Interesting chinese proverb, eh? One theory is that the above phrase is from the Chinese saying which means heroes(leaders) are made over turbulent times.
Nothing could be more apt in these times..
This post would not have any recommendations, what the hell! The entire BSE 30 is worth buying at these valuations!
A nice Warren Buffet quote comes to mind. “Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
As always the money sought to be invested in equities is ideally something you do not need for the next 4-5 years or so...So no point in panicking.
I happened to come across this smart observation in a gem of an article on the net by Alexander Green,...Extract below...
"Suppose you went out to your garage late one night and saw a huge snake coiled up in the corner.
If you grabbed a shovel and gave it a few good whacks, you might feel pleased with yourself.
But if you turned on the light and found that you'd just cut your garden hose in half, you might feel a little sheepish.
Unfortunately, too many frightened investors are taking a shovel to their stock portfolios right now. Worse still, their investment advisors are goading them on.
the market can always go lower than you think it will - and for longer than you think it will - before a major uptrend appears. For this reason alone, you should not have money invested in stocks that you will need in less than five years.
But for your serious, long-term money, you need to maintain a significant exposure to high-quality stocks.
Yes, the stock market is unnerving and unpredictable in the near term. But inflation makes your future financial requirements unpredictable, too. That's why you need to own stocks, to generate the kind of returns that only equities can give."
Stay focussed and stay invested.. Save money to buy more
Cheers,
Happy Investing
dp
Sunday, October 12, 2008
Tuesday, July 15, 2008
Laziness pays and how!
As always, please accept my apologies for being irregular in my blog postings. What does one write about when there’s absolutely no sign of good news on the economic front? Rising interest rates, inflation, political uncertainly, slowing down in GDP growth rates, and of course, the thing that worries us all, corporate profit growth slowing down. Yikes! And it can only get worse! One question that frequently get asked in Investor websites is whether we are entering a prolonged bear run and the answer from experts is a resounding YES! And we are talking about 3-5 years of pain to go!
But these are actually great times for the bargain hunters. We have great companies available at ridiculous valuations! Refer to my blog post (The reluctant fundamenalist) dated the 20th of April, 2008. The companies referred to in that post have maintained their performance and have actually become much cheaper to buy given the blood bath in the markets! Lethargy does have its merits! Laziness pays and how!
This time, I would like to write about a great new story! TRF a.k.a. Tata Robins Fraser ltd. CMP 599. This company was started as a joint venture between Tata Steel, ACC and Robins Engineers. The company primarily focused on the material handling needs of Tata steel. They have reduced their dependence on Tata Steel and have grown to become one of the leading material handling equipment manufacturers focusing on the mining, ports and power sectors. And with the increasing government interest in developing these sectors, the top line growth of this company is assured. Just chew on the projected numbers! Three time capacity increase in steel production, around 150,000 MW in power generation capacity to be added, traffic handling capacity of ports to be doubled. All these present phenomenal opportunities which TRF seems uniquely positioned to take advantage of. The projected revenue for FY 10 is set to double from its current figure of Rs 370 crores. This translates to a projected PE of 4.3 for its FY10 EPS. And the market cap to sales ratio is an absurd 0.78. (Which means you can buy a company with annual sales of Rs 100 for just Rs 78!)
The only catch in this story being that this company is heavily reliant on steel as a raw material and steel prices have been going north. But generally such companies have been able to pass on the increased raw material prices onto their customers and shouldn’t be adversely affected.
Disclaimer: This article has borrowed content from the write ups in the Business Standard dated 14th July 2008 and DSJ dated 20th July 2008. This blog post is an attempt to bring those ideas to a forum that doesn’t read these sources.
But these are actually great times for the bargain hunters. We have great companies available at ridiculous valuations! Refer to my blog post (The reluctant fundamenalist) dated the 20th of April, 2008. The companies referred to in that post have maintained their performance and have actually become much cheaper to buy given the blood bath in the markets! Lethargy does have its merits! Laziness pays and how!
