Saturday, 17 November 2012


So its here, my foray into the frenzy that is the stock market. They say that the market is for gamblers, running on sentiments and going up and down like waves in the ocean. But It does function otherwise. Stocks DO go up in down with business prospects and if a business is expected to prosper, so will its stock. So opportunities exist for the shrewd investor who can analyze and explore the intricacies of a business and gauge its future prospects.

One such stock which catches the eye is Orix Leasing. The business is on the upswing. With interest rates coming down, and the economic conditions generally stabilizing, one can assume that it is here to reap the benefits.

A few numbers should clarify the picture:

The above financial figures already depict improvement in a number of areas such as profitability, dividend, provisioning etc. However, what matters is the upcoming FY13 earnings result since that is when the market is most expected to move (this also means that the holding period for this investment should be up till the same time period).So what to expect? Some answers can be found in the 1st quarter report a snapshot from which is presented below:

An annualized earning of 3.2 or maybe more? Seems like a good shot given it translates into a forward PE of 4.67. This not where it ends however. A high payout also merits attention. It can rightly be assumed that the company will pay at least a 60% dividend in the coming year implying a roundabout payout of Rs.2, thus translating into a dividend yield of 14% on today's prices. Hmmm... not bad.       

Moreover, it appears the company is on the growth trajectory as evident from the following statement in the directors report for the quarter:

Finally, can we really expect further growth in quarterly EPS that is, implying an EPS even higher than 3.2? If the directors of the company have any credibility, I guess the following statement can be referred to:


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