[adimicra]

Originally Posted by SmartCat

These are the listed subsidiaries of Indian Railways:

RVNL (Rail Vikas Nigam)
IRCON
RailTel Corporation
IRFC (Indian Railway Finance Corp)
CONCOR
IRCTC

CONCOR & IRCTC are expensive though. Indian Railways subsidiaries have -

- Low or no debt
- High dividend yield
- Low valuations (nobody wants to buy PSU stocks)
- Guaranteed business from Indian Railways

I'm not too keen on private sector railway stocks

Looks like all of these have been on a mad run in the last few days, will wait for some cool down before purchasing.
What about wagon manufacturers or EPC players in the sectors? I know Titagarh wagons, any other major players there?

[warrioraks]

Originally Posted by adimicra

Always remember the famous quote by legendary investor Peter Lynch
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

Any my personal favourite - Markets can stay irrational longer than you can stay solvent.

[whitewing]

Originally Posted by adimicra

Looks like all of these have been on a mad run in the last few days, will wait for some cool down before purchasing.
What about wagon manufacturers or EPC players in the sectors? I know Titagarh wagons, any other major players there?

From memory - additional players not listed in the discussion till now, would be Texmaco, RITES, BHEL, BEML BEL, L&T.
I'm not sure if MNCs like Siemens, GE, Alstom, Ericcson route their railway contracts via listed stocks in India.
Among these only Texmaco is primarily focused on railways.

It is not as if the Govt. announced major policy changes in railway sector over the past month to justify such a runup. Probably just a pre-budget runup.

Take for ex: IRFC.
It being the major financier for indian railways. Runs a near zero risk business of leasing wagons & arranging for Indian railway's borrowings (subject to the Govt's policy). This comes at the cost that its net interest margins(NIM) have been range bound to around 1.5%.
What change in policy justifies doubling of the price? Here it has to be a policy change, since this effectively has 1 customer (either direct or via proxy) viz the Ministry of Railways.

Even if the quantum of lending/lease extents increases exponentially - I doubt that the Govt would allow the company to make more money off Indian railways. Essentially meaning that its profitability would be held at current levels at best allowed a marginal increase.

PS: I have been invested in IRFC, RITES and BEL since some time and have been buying during dips.

[sumeethaldankar]

Originally Posted by SmartCat

No effect on long term performance of stock fundamentally. But technically, FNO ban reduces speculation and liquidity in the stock. Only serious investors will be trading in that stock after the ban.

Is the FNO ban permanent? So will this means that investing in something like SAIL will be a bad idea?

Thanks.

[SmartCat]

Originally Posted by sumeethaldankar

Is the FNO ban permanent? So will this means that investing in something like SAIL will be a bad idea?

I don't think there is a clear link between FNO inclusion and stock performance.

However, I think we are more or less done with steel consumption boom that we saw last year.

[sumeethaldankar]

Originally Posted by SmartCat

I don't think there is a clear link between FNO inclusion and stock performance.

However, I think we are more or less done with steel consumption boom that we saw last year.

Ok (newbie here) but considering the dividend yeild is a healthy 10.3% (and after reading your older posts) which is better than the bank FD interest of paltry ~3% and also ROE of 25% would not SAIL be a decent buy?

[SmartCat]

Originally Posted by sumeethaldankar

Ok (newbie here) but considering the dividend yeild is a healthy 10.3% (and after reading your older posts) which is better than the bank FD interest of paltry ~3% and also ROE of 25% would not SAIL be a decent buy?

