use screeners, like I use usually, if you use screeners, you can make your watchlist. Then you will know which company's results are coming. One more thing you can do is suppose that in my watchlist there is Ganesha Ecosphere and, just for an example, and let's see Ganesha Ecosphere, so their results are coming tomorrow. So we also get to know on the screener that when the results are coming. So here it is written that results are coming out tomorrow. Similarly, if we see one more example of AB Capital, so when are the results of AB Capital coming? So results are coming out on 3rd of February. So upcoming result date we can read down here in 3rd of February, when the results of this company will come out. So this is also one of the ways that you can view when the results of the company will come out. So you will add the company to the watchlist by going to the screener. So the screener will always show you on the right when the company you have started tracking will be declared.
Speaker 1:One more thing which is very important is the quarterly results. So what happens in this is that the results come every quarter, but every quarter the company's cash flow or balance sheet does not come Like. Here I will see an example. Let's take the example of Axis Cades. Now, this is just a random example to understand that whenever the company's quarter 2 results will come, like September 2024 Q2-FI25 results. So when you open this, any company you open, then the Q2 results of the companies come with them. The balance sheet of the companies comes Now. If you look here, then you will get this balance sheet on the screener also, if you look at the screener, then this is the balance sheet of FI24. Whereas this is the balance sheet of H1-FI25, which is the balance sheet of September 2024. So here1 FI25's balance sheet, which is September 2024's balance sheet. Right, so here you will also see balance sheet.
Speaker 1:Then, if we look ahead, then you will see one thing these H1's results first half of the financial year, quarter 1 and quarter 2. So in first half of the financial year you get cash flow statement also. So cash flow statement tells you about business, that is, business generating cash or not. So you will see here. Also, cash flow statement tells you about the business, whether the business is generating cash or not. So you will also see a cash flow statement of the company here. So generally, when does cash flow statement and balance sheet come? Either it comes on the results of the first half or generally when does cash flow and balance sheet come, or it comes in the full financial year result. You tell me when will the full financial year result come? The answer is when all four quarters will be over. So let's assume, when all 4 quarters are over, then in which quarter? In the case of access gates, in everyone's case, the last quarter of March 2024.
Speaker 1:If you click here, then what will you get to know? You will see the full financial year results of the company. You will also see the income statement of the company, in which you will see the year end results of March 31, 2024. This is the quarterly comparison, right, and here you will see March 31, 2024. One more thing when you see quarterly, you will see here companies usually present income statements. You will see that these are the results of quarter 4, fy24. Right, these are the results of the previous quarter, december 31, 2023. This is for quarter on quarter comparison and usually in the third row, no-transcript.
Speaker 1:Now one more thing which is very important, right. One more thing which is very important. Like right now, axis Skates, quarter 3, fi25 results are coming, right, so if you will see in BSE announcement when you will see latest results, then you will see results here. So, with results, 3 things come. What are 3 things. First thing is board meeting outcome that company results are declared right. Second thing, which is very important, is company's investor presentation.
Speaker 1:And third thing, which is very important is company's press or media release. So what? And the third thing that is very important is the press or media release of the company. So what is written in press or media release? That the company generally has a snapshot of the results. If you look here, then we saw that in the company's income statement EBITDA is not calculated, profits are not calculated, margins are not calculated. So the company calculates everything and generally looks at you in a snapshot. So if you look at the snapshot, along with this press release, there is also a commentary of there that how they see business evolving. So this is called press release. Generally, media release just post the results. Generally it comes in 30-40 minutes. So this is how you look at the press release. So in this business commentary will also be there and business management's commentary will also be there. Then a little detailed version comes, which we call investor presentation. So here Q3FY25 investor presentation has presentation. So here their investor presentation of Q3 2025 has come. So again, whenever you see the results of a company, you should definitely see their investor presentation as well. So this is how you start looking at stuff and this is how you start looking at quarterly results. If you want to see the quarterly results of companies, then you can see it like this.
Speaker 1:Now there is another very important thing, because first we will talk about basic termin terminology, so that everything is clear for you that companies also have conference calls. So what are the conference calls of companies? Imagine yourself being a retail investor, like I am, and you want to ask management any questions what happened in this quarter? Why did your results go bad? Why did they go good? So how can you participate? Or how can you ask management directly?
Speaker 1:It's by attending conference calls. Let's take a small example here, because I have put watchlist companies in the screener, so what I can see here is the time of their conference call. Let's take an example here Like Mayur Uniquotas, again, I have put it to track in the watchlist, just for example. So here, as soon as I click on 3pm because their result has come, so I will get the time because their result is here I will get their conference call time. Universal dial-in number and conference call is with management, so I can join by clicking on the diamond pass. So what is diamond pass? By entering my email ID and security code, my name and participation will be registered in conference call. Otherwise, when you dial around 3PM, when you have to attend the conference call, what is the problem in that? Sometimes it happens that no one attends your call. And if no one attends your call, then again you have to tell your name first and from which company name. Suppose you don't have any company, then you can tell yourself as a retail investor. So there is an issue.
Speaker 1:Conference calls are of companies, so generally companies release transcripts of conference calls. So if we look at the example of transcripts, let's take an example. So let's open a random company. So let's open a business called Sard Energy and if you look here, you will see the transcript of this conference call. So if you look here, you will see the transcript of this conference call. So if you look here and you will see that even though the quarter ended in September, their conference call ended on 18th November, because generally companies release conference calls or results after a month. So you can read the whole conference call written and you can even participate in the conference call. Another way to attend these conference calls or to listen to the recording is that you can see the trendline's YouTube channel. So if you go to the trendline's YouTube channel, then you can attend the conference calls of the companies after the results.
Speaker 1:Now let's go towards what we should see in the quarterly results and we will go to a spreadsheet and after that we will do a lot of case studies. Right, so this was our part 1, in which we learned what is quarter on quarter, what is year on year. Then we saw what are half yearly results, what are full year results. Then we saw how you can see quarterly results. Then, with H1 results, your balance sheet comes out or cash flow statement comes out. Then we saw how you can attend conference calls. As a retail investor even, you can ask questions. And we saw that Trendline or Alpha Street India you can see the links of Confidence Call on their channels. So this is again just a basic terminology of quarterly results how you can see them. Now let's move towards the element that what exactly we have to see in the quarterly results, what margins we have to see, and along with that we will do 6-7 case studies. We will see the quarterly results of the companies and we will see which things the market focuses on Now, just before going forward.
Speaker 1:There are many problems in an investor's bull market, especially when the bull market is slowing down. The first problem is that we don't know our asset allocation criteria, so we don't know which asset classes are, which and beyond equity also exists. The second problem is that, even though we are investing in equity, we don't know how to filter fundamentally strong businesses. Third key criteria is how to find intrinsic valuation of stocks and across the sectors. How can we find intrinsic value, which is also one of the webinars which we are doing in SOIC, where we are looking at valuation parameters across different sectors. Fourth important aspect is that you don't know exit and entry framework. Many people know it, but those who don't know it it is very important to make an exit and entry framework. A retail investor can learn it on his personal level in the course. Then the fifth key criteria is how to find businesses, how to screen interesting stocks and, lastly, what is the language of different sectors. All these things are part of one SOIC membership and you can register for the SOIC course. The link is there in the description below. You can use a coupon code, soicbonus10, which is valid for the next 3 days.
Speaker 1:With this, let's go back to the video. Now. Let's go and see what important things we should see in the results. But along with that, now let's go back to the video. Now let's go and see what important things we should see in results. But with that, let me simplify one thing for you, because Screener has simplified our life a lot. Whenever the company's quarterly results come, if you come to the home page of Screener and click here on the quarterly results, then you will get the quarterly results of many companies and actually you can also check the quarterly results of any company that have come in the past. For example, my favorite past time result is in the past, so you can check that too. Like mine is my favorite past time results season that I sit and see the results of the companies, and usually I use this feature of screeners a lot just to go through results like.