This time, I would like to write about a great new story! TRF a.k.a. Tata Robins Fraser ltd. CMP 599. This company was started as a joint venture between Tata Steel, ACC and Robins Engineers. The company primarily focused on the material handling needs of Tata steel. They have reduced their dependence on Tata Steel and have grown to become one of the leading material handling equipment manufacturers focusing on the mining, ports and power sectors. And with the increasing government interest in developing these sectors, the top line growth of this company is assured. Just chew on the projected numbers! Three time capacity increase in steel production, around 150,000 MW in power generation capacity to be added, traffic handling capacity of ports to be doubled. All these present phenomenal opportunities which TRF seems uniquely positioned to take advantage of. The projected revenue for FY 10 is set to double from its current figure of Rs 370 crores. This translates to a projected PE of 4.3 for its FY10 EPS. And the market cap to sales ratio is an absurd 0.78. (Which means you can buy a company with annual sales of Rs 100 for just Rs 78!)
The only catch in this story being that this company is heavily reliant on steel as a raw material and steel prices have been going north. But generally such companies have been able to pass on the increased raw material prices onto their customers and shouldn’t be adversely affected.
Disclaimer: This article has borrowed content from the write ups in the Business Standard dated 14th July 2008 and DSJ dated 20th July 2008. This blog post is an attempt to bring those ideas to a forum that doesn’t read these sources.
Sunday, April 20, 2008
The reluctant fundamentalist
I apologise for the hiatus. First my net connection went kaput and of course there wasn't much to write about the markets in the last month or so.
Market tanking for the last one month save the last week! Good sign, eh? Fundamentals are just as important as they are at any other time. Click here for Warren Buffet’s take on falling equity prices. Falling prices are a great sign with value picks becoming cheaper and consequentially greater value picks. I mean if I wanted to buy that DVD compilation of Seinfeld and DVD prices crashed, I would be elated eh?
This time I would be revisiting some of the old recommendations I had made in my mailing list in pre blogging days.
Welspun Gujarat: My favourite pick. I started tracking this company at a price of Rs 88. They make something boring like metal pipes for Oil and gas transportation. Remember with all the hoopla about energy and all that jazz, these guys stand to make the maximum money. Moreover their plate mill (plates being a key raw material for these pipes!) just went live a week back. Now they have an assured source of key raw material. The impact of this would be seen in the coming quarters. Their order book stands at a whopping Rs 5900 crores. Twice their annual sales of Rs 2700 crores. CMP: 403. A patient investor can expect levels of Rs 800 in a couple of years.
GEI Industrial Systems Ltd: I bought at 98 levels and now it is Rs 90. Am not too worried about the small loss. Remember the Warren Buffet quote? Anyway they make industrial compressors and are a key player in the Heat transfer Industry. Their key customer is again the Oil and gas transportation industry. The bottom-line is that their last quarter results have been terrific. Their sales are up by 74% and their net profit by 70%. No brainer, eh? Sure to double in a year.
Gujarat NRE Coke: These guys are one of the biggest miners and suppliers of coking coal. This is a fantastic play on the huge demand for steel. As anyone would obviously know, coking coal is a key input for the Iron smelting process. This scrip was available for as little as Rs 54. Now at a healthy 156. The management has shown the foresight to purchase coking coal mines in Australia thus ensuring themselves of raw material supply as well. Morever the coking coal rates are now being renegotiated with their customers at 20-30% increase to current contracted rates. This is one hell of a story. This stock is sure to reach Rs 250-300 levels by next year this time! Remember to ask me about it!
Wanbury: CMP Rs 113: They make bulk drugs for several branded manufacturers and have one of India’s very few FDA approved plants. They are the world’s biggest producers of Metformin- the number One Anti Diabetic drug in the world. They are developing leadership in other key segments such as Gynecology, pediatrics etc. Because of its small equity base, it has been ignored by the big institutional buyers. Well that’s a good sign cos it’s now available at a PE of 5 which is a steal considering its explosive growth prospects. Just go out and buy!
Well here comes the standard caveat, it is reasonable to assume I have decent amounts invested in these stocks. And hence my opinion is definitely biased. What the heck! Let’s all get richer together! Happy Investing!
Market tanking for the last one month save the last week! Good sign, eh? Fundamentals are just as important as they are at any other time. Click here for Warren Buffet’s take on falling equity prices. Falling prices are a great sign with value picks becoming cheaper and consequentially greater value picks. I mean if I wanted to buy that DVD compilation of Seinfeld and DVD prices crashed, I would be elated eh?
This time I would be revisiting some of the old recommendations I had made in my mailing list in pre blogging days.