When buying high dividend yield stocks, you need to add more filters. If you look at SAIL's 10 year P&L history, you will notice that their dividend payout has been inconsistent. Between 2016 & 2021, company did not pay any dividends. Past performance gives you some idea about how the future will be. So while the current yield is 10%, next year yield might be only 1%



Also look at net profit for last 10 years. You will notice large dips/rise in profit. They even booked losses for many years. Even when looking at RoE, look at the 10 year history - average 10 yr RoE has been only 5%



Now compare SAIL with something like Coal India/ ONGC/ BPCL/ ITC/ Powergrid/ Oracle Finance etc

In addition to what I mentioned above, also look at:

- 10 yr sales growth
- 10 yr profit growth
- 10 year book value growth (under balance sheet, look at reserves number)

You will notice that powergrid/ITC/Oraclefinance/BPCL have both growth and dividend payouts. These are much better 'buy and hold' candidates than coal India/ongc types. Coal India/NALCO/NMDC/ONGC etc offer good yield, but is ideal for short term investment (say 1 to 3 years). Buy low and sell high or rather, buy when dividend yield is high and sell when current dividend yield is comparitively low.

Completely avoid inconsistent dividend plays like SAIL or Tata Steel. However, using technical analysis to buy/sell these stocks for short term is fine.

[fordday]

Talking of dividends, what is negative Dividend?
IOCL Dividend payout was -437% in Mar 2020.

I looked up in google and got more confused with the answers.

[BaCkSeAtDrIVeR]

Where b did you find this information that Indian Oil has declared negative dividend? Can you post a screen shot?

I suggest avoiding that source of information.

[PatienceWins]

Originally Posted by fordday

Talking of dividends, what is negative Dividend?
IOCL Dividend payout was -437% in Mar 2020.

I looked up in google and got more confused with the answers.

Originally Posted by BaCkSeAtDrIVeR

Where b did you find this information that Indian Oil has declared negative dividend? Can you post a screen shot?

I suggest avoiding that source of information.

This must be typo error in the site. Dividends are cash paid out to investors; so it cannot be negative. Check the corporate disclosure/ annual report for the right informaiton.

[SilentEngine]

Originally Posted by fordday

Talking of dividends, what is negative Dividend?
IOCL Dividend payout was -437% in Mar 2020.

I looked up in google and got more confused with the answers.

It's not negative dividend. It is the dividend payout ratio (dividend/earning) that's negative. It reported loss for March 2020 FY, and paid dividend in the same year, so the ratio becomes negative.
Now the question is, if company is paying dividend in spite of declaring loss, where's the money coming from? Cash reserves form past profits?

[PatienceWins]

Originally Posted by SilentEngine

Now the question is, if company is paying dividend in spite of declaring loss, where's the money coming from? Cash reserves form past profits?

Cash reserves from past profits or money raised

[SmartCat]

Originally Posted by SilentEngine

It's not negative dividend. It is the dividend payout ratio (dividend/earning) that's negative. It reported loss for March 2020 FY, and paid dividend in the same year, so the ratio becomes negative.

Correct.

Dividend Payout Ratio in % = Dividend Amt Paid (Rs. Cr.) / Net Profit (Rs. Cr.) x 100

So if denominator is negative (meaning company declared a loss) but company still paid out dividend, then Div Payout Ratio shows a negative number.

Now the question is, if company is paying dividend in spite of declaring loss, where's the money coming from? Cash reserves form past profits?

If management wants to signal "all izz well" to shareholders, company pays out dividends from the reserves. However, IOC case in FY20 is different:



Company actually made an operating profit of Rs. 16,053 cr. But other income is Rs. -7,165 cr. This is very likely to be "inventory loss" because of crash in crude oil prices in FY20. It is a "non-cash" loss. So in this particular case, IOC paid out dividends from the cash flow itself.

[Tapish]

I consolidated my stock holdings in the past month and have only kept 3 stable stocks - IOCL, NMDC, and IGL. I was able to pick these when the price was corrected last month and have seen them zoom in a month. Intend to hold onto these in the long term for consistent dividend yield. I have a bunch of small-cap MFs for the long run.

[MT_Hyderabad]

I lost a lot in stocks (never realised the loss, it is on paper).

I started investing in Bharat22 ETF also called Icicib22 ETF. The money is safe and growing gradually, even with wars and elections and what not.
I intend to pull out all my money from stocks and put it in Etfs going forward, just want to reduce my loss somewhat more before going full throttle on ETFs.