Speaker 1:Let's take an example like EPAC Durable. Now, epac Durable has 98 PE results. Sales growth has come good, but EBITDA growth is not there at all. Net profit is 49% minus and earnings per share is also 58% down, whereas NOAMA is at 22% and EPS growth is almost 40%. Similarly, if we go down, quality pharma has 11% profit growth. Triveni turbine has 35% bad growth. Ongc has negative growth. Mahindra Life's real estate business is generally not visible in the P&L statement. Then also Macforce, a robo-car company. Its pat growth is only 10%. 5-star results are optically looking good at 26% growth. Then, if we look at here also, then today alone you almost had 600 companies' results. So this is the beauty of using this by coming to the latest quarterly results.
Speaker 1:Suppose you want to know which results came on 4th Jan, then you can check that. Suppose you want to know which results came on 29th January, then on 29th January almost 1078 results came and you can keep reading them right. So here you can check the results of many companies. That is up to you, basically that you are checking the results of the companies. So this was our thing. And you can also see the results according to the watchlist In the core watchlist, which are the results of which companies. So now you can check the results by clicking on your core watchlist. Also, another way is that when you come to the screener, basically there is another feature of upcoming results which companies are getting results in the coming future, so that also you can view from here. Which are the upcoming results? So generally you can see the results of such companies using the screen.
Speaker 1:Now let's see what to see in the results. First of all, one thing is very interesting In the stock market world generally, if you understand it, you have to view it as an odds. Why like odds? Because here, full on expectations are made. Who makes expectations? Analysts, brokers, sell side analysts, buy side analysts, and what do they do? Expectations are made, expectations of which that this company will make so much profit this year. And what do companies do Companies guide those expectations from ahead that our profit can be this much. Our profit can't be this much.
Speaker 1:Itna munafah ho jayega and companies kya gati hai. Companies aage se un expectations ko guide kati hai ki humara profit itna ho sakta hai. Humara profit itna nahi ho sakta Hum itni growth aapko dekha sakta hai. Hum aapko itni growth nahi dekha sakta hai Humare business me ye ho sakta hai. And uske basis pe analyst kya kate hai Forecasting karte hai Forecasting ka matlab. A company says that in the next 3 years 25% CAGR growth will come. Then analysts will catch sales of 1000 crores and grow it to 25% CAGR and show it around 2000 crores. That is an example of forecasting. And what does that forecast make Expectations?
Speaker 1:Whose expectations do they make Dalal Street's expectations you must have heard this term repeatedly that this company has beaten its expectations or this company has not met its expectations. So what happens here is that it is a cycle of upgrade and downgrade. Here I will show you a very small example and I will open a note of a broker so that you can understand it well that the cycles of expectation and the, the cycle of expectations and how expectations are made. So let's see how expectations look like. So, as this is a business report on their quarterly results, so the results of the company are not that good. So, if you see here, what the broker did here is that the company's expectations that they have cut their estimates, meaning they have cut the estimates of operating profitability and their sell rating is operating profitability estimates have been cut and their sell rating is different, but estimates have been cut, meaning their growth in the future can be even less. So again, future expectations have been reduced by this business.
Speaker 1:Similarly, if you look here, there is an upgrade cycle. If this company gets good results, then what will you see here? Here you will see upgrades. We raise the EBITDA by 23-34%, which means the EBITDA which the broker expects. Again, this is not our estimate, just showing you how you can see here you have an upgrade cycle. So to understand the earnings upgrade and downgrade cycle, why is it important in results? Because it has a very simple answer Whenever the company's results come, then there is always an earnings expectation cycle.
Speaker 1:So usually what is the an expectation cycle of earnings? So usually what is the expectation cycle of earnings and why? You should see the results of fast growing companies more? Because, see, what generally happens is that first contra investors come when they feel that the growth rates of the company have ended or this sector has been bombed out. Then in results, positive surprise comes, people come better than expectations. Then positive surprise model is made. Then everyone upgrades their models, then estimates are revised, then analysts say that our expectations have been revised upwards. Then EPS has momentum of the company. So the company shows a very fast growth quarter on quarter.
Speaker 1:Then the company becomes a growth stock, valuations become irrelevant and then accidentally, results come bad. Then torpedoed, negative surprise models, estimate revision dogs and neglect. For example, if you look at the results of Keynes Q3 FI25, then it was a high growth stock. But what happened is that this time the results didn't come according to the expectation. And what did the management do? It reduced the guidance. Because the results didn't come according to the expectation and the management reduced the guidance. Then what would happen there? The stock would have basically corrected. And that is exactly what took place.
Speaker 1:Because when you are looking at the earning season, then in the earning season you have to study only two things, that is, companies which are surprising the expectation and companies which might do well in anticipation of expectations. And why are analyst's revisions powerful? These studies have shown according to Trade, like a Stock Market Visit powerful. These studies have shown according to trade like a stock market visit book. These studies have shown that when estimates are revised upward by 5% or more, stocks tend to show better than average performance. Conversely, if an estimate down revision of 5% or more is done, stocks exhibit lower than average performance because upgrades or downgrades have a cycle and because analysts are employed all over this industry. So whatever research industry, equity industry, people will employ analysts. So their job is to forecast future upgrades and downgrades cycles, even though half of most of the times they are wrong. But that is what most of the analysts are doing. But this is from a psychology point of view, but let's see the results exactly. So I this is a psychology point of view, but let's see the results exactly.
Speaker 1:So I have put a spreadsheet for you. You can use this spreadsheet for yourself. You can do this, take this as a homework. So I have put this for Q2-FI25. You can change this and simply do Q3 too by downloading it. So what can you do? Simply in this? You can do Q3 FI 25 here Whenever results are coming. You can do comparison here.
Speaker 1:But first let's understand the thought process of the spreadsheet so that you can understand in detail. So if we see this, this is the spreadsheet of the last quarter. So I have done analysis of a company for you. So now it is Q2, fi 25. Then what will be its last quarter? Because we see quarter on quarter, that is quarter 1 FI 25. And what will be its previous quarter? Because we see quarter on quarter, that is quarter 1, fi 25. And what will be its previous year? That is quarter 2, fi 24. And what do we do here? We see year on year what growth rates came in companies and we see quarter on quarter change, like in this spreadsheet. Wherever it is yellow you have to insert it.
Speaker 1:So I will do a live experiment with you so that it becomes easier for you and we are taking clarity in the results. Like this is the results of PI industries. So the results of PI industries are Q2-FI25. So you should have one more clarity that whenever the company shows results there are two types of results. One is standalone, means the results of the company alone, and one is consolidated results. If you see the example of consolidated results, then you will see consolidated results here in which the company's subsidiaries are also included. So that is always known as consolidated results right, in which the subsidiaries' results are also included. So here we will put things from the consolidated Q2FI25 results of PI Industries.
Speaker 1:So first we put the sales number. That is again because it is in rupees, million. I will move one decimal. That is 2221 crores. Here I entered the figure of 2221 crores. Then basically what I did is I put the figure of last quarter's sales. So last quarter's was 2068 crores. You can see here from the date. So I entered here. Then I entered the figure of last year's same. Last year that was 2116 crores. So here you can see that it came to 2117 crores through decimal point. You just have to enter the sales figure For you. Yoy change and quarter on quarter change will be calculated automatically in the spreadsheet. Similarly we calculated COGS, because what comes after sales? Let me simplify it for you. I think we will go down.
Speaker 1:So if you want to see profit and loss statement, then how does it become? It is simple. First comes sales. We call sales as top line of a company. Then what do we minus from top line? We minus COGS, that is cost of goods sold. Then what do we have? Gross profit? If you take out the raw material of the company, then how company is earning gross profit? Then we minus from gross profit SG&A expenses, which are your rent cost, power cost, employee cost, right. Though all those costs are part of SG&A. Whatever product has cost involved in selling, that is called SG&A Right. So here usually other expenses and employee cost come from income statement, but here we will write SG&A.
Speaker 1:After SGNA we have EBITDA, which we call Kamkaji Munafa, or Operating Profits. When we subtract depreciation and amortization from EBITDA, we get EBITDA, that is, earnings Before Interest and Taxes. When we minus interest we get Profit Before Tax. When we minus taxes, then we have profit after tax. Profit after tax is also called bottom line and sales is also called top line. And here we can calculate margins in every step, that is, gross profit margins, ebitda margins, ebit margins, pbt margins and PAT margins.