Welspun Gujarat: My favourite pick. I started tracking this company at a price of Rs 88. They make something boring like metal pipes for Oil and gas transportation. Remember with all the hoopla about energy and all that jazz, these guys stand to make the maximum money. Moreover their plate mill (plates being a key raw material for these pipes!) just went live a week back. Now they have an assured source of key raw material. The impact of this would be seen in the coming quarters. Their order book stands at a whopping Rs 5900 crores. Twice their annual sales of Rs 2700 crores. CMP: 403. A patient investor can expect levels of Rs 800 in a couple of years.
GEI Industrial Systems Ltd: I bought at 98 levels and now it is Rs 90. Am not too worried about the small loss. Remember the Warren Buffet quote? Anyway they make industrial compressors and are a key player in the Heat transfer Industry. Their key customer is again the Oil and gas transportation industry. The bottom-line is that their last quarter results have been terrific. Their sales are up by 74% and their net profit by 70%. No brainer, eh? Sure to double in a year.
Gujarat NRE Coke: These guys are one of the biggest miners and suppliers of coking coal. This is a fantastic play on the huge demand for steel. As anyone would obviously know, coking coal is a key input for the Iron smelting process. This scrip was available for as little as Rs 54. Now at a healthy 156. The management has shown the foresight to purchase coking coal mines in Australia thus ensuring themselves of raw material supply as well. Morever the coking coal rates are now being renegotiated with their customers at 20-30% increase to current contracted rates. This is one hell of a story. This stock is sure to reach Rs 250-300 levels by next year this time! Remember to ask me about it!
Wanbury: CMP Rs 113: They make bulk drugs for several branded manufacturers and have one of India’s very few FDA approved plants. They are the world’s biggest producers of Metformin- the number One Anti Diabetic drug in the world. They are developing leadership in other key segments such as Gynecology, pediatrics etc. Because of its small equity base, it has been ignored by the big institutional buyers. Well that’s a good sign cos it’s now available at a PE of 5 which is a steal considering its explosive growth prospects. Just go out and buy!
Well here comes the standard caveat, it is reasonable to assume I have decent amounts invested in these stocks. And hence my opinion is definitely biased. What the heck! Let’s all get richer together! Happy Investing!
Monday, February 25, 2008
House Vs God(s)
No-brainer, eh? Who would choose Equities over a solid real estate investment such as a house where you can live in and your net worth is not measured everyday in a portfolio in www.moneycontrol.com or the like. (Useful little feature, check it out!)
A House is always a great first big investment and should be a part of everyone’s financial planning. And it is an emotional part of our life. No one can give a financial argument against emotions, right?
This write up assumes that we or our parents have made that big investment and how a second or third real estate investment stacks up against traditional investments such as stocks. Well not too great..
What are the arguments against equities vis a vis House?
Not safe, eh? Well do we really spend the time and energy buying equities the way we do when we buy a house? We check the builder for his reputation, the area for potential appreciation, the rates, the layout of the complex, freebies such as gym, play area etc. (No freebies those, the builder pads in onto your cost!). Not to speak of having the having the legal rigmarole vetted by an attorney! And do we buy equities with even remotely comparable diligence! The next tip from a broker, 8 best buys for 2008, web sites offering phree gyan! (Oops!)
Appreciation? Well if you had bought a crore of NSE Index funds in 2002, you’d be sitting on around 5 crores worth of the same today! And remember, no need for research, brokers, godsofgreed etc. And no property taxes and of course no capital gains tax as well! Real estate probably appreciated at the same rate through the period. People who point to the equities boom must remember, the same liquidity that drives the sensex crazy drives real estate prices too! And over longer periods of say 15-20 years, studies have shown that equities have matched or exceeded real estate returns.
Equities held for a year or more have no capital gains tax at all, thanks to PC’s budget a couple of years back. Whereas real estate carries a tax of 20% capital gains when you sell irrespective how long you hold!
And there is this concept called Fungibility. One stock of Reliance Petro is just the same and carries the same value as another one. Whereas a house in Bandra is not the same in value as an exactly similar looking adjacent apartment of the same floor area. So you get the perfect market determined price when you should decide to sell your shares. And apartment prices can be determined by the direction of the door and numerology of the door number!
Lastly the best bit about stocks is that you can set aside small bits of money at different points of time without getting caught in a EMI trap and lose out on several small indulgences. And conversely you have your heart set on a Skoda Fabia. (sigh, me too!) You can sell a bit of your portfolio to make a down payment instead of the whole house!
So, it would do well to remember what I mentioned in the earlier part of my write up, If you have your hearts set on that condo, go ahead and indulge, nothing like a cozy nest! Once that done, more houses only pull us into debt and make land sharks rich! Happy Investing!
