16 Quarters of above 25% Sales and Profit growth by Eicher Motors

classic350_right-side_blue_600x463_motorcycleEicher Motors declared its December 2014 results yesterday. It had a growth of 56% on sales 66% on profits. This company has been giving above 25% sales and profit growth for the past 16 quarters. This is a tremendous feat, and the same is reflected in its stock price. This stock was at 1300  a share when the company began with its strong growth phase. 4 years have passed now and the stock price is at 16000 a share. Growth of 1250% in 4 years, apart from the the dividend the stock has provided in the same period which amounts to another 127.00 per share.

This company manufactures trucks and mini trucks along with Royal Enfield bullets. Today, bullets have become a fancy possession among the youth of India. The company is investing 500 Crores in a new facility to produce more Royal Enfield bullets and today there is a wait period for a new purchase and it has a premium too. On the roads, if we travel a kilo meter, out of 10 mini trucks and trucks that ply on the city 8 would be of Eicher motors make. With more new facilities coming up, it looks like the growth story is going to continue further.

In the year 2014, this stocks has delivered 200% profits. On 1st January 2014, the stocks was quoted at Rs. 4992.00, on 31st December 2014 it was Rs. 15103.00. We have a 3% exposure to this stock in our portfolio, it will continue to be in our portfolio till the companies growth slows down.

Agriculture stocks in our portfolio.

000413We had invested in a stock called Excel Cropcare in the early 2014. Last year Agriculture stocks showed good strength in their Sales and profits. Among many stocks like Monsanto, Advanta, Kaveri Seeds etc., Excel Cropcare too participated in the growth story.

 

Following is the story that unfolded in this investment for us. We invested in January 2014 at Rs 475.00, held on to the position as the company was growing. The company in its December quarter results, showed signs of tiredness in its growth and along with that, the stock price began to look down.

ExcelCrop

 

Our research application gave us an exit signal in early February 2015. Following the signal we exited this investment at  Rs. 950 on 9th February 2015. We stayed in this stock for 396 days, thus qualifying for a long term capital gains tax savings on full profits made in this investment.

 

 

It was a nice experience being with this company & taking our share of profits from the investment.

The cost of Financial Procrastination

Retirement usually doesn’t start until you’re in your 60’s but there is a good reason to start saving much sooner. The earlier you contribute to your nest egg, the more time your portfolio will have to grow in value.

 EffectofCompounding

The image illustrates the ending wealth values and effects of compounding of three investment portfolios. Consider three hypothetical investors who begin investing 10,000 at an average annual rate of return of 12%. Investor A invests 10,000 for a 30-year period, which results in an ending wealth value of 349.49 Lakhs. , Investor B invests 10,000 for a 20-year period, which results in an ending wealth value of 98.92 Lakhs On the other hand, investor C invests 10,000 for a 10-year period, which results in an ending wealth value of 23.00 Lakhs. Investor A invested an additional 12.00 Lakhs compared to Investor B. However, a large difference in the ending wealth value can be attributed to the compounding effect of the 12.00 Lakhs for the additional 10 years. In other words, your money saved now will be worth a lot more than your money saved in retirement.