Speaker 1:Right, so the purpose of this sheet is that I will simplify the income statement for you and break it down. This sheet is free. I will simplify the income statement and break it down. This sheet is free to download. It's not a paid sheet. You can download it for free. You just have to enter the yellow bars from the company's P&L statement. This will make your results analysis very easy.
Speaker 1:So here we see what we have done in PI Industries. So how do we calculate the cost of goods sold In the cost of goods sold? These three line items are the. We calculate cost of goods sold In cost of goods sold these three line items. This constitutes of cost of goods sold. Now you have to remember this cost of material consumed, purchases of stocks in trade and changes in inventory. These three are your cost of goods sold part in which you know the raw material cost of the company. So if you add these three, then you will get cost of goods sold.
Speaker 1:One thing you have to remember these changes in inventory. If you add this thing, then you will get cost of goods sold. One thing you have to keep in mind that the changes in inventory, sometimes this figure will be seen in brackets. So if it will be seen in brackets then you will write it negative there. So this will be subtracted from the other two line items to calculate the cost of goods sold. Just remember this point. The explanation I gave you on Twitter, the explanation of changes in inventory. I will retweet it once or I will put it in the description so that you can understand it better. But just remember this if anything is in the bracket, it will be subtracted from the cost of goods sold. This will give you clarity. So we will put these three things here.
Speaker 1:We put these three things here for you. So we have the cost of raw material of the company. So we put purchases of traded goods, cost of R&D, changes in inventory. So wherever black and gold is, it is automatically calculated for you. So COGS is calculated automatically for you, which is 1071 crores. Then we saw the gross profit of the company. So gross profit will also be calculated automatically for you. So we minus the sales from COGS, so gross profit has come out to be 1150 crores, which is 51.76% gross profit margin. This also has been automatically calculated.
Speaker 1:You don't need to add this. Then we will see other expenses. Now we have come to SG&A. So in the case of PI Industries, what is SG&A? If we track here, then all your expenses come in other expenses, which is your power cost, wages, cost all the costs will come in your other expenses. So this came in front of you. 306 crores is the other expense. Along with this, see, which is the other expense. Impairment on financial assets is 25.2 crores. So if there is any impairment, then their asset will be damaged. So this is also a part of other expenses. And also employee benefit. Whatever your wages are, that is always a part of OPEX. So you got wages of 195 crores, so we put these three here. So we added other expenses. Basically this is 25.2 crores. Impairment loss, if you check here we have added, if you can see above, here, and we have written employee benefit expenses here. So we have OPEX here Now and we have written employee benefit expenses here. So we have OPEX here Now.
Speaker 1:You just have to put these two figures. This will automatically calculate your EBITDA. So EBITDA is calculated, which is 628 crores. Now we will tally from the screener. How much EBITDA was there on the screener? 628 crores, so you can see exactly it is matching. Then as you calculate EBITDA, ebitda margin will automatically calculate for you, which is 28.3%, which is tallying with screener also, because screener does not round off decimal points, so we can round off this too. So it became 28%.
Speaker 1:Then we have depreciation, interest and other income. So depreciation and interest, which is again below EBITDA. So depreciation is a non-cash expense, which is a wear and tear expense. So here we wrote interest cost. We wrote how much is the finance cost. That too we took from the P&L statement of PI Industries. It is 8.5 crores and along with that 80 crores is depreciation.
Speaker 1:So, as we wrote here, and along with that other income added, why did we add other income added? Why did we add other income, other income? Basically, here you can see that above is other income of 122.2 crores and below is a share of profit of associate of 7 crores. Because other income? Why do we add it at the end, before PBT? Because we have to see that what is the profit of the company, which is EBITDA or operating profits from the business. That's why we calculate other income later, like we calculated here. Then we have PBT of 663 crores. As soon as you put these yellow things, you will automatically calculate PBT. So how much is PBT 663 crores? Our answer is 663 crores. Then we took taxes from PI Industries, which were 154.6 crores, and as soon as you put taxes, pat will automatically calculate and you will get which is 508 crores.
Speaker 1:So you can use this sheet, you can play with this sheet and you can do n number of changes in this sheet and basically this sheet can help you to sort of look at sales, cogs, gross profit, gross profit margins, ebitda margins, pbt, pat and along with that, the derivative of this sheet will automatically come down to you. That what are the important things. Now one more important thing Cash flow, because the cash flow of FY25 has come in the first half of the financial year. So what can you do? By going to the cash flow statement of PI Industries. Again, you have to enter wherever yellow is. So if you enter cash flow from operations of business, then CFO to EBITDA and PAT will be calculated on their own, meaning how much operating profit is the company converting into cash flow? So you will get to know your cash flow metrics from here and this is also something which you can track in every first half results. This is also something that you can track Right. So this is a spreadsheet.
Speaker 1:So the purpose of tracking a spreadsheet in results is we track margins, we track sales growth, we look at the trend of sales growth and we look at the trend of margins, like in the case of PI Industries. If you come and see then how many quarters of sales growth is there Now, if you check here, then what are you able to observe? Do this with me Sales growth was always in mid-teens, so sales growth used to come in mid-teens. But what happened? From last 2 quarters, sales growth basically signal digit, 8% or 5%, right. So sales growth which was there in mid teens, now sales growth rate, has slowed. So this is like understanding a trend. Similarly, what you can do, you can go to companies and see their quarterly trends. What trend is going, trend in the past? Are the margins of this company expanding or are the margins of this company contracting? I think I'll just take an example. So let's go to a business Garware Hitech I just open here and let's go to Garware Hitech and see. So the margins of the company were around 17-19-17%, which have now gone, gone, 25-22% right.
Speaker 1:And here, when you see quarterly results, businesses have seasonality too. What is seasonality? That some quarters are better than some others, right. So in quarterly results there are a lot of one-off things. We will read that too. But in some quarters there is more sale and in some quarters there is less sale, like I think I will give you a wonderful example of this in the hotels business. In the hotels business you will see that H2 of the financial year is better than H1. H2 means that in quarter 3 and quarter 4, the sales are more in this year. If you compare it in this year, then in quarter 3 and quarter 4, the sales are more in quarter 1 and quarter 2 because people do round-the-clock in quarter 3 and quarter 4. And also the wedding season is in quarter 3 and quarter 4.
Speaker 1:So it is a very natural thing that every business has seasonality. Sometimes in some businesses, quarter 3 and quarter 4 will be better. Sometimes in some businesses, quarter 1 will be better, or sometimes the whole business is in a quarter. Sometimes in some businesses quarter 1 is better or sometimes the whole business is in a quarter, like I will give you an example of a business, s Chand, who publishes your NCRD academic books. And just look at it Now. When do children buy books? When their school season starts. So when does the school season start? Generally, that is in quarter 1 of every financial year, right? So again, that is quarter 4 of every financial year, right? So again, if you sorry, that is quarter 4 of every financial year means January, february, march month and quarter 1 till spillover happens. Everyone is getting admission. So if you check in this Chand's case, this is an example that always quarter 4 and quarter 1 sales will always be more than quarter 2 and quarter 3, right? So this is a seasonality. If we take an example here, then quarter 4 and quarter 1's sales are higher than the last 2 quarters, basically higher than the last 2 quarters. Similarly, you can see the same example here, that higher than the last 2 quarters. So this is also a seasonality which comes into the businesses. So there is a seasonality in your sales growth.
Speaker 1:Now we will go to different companies' quarterly results and give insights and read conference calls and make a whole thread of a kind how can we make that thread To understand companies better, to look at hidden insights from the results and to see what Mr Market likes or what is Mr Market's reaction to those results. And we will go across the sectors and read some metrics which we are increasing students in the valuation webinar If you want to join the valuation webinar, you can join that by being a part of SOIC membership. And also we will see how markets know whether these results are good or bad. We generally get to know from the market's reaction. So be ready for numerous case studies across the market caps. So now let's go to the case study of quarterly results, and what we will do here is that we will not only do case study of a particular business, but also of all sectors, and we will see how we can see the quarterly results more broadly.
Speaker 1:So here I will first present you the quarterly results of a sector which is the chemical sector. So here, if you will see the results of Alkyl mines and Balaji mines, then you will get to see a lot of interesting things. So you will get to see many interesting things. So here was a phase during the 2021 and 2020 phase where their margins went to almost 35% EBITDA margin of Alkyl Amines and because there is only one company in this sector Balaji Amines. So we also see how much margin there was in 2021. So if you see Balaji Amines' margin in 2021, then it was 29%, whereas in the last several years we will several years these were the highest margins right, so for 2-3 years, the highest margins right which started being normalized. So if we look here, it started being normalized in Alkyl Avines too. So at that time, if you look at their quarterly results, or if you look at the quarterly results of the entire sector, then what will the management be talking about. So if we open 1-2 quarterly results and see so here, if we open the quarterly results and see so this is from FI22, and if you see the results of FI22, so here again, the margins of the company, basically those were elevated and as and when COVID phase got over.
Speaker 1:So in theaji amines aur alkyl amines ke case me, what started happening was ki ya pe margins started correcting, margins started to normalize. Right dono ke dono ke jo margins hai waha pe normalization ka element start ho gaya. Ab. Ye important kyo hai ki jabhi bhi aap companies ke results dekhte hai right to waha pe aapko ek. Because whenever you see the results of companies, then what you have to derive is that almost all companies move together, meaning sectors move together. For example, if a new regulation comes today, then it comes on the entire industry, right? So it impacts the entire industry. Similarly, in the case of Alkyl Amines and Balaji Amines, if you track the results of both, then you can know that the good times of the company are one off in 2021 and in 2021. And both the companies can say that the margins can be normalized. Now, this is not only true for Alkyl Amines, this was also true for GMM Faudler.
Speaker 1:Now, if you talk about GMM Faudler, then see, your metric is different in every business. So here we will also discuss that metric. What metric we have to see in every business. For example, gmmp Fodler is a supplier of chemical industry. So if you see the results of GMMP Fodler at that time, or if you see the results from the last couple of quarters, then GMMP Fodler has started to have a big growth. So the first thing whenever you see a capital good company, you should definitely see the sales trend, because in this capital good there are no annuity revenues, meaning recurring revenues. There is one time sale of products. So because there is one time sale of products, then the problem is that as soon as you see degrowth, then issues start to happen in the order book. So what will we do in GMM fordler is that whenever you see the conference company's conference calls, after the results, which are their transcripts, you should definitely open PPT along with them, which we call investor presentation. Here we also opened PPT of GMM PowerPay, faudler Q1 FY25.
Speaker 1:Now here I will show you something interesting, see, because it is an order book driven business. So here you have to track the key metric, order backlog, that. How big is the company's order backlog metric? Kya track kane hain order backlog ki company ka kitna vada order backlog hai to order backlog. Agar ghatte jayega to. What does it mean? Agar company ka order backlog falls right to, agar aap dekhenge aapko minus 12% ki aas paas ka number dekhega right. This was in q1, fi 24 to what does it simply mean? Ki is quarter ke andar almost jo, basically order backlog. Ta uska number yeh tha, whereas In this quarter the order backlog number was this, whereas in this quarter Q1-FI25, it has fallen by that particular number. So again, that is something that you must remember, that order book intake or order backlog, becomes very important in capital good companies in quarterly results.
Speaker 1:Let me show you a recent example. So KEC International's results came. So after results the stock increased by 3-4%. So the situation was that when we look at the results, the results were okay, right, even though EBITDA growth was almost 20-25%. But what was the problem in the results? The valuation of the company was almost 100 times, 70-80 times on PE. After that there were a lot of corrections before the results.
Speaker 1:But if you see the results here, then again similarly, because it's a capital good business then what you will see here order backlog. What growth came in the order backlog? And in their case, even though EBITDA's growth was only 7% and PBT's growth was only 3%, because there are some one-offsers will not be accounted, but here the growth of order backlog was really, really high. So from order backlog what happened is that people basically overlooked the thing. So robust order backlog pipeline is 41,000 crores and tenders under evaluation are 1,50,000 crores. So the growth of order backlog growth was almost 72% right and year to date almost 24% growth. But again, this gives you an idea that transmission and distribution part of the business is 72% order backlog growth. So in spite of ok-ish to flat-ish results which they reported, still the stock price didn't correct much because market is focused on order backlog in capital good companies.
Speaker 1:Similarly, one thing you have to remember that the jewellery companies in jewellery companies, now when you have some company results, there are one-off also. What are the one-off? So here we take an example of a company. Let's take an example of a company, thanga Mile. So this will give you a good perspective to look at results. So you will also see the PE ratio of Thanga Mile 54. Why is that? Because in the last quarter results they showed a negative 1% EBITDA margin, negative 7 crores EBITDA, whereas profit before tax is minus 24 crores and PBT is minus 17 crores and pbt is minus 17 crores. But is it actually negative or not? So for that we have to go to their results and read their commentary. And we can go and read in the commentary what happened. So the company adjusted operating profits of the company for the half year ended were 85 crores as against 53. During the half year, company opened its two stores and now over here. For the half year, company opened its two stores and now over here for the half year, hedging derivative loss of 26.33 crores as against 5.78 crores of profits in the first half of 2023. Now the net impact is almost 32.53 crores.
Speaker 1:So what happened in this business case? You will remember, our last budget was just before election. So the custom duty was cut on gold so that gold prices fell. Now, whether it is Senco, thangamail, kalyan or Titan. So what happened to these businesses? Even though they do hedging, but they hedge against the gold price, they don't hedge against the duty. So as soon as duty fell they took gold on expensive. So due to duty fall, they got a sab ko ek custom duty ka impact lada to thangamayal ke case me bhi same cheese hui to yaha pe.
Speaker 1:Ye jo loss hai. Ye jo loss dikha. This is a more of a one off loss in nature. Right to this is more of a one off loss to jiski wajah se hume company ke quarterly result me hum loss because once the duty is done, then it will not be cut again or again it will not increase. So we should see the profits of the company.
Speaker 1:Just to get an idea of how we can do the better analysis of our thought process. If we want to see the prospects of any company, then the one-off comes in the businesses sometimes. So again, the amount of one-off loss is like so almost 35.81 crores one-off which led to a 23.55 crore loss on a pbt level. Right. So profit before tax pay company lost almost 24 crores. This was because of a one-off of almost 35 crores. So if you adjust this and see the profits, then you see a true figure that almost 11-12 crores of PBT. So that would have given us a truer picture. Same stands true for Senko, same stands true for Angamayal, same stands true for Kalyan. Also, if we go to Senko's Concall, you will see the impact of Custom Duty. So they have taken a hit of 30 crores on account of Custom Duty, right, so again. So total impact is a hit of 30 crores on account of custom duty, right so again. So total impact is likely to be 58 crores to 60 crores, to half of the impact.
Speaker 1:Inho ne profit after tax pay H1, first half of the financial year ke nal liya Malab quarter 2 ke nal liya To just over here, to agar hum like 30 crores ka dekhta hai To yaan. There was an impact in Senko then just over here. Yeah, all right over here, so here, if their profits came, then these profits would have been higher by that amount, which was almost 12 crores last year. This time it is 17 crores. So we should always see profits. Consolidated Profits were 12 crores last year also were 12 crores, but this time their inventory hit from 30 crores, so we will adjust the tax so profits should have been higher from 30 crores. Their inventory hit, so we will adjust that tax. So from 2022 crores, profits should have been higher. So last year it was 12 crores and they told us that 60 crores total hit. So in quarter 3 their 28 to 30 crores hit will come.
Speaker 1:So why am I explaining this to you again and again? Because when we look at the quarterly results of the company, so sometimes there are one-offs in businesses. Why are there one-offs? Sometimes there is a write-off, sometimes there is a policy, sometimes there is an exceptional loss that the company has write-off something. So one-off also happens a lot in businesses. So that is also part and parcel. So always remember, looking at quarterly results, you have to adjust for all the one-offs, whether it is the gain of other income or whether it is the loss of other income or the loss of other income. Let me give you an example of other income gain.
Speaker 1:If you see Raymond's business, if you see the yearly results, you will see the PE ratio of Raymond Lifestyle On the screen it is only 3.86 PE ratio. But actually it is not 3.86 PE ratio Because if you see the full year results of FY24, then you have a one of other, have a 2257 crore one of other income, so you have to adjust and calculate their numbers and we have a truer picture of number of payments coming from here. So what we are seeing in truer picture in payments number, so minus 24 crores loss was in quarter 1 of FI25. Then 26 crores profit was in quarter 2 of FI25, so almost 2 crores profit was in H1 and 26 crore profit was there in quarter 2 of FI 25. So almost 2 crore profit was there in H1. And 53 crore profit was there in December, which is equal to 55 crores of profit. Assume that similar amount of profit comes in quarter 4. So if the company's 100 to 110 crore full year PAT comes, so if 100 crore full year PAT comes, then the company actually if you divide market cap upon earnings, 100 to 110 crores, then the company is at 85 KPI today, whereas Raymond Lifestyle's PE is 3.86.
Speaker 1:That's why the art of reading results, the art of looking beyond one-offs, becomes really really important in looking at results. A similar example I'll give you of Glenmark Pharma. Now, a complete disclaimer, not a buy or sell recommendation. This is one of our stocks which used to be in our RA desk. It is still there, but we were there like almost 7 to 8 months back. But what case study is there? I think initially, when we recommended there were two one-off losses. Now, what were these one-off losses? So the company reoriented its distribution model and along with that there were some litigations in the US against which the company was doing provisioning. So this led to one-off losses in the company's case. So these one-off losses you can read the company's PDF that. Why one-off losses? Because it was because of contingent liabilities that the company was providing for, right?
Speaker 1:So here, when you read the quarterly results of the company, then you should definitely read the notes to accounts, because in notes to accounts you get a better idea, right? So here, if you read notes to accounts, then you will see that the company tells you that it is an exceptional item in consolidated results because of the antitrust division of US. There is a court case against which they have created provisioning. So if you read notes to accounts, whenever you read quarterly results, you should always read notes to accounts, because sometimes companies are doing more CAPEX or make announcements of CAPEX, so always those CAPEX notes and everything is published in Notes2 accounts when we see their consolidated numbers. So here the company's loss is right. So you will see here almost minus 446 crores. And in this loss there is an exceptional item, also Right. So you will see here an exceptional item also. It is 76.7 crores. This is where loss and widening happened and the company had reoriented the distribution model completely. So the company covered it in conference calls. So what is my idea to tell you here?
Speaker 1:Sometimes the company's results have one-off items. So you should always adjust one-off items and see it. So you have to remember this. One-off items can also be positive, as we saw in Raymond Life's case. That PE ratio is less than other income on screener, but actually it is not less, whereas one of items can be on the negative side as well, as we saw in the case of Glenmark Pharmaceutical.
Speaker 1:Let me give you one more example. That is an example of Gravita India and let's see in the case of Gravita India. So in the case of Gravita India, if you look at other incomes, so when results came of Gravita India, people said that top line growth has come to 32%. So it means that there are very good numbers, but actually there were not that good numbers, because now see how I will compare the results in front of you. So again, if we look at the core operating profit of Gravita, core, ebitda, core, kamkaji, munafah so from 80 crores to 81. So it means what happened in margins Suppression? 11% margin to 8. Right, whereas why is there so much growth at the profit before tax level, right? Why did profit before tax go from 74 to 89? Or why did profit after tax go from 61 to 78? The simple reason for this is other income. Because Its simple reason is other income Because in the business of Gravita India there is a lot of hedging which leads to the gain of commodity. So other income of 15 crores will be 29 crores, which will lead to 14 crores of other income additionally. So what do you have to remember over here In such cases? Always look at core operating profitability of the business, luckily on screener. What is the benefit on the screener? That the EBITDA calculated on the screener, that is X of other income. For example, we took the example that EBITDA of 80 crore is here and EBITDA of 81 crore is here. So again, idea of looking beyond results from one off right Now we move towards.
Speaker 1:Another interesting element of quarterly results is that business updates. So companies give business updates before announcing business updates that we have so much growth. Generally, which companies give business updates? Generally, retail oriented companies Will give business updates, like in the case of Dmart. There will always be a business update. Generally, some platform businesses Can give business updates. So here we take an example of Cardrade Now just to make you realize the importance of these business updates. We will go towards the case study right now just to make you realize the importance of these business updates. Right, just, we'll go towards a case study over here. Now. Let me just open their bse notification and there was a business update which came. So this business update came on 4th december, so the moment we click on this. So just over here you'll find business update that.
Speaker 1:How are the results of quarter 3? So what the company told us? Car trade announces a significant milestone achieved by business car bike holex India. Each of the platforms have crossed 150 million yearly uniquely users, with more than 90% traffic being generated organically. And what is the company referring over? The company's asset? Light business model continues to set it apart and in Q3 of 2025, the company reported strong operating margins and a growth of 25-30% in PAT over the previous quarter. Now, just over there, we didn't have the number of PAT because the results actually came around the end of January, but if you look at this, the company said that 25-30% PAT growth has come. What does 25-30% mean? It means that almost 40 crores of PAT has come. So this business update was released on 4th of December and you just take a look at it, results came out on January 29, 2025.
Speaker 1:Someone who was observing business updates could have easily observed a company which has grown its profits almost 30% quarter on quarter and year on year. How much was it? Last year it was a loss of minus 24 crores, so this year it is 46 crores. Loss was there? So this year, 46 crores. So earlier it was 40 crores idea, as management told us. So almost non-linear growth happened. So this has again happened over the last. I think. This business update came out on 4th of December, somewhere close to here, and post that, the company has reported very strong results and the stock has been in an uptrend.
Speaker 1:Now, this is just an example. Now, this is why business updates, or looking at business update becomes very, very important. Similar example let's see about Demart. In the case of Demart, they always release a business update. So if you check here, whenever the quarterly results end, they will do a business update. I think they have done it somewhere in December. If you look at them, they always give quarterly results end, so they'll do a business update. Yeah, I think, yeah, they give a business update that we have so many sales in this quarter, and so I think that is how you should sort of start looking at this company update. You will see here in company update already sales number company gave, even though full results did not come nahi hai. Similarly, agar aap all businesses mein example leta hai Chai wo V2 Retail ho. Chai wo Vishal Megamart ho Right. So all these retail companies, or all the consumer facing companies, prefer to give business updates, right? So that is how you should also look at results.
Speaker 1:Quarterly results's move towards a final understanding of quarterly results. Now let's take an example of rate gain. Now, when the quarterly results of rate gain came, which are the previous quarterly results of September 2024, so actually if you look at the results, then the top-line growth was around 18% and profits have gone from 30 crores to 52. Now, in any world, this is a very good number, right? It looks a very good number, right. But results I think this result was announced on 11th November, right? Results 11 November go on out. So they me up a dicta 11th of November, 11th of November go. Stock price 834 cada. Immediately pose results the stock price fell to 755 rupees and post that it fell to 684 rupees. Now the question arises why so? Simple reason hai three or four key reasons. Pehla key reason kya hai ki markets are growth hungry. Markets in india. Markets always worry about growth in india, right to.
Speaker 1:Whenever you looking at quarterly results of businesses, what you also have to realize is that what is the trend of growth rates? The trend of growth rates biggest indicator is sales growth. Right trend of growth rates biggest indicator is sales growth. So, in two quarters, 69%, 39%, 47%, 60%, 50% or 57%. Whereas what is the problem in this quarter? What will we have to do? See, because the market has given a reaction in spite of showing almost a 60-70% fat growth. So what will we have to do? We will have to come to the company and come to the conference call. And what will we see in the conference call that? What company has downgraded its growth guidance or not, because what happens is that Indian markets generally look for growth. So if somewhere, if the growth guidance has been downgraded, then what will happen? Stocks tend to get punished in India. So again, this is just an example that when you want to see quarterly results, then what should you see? Even though Redgen has been a very good wealth creator, has been a very good company, right? So just over here we continue to expect growth in q3 and q4.
Speaker 1:I think my point is I mentioned earlier it impacts our growth, so we were guiding for 20% growth. We lost a customer that makes 4% of our revenue today. So that's why I'm indicating a lower growth for the full year, which is more about 15% now. Now see, market is a discounting calculator, so how will the market discount? Just I'm discussing with you If 15% for the full year growth will come, then how much growth has come in the first two quarters? Almost 20% growth in H1, in sales. If we divide both percentages by 2, then 20% growth will be in the first half of the financial year. Now, in the first half of the financial year, there was 20% growth. Now in the second half of the financial year. What does this imply? If there is a 15% growth rate for the full year, then there will be almost 10% growth in the next two quarters. Right, which is a slowdown versus their past. Now, why is this a slowdown?
Speaker 1:Always look in business analysis you also have to go behind, the reason basically why this slowdown has happened. So what happened is that they had a very large customer, which was four percent of their revenue, and what happened is that that customer got acquired by a bigger customer which does the martech business in-house. Because that business got acquired by a bigger customer which does the martech business in-house, so they stopped using the rate gain which led to this one-off or this led to this decline in revenues until or unless they keep finding more customers to fulfill the pipeline Even though they haven't lost the customer typically but because that bigger customer had this entire tech stack in-house, so they replaced the rate gain. Again, there is no fault of the company, there is no fault of the business person, but it's just how fault of the company or the business person, but it's just how business is right. So this is why these things happen, right and this is why, looking at the final print of quarterly results, what is happening in between the lines of quarterly results. That is a very, very important aspect that you must study when it comes to analyzing quarterly results of businesses.
Speaker 1:Let me give one more example. We go to hoon Ek hum company, mein chaltay hain, lawrence Labs, ke taraf. And also how promoters change right. So this is a business. I think we did an analysis 3-4 years back. Business wise, they reported peak profitability at 1000 crores. Last 2-3 years have been in wilderness for them.
Speaker 1:Now let's look at some of an interesting thing. So we go to the company's past conference call and we open the conference call and we see the company's guidance. So the company's guidance aspiration is $1 billion of sales. So again the analysts are asking the question of revenue of $1 billion and management is also repeatedly telling in their investor presentation that we will deliver a revenue of $1 billion. But actually did they get a $1 billion revenue delivery? The answer is no. But now things see, promoters also learn.
Speaker 1:The aspect is that one quarterly result doesn't define a company. See, in bad times proponents also miss. In good times also, good things happen. But now look at the recent quarterly result and just see when people are asking for guidance, what is the answer Just over here. So the company's guidance was for 2-3 years. Now what they are saying is that I don't want to comment on quantum of business for the next year, but prospects look bright in the CDMO business. So last couple of quarters say they have refrained from giving any guidance. We are not giving any margin guidance because what led to that last time when they couldn't meet the guidance? Because see, business hai, business mein, ye sab ho sapta hai right. So what happened? Ki there was widespread disbelief kiya itna bada guidance hiya kabhi achieving hi ho bhai ye sab hua. Again, promoter ka reputation banne labh jata hai. But now what has happened is that the promoter has refrained from giving a guidance and the numbers have started improving over it. So again, the company is not giving any margin guidance or sales guidance beyond a particular period of time. So that is how you start to look at things Now.
Speaker 1:Also a very interesting aspect, that when the company's results come, you are reading conference calls. So let's take the example of AmiOrganics Now. We covered a lot of CDMO businesses in one of our YouTube videos which teaches you how to read CDMO companies. This was 6 to 7 months back and we covered a lot of businesses like AmiOrganics, bluejet, loras, newland, jubilant Ph, bluejet, loras, newland, jubilant Pharma, dv's Laboratories, which gives you an idea how you can see the CDMO industry.
Speaker 1:So now, if we check the results of Ami Organics, quarterly results first thing is we have to see the sales growth. So always one thing what I find interesting when I see the sales growth, I am looking for the mental model of acceleration terms. That sales growth was flat, 15-20% growth but it exploded suddenly, right? Sales growth exploded suddenly. So this acceleration mental model is also very important, right? So here we see from the last quarter itself there were hints of this if you check here. But if you read the conference call then you will get a very interesting insight in that conference call. So let's open that insight just over here.
Speaker 1:So they have a CDMO business. So I think they are saying that the CDMO business is of 80 crores In the last financial year. They are saying it might scale up to 1000 crores by FY28 compared to 80 to 90 crores in the last financial year. So it means that almost 10 to 11 times jump in the CDMO business that the company is foreseeing Now again, almost a 10 to 11 times jump in the CDMO business that the company is foreseeing. Now again, this is the long term guidance that the company has given right. And company ne kya kara ki quarter four ki guidance upgrade kardi from 30% to 35%. Right to quarter four ki bhi company ne growth guidance upgrade kardi. Now these are signs is that the company is going to be on a very strong growth trajectory, because CDMO used to be 90 crore of the business last year, which is like 10, 12, 13% of the revenues, but now it will be actually just like the revenue of TTM today. If you add 1000 crore to that, then it will be the same as CDMO. The rest of the business of semiconductor electrolytes and intermediates will be different.
Speaker 1:So what you have to remember here is that in any quarterly results, acceleration is seen. Or if you ever feel that these results are out of the park, then you should go and attend the conference call of these companies and you should have an open mind. So in quarterly results reading, having a strong filter of extremely strong results is also very important so that you can go and do the homework on those business. Here I am giving you a shortcut. So there is an id on twitter of srinidhi. You can follow them. Their name is srinidhi, that is, nid, underscore rocks and these companies which get strong results, they definitely upload their results. Like if any result blockbuster results come of any company, then they will put it. Like if ganesha has blockbuster results, then they will upload. Like, if Ganesha has good results, then they will talk about it. Right, and he will also keep posting data from their investor presentations also. So this is a handle that you can follow to get a sense of quarterly results. So during post the quarterly results, he's not so active on twitter, so good idea is that you can track them because he'll point you towards the companies which are reporting very strong results, right, like if it's sammy's results, he'll talk about it. Similarly, if it's brigade enterprise's results, he'll tell you about it. So that's how it is, like blue jet healthcare's blockbuster results. So similarly, again, how to filter it becomes easy from here. So from here. So from here. I'll show you on the screen Last over here. So Bluejet we see here Bluejet healthcare In Bluejet healthcare. If you come in and see then the company's results.
Speaker 1:After that, first thing is acceleration Company was degrowth. Then 91% sales growth came. So that is also mental model play over here, where there is also mental model-led play over it. Where strong growth is coming, you should observe businesses, whether their valuations are up or down. At least, if you observe business, then what will come to you? It will come in sector observation. That is the CDMO sector. You can watch our CDMO video, which will give you an idea. In this CDMO sector, which are the different companies and kaunsi aur kis, kis type ki companies exist ka the other.
Speaker 1:Now coming to even better, aur more case studies. Right so, dekhe case studies ke through hi aap padha sakta hai, seekh sakta hai, investing maa aapko sirf kitab se nahi padha sakta. Right Now let's go to more case studies. And in Newell Labs we come towards the past growth rates. And in the past we see that at one time the company's growth was not so good. And then what was happening? Even though the company's growth was not good, ebitda margins were contracted by the company. Still what was coming? The company's gross profit margin. As we learned to calculate gross profit margin of the company, still almost 55-60% was coming, which was almost tier 1 in pharma. In pharma, 60-70% gross profit margin, innovators who work with them 80% also become. Then what happened is that gross profit margin was good but operating leverage was not there as the company's sales increased. So what happened after sales increased? By expanding the EBITDA margin. You reached almost 33, 28, 31. So the idea is that you should also look at the gross profit margin, that if the company's gross profit margin is consistently high but the EBITDA margin is not high yet, then probably the company is investing in the middle. And when the sales growth comes, what will come? Operating leverage you can also watch our operating leverage video. So that is an understanding which you can take even a finer nuance while reading quarterly results.
Speaker 1:Now let's look at another interesting thing. Now let's discuss about 3-4 companies. Let's take the example of NetWeb. If you see here again similar trend, so you tell me this is a business Standard disclaimer I don't own this top, I am just giving you a case study via you can learn fundamental analysis.
Speaker 1:If you see the sales growth of the last couple of quarters of the company 97%, 41, 115, 150%, 73%, but now this quarter, 32%, right, so what trend did we see in sales growth? That we saw de-acceleration in sales growth. In sales growth, the first thing we saw was de-acceleration and the second thing we saw was fall in margins. The margin of 14% remained 13%, which is 34 crore EBITDA 44 crore EBITDA and at the PAT level the PAT of 26 crore EBITDA was 30 crore. Ebitda 44 hua and PAT level pe 26 crore ka PAT 30 crore hua. So it means ki 16 to 17% growth hai profit after tax ke inder Right. But at the same time kya hua Company ka valuation ka aata hai. Again, yahaan pe ma apko ek bhat important analysis dene walo valuation company ki 170 PE thi To 170 PE ko aap 30%. Se divide kar yeh, then you would have a peg ratio of almost 6 times and that is drastically corrected. So always remember this the higher the valuations, the better the results have to be to justify them.
Speaker 1:Similar example of Keynes Keynes at a peak went to 7825. So from 7825, today Keynes' price has come to 4459. So almost a drawdown of 40-45%. How long has this drawdown been? This drawdown happened in the last one month. And why has this drawdown been in the last one month? Because the company's results, if you check after several quarters of 50-60-70% growth, the company has shown 30% growth.
Speaker 1:So what does it indicate In highly valued names? The results have to be blockbuster. If results are not blockbuster, what will happen in highly valued names? This is an example, right? So in result reading, if there is a highly valued company in your portfolio, a company with high PE, a company with high price to sales, a company with high expectation or hype, then what do you have to remember? That you have to carefully read the company's results. And this company has downgraded its growth guidance, right. That you have to carefully read the company's results and this company has downgraded its growth guidance Right. Their first, I think, sales guidance, was of Rs 3,000 crores, so they have downgraded it to Rs 2,800 to Rs 2,900 crores. So again, margins. The market generally don't like growth guidance being downgraded at a very high valuation. So that is also something that you must remember that you have to see the results in conjunction of valuations. So that is also an interesting example.
Speaker 1:Now, looking at another applied type of results Now let's see the results of Judge Dial. Judge Dial's P-Ratio is 18 times. You will think how the company's profit growth is coming. So here you will see a good example. If you see the pad growth from the last several quarters of the company, or if you see the pad growth of the last full year, then the company has 237% profit growth, right. So 71 crore profit, 542 crores in the case of Just Dial.
Speaker 1:But here comes a but that Just Dial's other income is very high, right, so other income is very high, right, so other income. High means that there will be a lot of cash on the balance sheet. So actually, right, other income means that cash will be a lot on the balance sheet. Actually, if you look at cash, then 4900 or 5000 crores is the cash on the balance sheet. Market cap is 7300 crores. So if you minus the market cap with cash, then you are getting a core business of 2300 crores. X of cash Problem.
Speaker 1:Guess, in the quarter 1 conference call we are working on a capital allocation plan. So we will work on capital allocation or cash distribution policy. So we are already discussing internally. So as soon as we have crystallized our cash distribution policy, we would adequately communicate. So our endeavor would be 100% of annual profit should we distribute it? Or even higher amount.
Speaker 1:Right now, again, this is just an example. But cash is increasing and cash is increasing. But here, if you see, one thing what happened is that company stopped conference call from last 2 quarters. Before that, every quarter company used to do conference calls, right, just overlook this example. It was the last, so many years the company was doing conference calls. But from the last two quarters the company stopped doing conference calls, right? So this is also an art of reading quarterly results. Is that a lot of investors were thinking that there will be a dividend distribution or one of cash payment which the company might give because the valuations are very cheap, but because the company stopped doing con calls, so one never knows whether it will happen or not. So, again, art of reading results.
Speaker 1:Similar example let's take MTAR. Now you have to watch our video on CFO upon EBITDA Along with that, if you want to watch this video completelyne hai to humne ek CFO upon EBITDA ki video banayi thi. What is that Number one fraud ratio that you can use? Right, mtar ke case me bhi. Dekhte hai To MTAR ke case me agar aap check karenge to company ki jo borrowings hai. Toda time se expand ho rhi hai. But more than borrowings company.
Speaker 1:So let's see the cash flow of the last 4 years or 5 years of annual results. So 56 plus 9, 65, 35, 44, 44 plus 55 is equal to 99, right? So in the last 5 financial years the company has generated a cash flow of 99 crores, whereas in the last 5 financial years 138, 142, 142, 242, 242, 248. So a company of 298 crores has generated profit, out of which the company has only converted 100 crores into cash flow. So this means that this is a very working capital heavy business. So here you have to track major improvement in cash flows. You have to track cash flows in cash flows by looking at annual results. You have to track cash flows. What else do we see in results? Here I will give you an example.
Speaker 1:This is a business by the name of Tejas Networks. Now let's see how the results are coming. From the last 2-3 quarters you will say what growth is coming? 100%, 300%, 72%. But stock price which started to increase. Now what happened In the last 6 months? Stock has fallen from what? From the peak of Rs.1300-1400, stock has come to Rs.880. Now why is this? Because, again, this is a capital good business. What happens in a capital good business?
Speaker 1:So here we check in September 2024 company's order book. Leave September 2024, let's move ahead. Let's come to April book before September 2024. Let's check the order book before April 2024. Let's check the order book before April 2024. Let's check the order book before April 2024. The order book was 8,221 crores. Let's check the order book before April 2024. Let's check the order book before April 2024. Let's check the order book before April 2024. Let's check the order book before April 2024. Let's check the order book before April 2024. Let's check the order book is 2681 crores. So the company showed the execution of the order book in its revenues. Now no one knows what will happen in the future, that how many big orders will come to the company. So that is also an example of the art of result reading, that markets are forward looking creatures and market is always looking for this Similar example you can see in the case of India Mart.
Speaker 1:So if you see in the case of India Mart, then here you will see that if you check's quarterly results, last year profit was 82 crores. This time it is 121 crores. Last quarter it was 135 crores, before that it was 69 crores. So if you see profit growth, you will see a lot. Sales growth is also good. Margin is also expanding. But despite that, last quarter results were announced on 17th October, 18th October. After that, the stock came to 2500.
Speaker 1:The question arises, why? Because business model understanding. So in India Mart the customers churn their paid suppliers on their platform. So in paid suppliers, the low end ones, the silver category, they are churning out because in India Mart's platform in the past also, this has happened. So in paid suppliers, the low-end ones, which are the silver category, they are churning out Because in the past in the platform of Iliamart, it has happened that when many suppliers take it in a short span, then unique inquiry delivered per supplier. That reduces its quality, reduces. So then here, probably in the past, what has happened is that suppliers de-grow first because it is a platform business, in the end you deliver inquiry to the supplier, supplier will improve and then, after the improvement happens over a period of time, then they again start adding suppliers.
Speaker 1:So here you have to see the data, churn data, how many suppliers have churned. So again, this is also a good case study to do, which we have seen in part one, but here we can see a churn case study in the presentation which we have seen earlier in the video, right. So here you will see the churn data 2,18,000 subscribers, 2,14,000 paying subscribers. So this led to, again, in spite of very good bad growth, very good margins growth. This has led to, again, in spite of very good bad growth, very good margins growth. This has led to a fall in the stock price so this is also an example is that how you can read results in a deeper way. So we have learned many ways through which you can see results.
Speaker 1:Now we will go through what variables are tracked in each sector. We have covered this in the valuation webinar which we have done live for SOIC students. If you want to become a SOIC student, then in the description there is a link to register for the membership. Here we see what we should track in each sector. Whenever you see different sectors in detail, then there are different criteria to track each sector. Like the KPEX to track hospitals, because it is an asset-heavy business. The position in the market cycle to track capital markets, because it is an asset heavy business. To track capital markets position in the market cycle is important. When the stock market is cold, then the degrowth of capital related stocks starts, like CDSL's transaction income falls. Angel one's transaction income falls because the regulator has changed the lot size of F&O in capital goods players.
Speaker 1:What you have to do in order booking and end industry, you have to track that. Similarly. In defense, you again similarly defense order booking, prototyping vs production. Track real estate, new launches, inventory and income track. Auto may be track volume growth, business update auto and series. You have to track segmental exposure 2 wheeler vs 4 wheeler vs segment. In IT product you have to track how much, again, gross attention ratio is, which we learned in the video of rate gain. Similarly, in IT stocks you have to track absolute sales growth and what is the guidance of management for sales growth Right? So these are different metrics that you can use to track each and every industry and each and every result through these metrics. So you can take a screenshot of this or we'll make this available to be downloaded in the description below so that you can go through it comfortably. And here you can see the valuation metric of each one. So you should at least see this slide in more detail.
Speaker 1:Now let's go to the bottom concept that whenever the results of a company come out, you have to remember one thing that there are different types of reactions to the results of the market. So one is the. So you have to remember one thing that there are different types of reactions of the market towards the results. So one reaction of the market will be that the stock price might go up. So if the stock price is going up, then definitely markets have liked the result.
Speaker 1:Sometimes the results generally will not be as good. If the company's results are not as good, then what will you see? That the stock price might go sideways or might fall. Sometimes the profit growth on the front line will not be as good. Then you will see that the stock price might go sideways or might fall. Sometimes the profit growth on the front line is not that good, but the company has won an order and told us in a conference call that our upcoming results will be very good. So in that case the market is a very forward-looking machine and the market forgets the recent results. In some cases, when the stock price drops by 10-20% after the results, then the market was expecting better results, but the results are worse than expectations.
Speaker 1:So these analysts make models which you can see in their research reports and generally they make models of Dalal Street or Wall Street in which if the companies are not able to beat those guidances, then what happens? Stock price is fall. If companies beat, then what happens? A phenomenon occurs by the name of proposed earnings announcement drift. So what is the phenomenon of PEED? In PEED, when a company gets good results, then generally it is believed that stock price starts drifting towards the all-time highs over a period of time.
Speaker 1:Example here we see Shakti Pumps. So this 5-6 quarter cycle lasts for the period. So if you look at Shakti Pumps' case, so for these 3-4 quarters, 57%, 2 for 34%, 402%, 316% this phase of period was such that they were making highs in their sales growth every quarter, right, and this slowed down in the current quarter. So again, this is something that you should like. These are the type of results which you can see in the past. So you should definitely start tracking from here because this just shows very fast or very high profit growth could be happening in the businesses.
Speaker 1:And in businesses what happens is post earnings announcement drift that after results, typically these companies, they start digging out, they start forming all-time highs, they start forming 52-week highs. Just look at this example. So this business formed an all-time high here. It formed a 52-week high here, but an all-time high formed at Rs 250. Many people say why do we have to look at this all-time high stock? But again, what is your idea If you? Many people say that, why should we look at this all-time high stock? But again, the idea is that if you get biased and miss from here the 250 stock went almost to the peak, up to 1300 and then also up to 900. So this post-earnings announcement drift phenomenon, you should understand it very well.
Speaker 1:So for this we can check on the screener and on the stock scans that we will make two screens and see how, when company's strong results come, how you can filter them in every quarter. First we learn to make a screen on screener. If you come here, screens come on screener ready-made. What you can do in these screens is if you come down and see, you will see all latest quarterly results date-wise. As soon as you check this, all quarterly results screen will come. So as soon as you check this you will see all the quarterly results. And here what you have to do is come down and do simple and sales growth, sales growth year-on-year quarterly sales growth of companies that is greater than 20%. And what you have to do is the profit growth right. So here we can simply do that profit growth, year-on-year quarterly profit growth is also greater than 20%. As we run this query, 274 companies will appear where the latest quarterly results have good numbers.
Speaker 1:You can also use market cap criterias because many people don't do SMEs. So what you can do is, market capitalization should be higher than 1000 and market capitalization should be lesser than 10,000. So as you run this metric, then 86 companies will be there where these criterias are meeting, as if you check, then bad growth of which companies has come. So again, here, jay Kumar will see you. Bharat Bijli will see you. If you check, then pad growth of which companies? Right, so again here, jay kumar will see you. Bharat vizli will see you. Sikka interplant will see you. Parity phosphates will see you. New gen chemicals will see you. Ganesha ecosphere will see you. Almost 30% pad growth is seen, right, 30% will be more. Actually, sales growth is almost 39.66%, right, anoop Engineering will see Shilcha Tech will see here. But Shilcha Tech, again.
Speaker 1:When you read quarterly results, then here what is the market concerned in transformer stocks, that quarter on quarter their margins have gone down from 31 to 28%. So again, you will have to go and read the conference call, that why this has happened. Similarly, you will see the result of Doodla Dairy, right, so I think the result of Doodla Dairy, so I think the result of Doodla Dairy is 64 crore pat, which was 41 crore last year. We will see that here too, ebitda is growing almost 16-17%, but this time other income is more in Doodla Dairy, other than smart space you will ASK. Automotive will be seen, then Cartridge Tech will be seen, dynamic Cables will be seen. So again, what is the idea? What is the idea? Like, associated Alcohols will be seen here, dam Capital is seen. Results of Vimta Labs were very good. So the idea is that whatever latest results are coming, we should keep a track of those companies, so they should be under a tracking universe.
Speaker 1:Now final nuances of reading results. Like in E2E networks. So E2E networks. Pe ratio almost went to 50, but quarter on quarter, company's profit growth was stagnant 12 crores, 12 crores and margin was less from 66 to 59. So again, this is enough to punish the highly valued stock, right? So that is something you should remember.
Speaker 1:Now let's come to stock scans. So in stock scans we have a scan by the name of explosive growth. Here we have a filter of India's top 500 companies. So what you can do in this is pad growth year on year. So basically, you can take pad growth year on year, quarter on quarter. So we took greater than 20%. So we remove the 52 week high distance criteria. So we took all the criteria. We can take many criteria, like ROC, roe, roe, and we saw that at least 132 companies where the PAT growth is higher than 20% in the latest quarterly results. So that is how you can even find in this tool as well. That is by the name of stock scans. Stock scans is from the house of soic and stock scans ready-made screens. So here the companies' V-stop is positive, like access gates are happening.
Speaker 1:We wrote a blog on this. If you want to study the business model, then weekly trend twist is happening, like Chola Mandalam trend twist. Positive investment and finance, right. So other businesses, right. So. Similarly, financial services, right. So, yeah, hundi motors. So that also gives you an idea. Something or the other might be happening there. So we could go and study that volume rock when smart money starts looking at businesses, so, like after MPS results, volume rocketing is happening. It is happening in Bluejet too, right. So it is happening in other businesses too. It is happening in associated alcohols too. A lot of volumes are coming. So that is generally an indication that smart money might be entering. Right. So you can use stock scans as well, because in stock scans, these technical and ready-made scans in them, in these generally institutions, are coming or happening, that something or the other is fundamentally positive here. So then you can go and study these businesses independently.
Speaker 1:Hopefully you loved the video. If you loved it, just smash the like button and make sure that you subscribe to our channel. And now with this, we'll go towards the conclusion segment. So in conclusion of this video, we can see what we have learned.
Speaker 1:First thing we saw is what is the importance of reading quarterly results, why quarterly results are important and what are the intervals of quarterly results. We also saw that in the first half of the financial statement we get cash flow and balance sheet, and in full financial year results also, we get cash flow and balance sheet. Then in the second aspect, we read how we can see the quality results of a company. How can we analyze it quickly and in detail. I also shared a spreadsheet with you. In the third aspect, we learned that all of us learned together that we did case studies of different companies that beyond the obvious profit growth, what is the market looking at? What are the expectations of the street? What are the expectations of the market, what are the quarterly results, what are the annual results, what are the three-year results? And we also saw what is the importance of being a student of earnings and being a fundamental analyst. Finally, we came to know how we can derive deeper meaning of results through different case studies.
Speaker 1:So this was the purpose of this video. If you loved this masterclass, just drop a love in the comment section below and also drop your key learnings. Whatever you want in the next video, whether it's your key learnings, jo bhi aapko next video, kisi bhi business pe chahiye, whether it's a BlueJet, healthcare or it's something else, do let us know in the comment section below ki aap hume next video. Kaunse business pe banane chahiye? With this, I'll see you in the next business analysis of SOIC Jai Hind.