A House is always a great first big investment and should be a part of everyone’s financial planning. And it is an emotional part of our life. No one can give a financial argument against emotions, right?
This write up assumes that we or our parents have made that big investment and how a second or third real estate investment stacks up against traditional investments such as stocks. Well not too great..
What are the arguments against equities vis a vis House?
Not safe, eh? Well do we really spend the time and energy buying equities the way we do when we buy a house? We check the builder for his reputation, the area for potential appreciation, the rates, the layout of the complex, freebies such as gym, play area etc. (No freebies those, the builder pads in onto your cost!). Not to speak of having the having the legal rigmarole vetted by an attorney! And do we buy equities with even remotely comparable diligence! The next tip from a broker, 8 best buys for 2008, web sites offering phree gyan! (Oops!)
Appreciation? Well if you had bought a crore of NSE Index funds in 2002, you’d be sitting on around 5 crores worth of the same today! And remember, no need for research, brokers, godsofgreed etc. And no property taxes and of course no capital gains tax as well! Real estate probably appreciated at the same rate through the period. People who point to the equities boom must remember, the same liquidity that drives the sensex crazy drives real estate prices too! And over longer periods of say 15-20 years, studies have shown that equities have matched or exceeded real estate returns.
Equities held for a year or more have no capital gains tax at all, thanks to PC’s budget a couple of years back. Whereas real estate carries a tax of 20% capital gains when you sell irrespective how long you hold!
And there is this concept called Fungibility. One stock of Reliance Petro is just the same and carries the same value as another one. Whereas a house in Bandra is not the same in value as an exactly similar looking adjacent apartment of the same floor area. So you get the perfect market determined price when you should decide to sell your shares. And apartment prices can be determined by the direction of the door and numerology of the door number!
Lastly the best bit about stocks is that you can set aside small bits of money at different points of time without getting caught in a EMI trap and lose out on several small indulgences. And conversely you have your heart set on a Skoda Fabia. (sigh, me too!) You can sell a bit of your portfolio to make a down payment instead of the whole house!
So, it would do well to remember what I mentioned in the earlier part of my write up, If you have your hearts set on that condo, go ahead and indulge, nothing like a cozy nest! Once that done, more houses only pull us into debt and make land sharks rich! Happy Investing!
Thursday, February 14, 2008
Greed is right, greed works.
To all people who are certainly not happy with the money they are making...
For the last one year or more I have been inflicting my investment ideas and views on the markets on a group of close chums through a mailing list! As an alternative to adding more people to my mailing list, I am moving my investment/personal finance ideas mails to a blog format today, the 14th of February. Quite an auspicious day, I must say, Sensex just closed 800 points up around 5%!
Like my mails, this would not be periodic but sporadic depending on the kind of investment ideas that I read about or get from somewhere. No idea in this post is original... Everything has been lifted from or inspired by original research done by others. And of course, I would try and give credit or better still, hyperlinks to the original source. I try and collate ideas from disparate sources and present it here...I would appreciate questions, feedback and better still fresh investment ideas! Also this blog is meant for the lay investor and hence I have tried to avoid the financial gobbledygook and kept the numbers simple!
So what is in store for equities now that the markets are listless and future seems bleak? (Despite the last two days' rise!) Well nothing at all! Equities as an asset class have never been bad! I can't imagine any other asset class where a good stock picker with discipline can average around 25+% return YOY! Remember what counts is the companies we invest in and not where the Nifty or Sensex are headed! Warren Buffet goes even further to say that equity markets are not so affected even by the performance of the country's economy as much by the interest rates! And Indian rates are probably on their way down in the next few years! Note the use of the word 'Probably'!
Moreover a period of uncertainty as is now prevalent is probably the best time to enter equities. We now have time to review companies, their performance over a couple of quarters etc without the market running away! I am sure each of us have been in a position where we had decided to buy a stock at a Rs 120 levels and see it run away to Rs 210 levels by the time we actually found the money. Well that's not going to happen in the near future! We have the luxury of time to stop and think about planning our investments before crazy things happen. I remember a similar such period in 2002 when some of the best performers of the last decade were analyzed and recommended. To name a few. UTI Bank at Rs 29. J&K Bank at Rs 11, Bajaj Auto at Rs 600 etc!
Currently I like Sanghvi Movers. (CMP 251). This company is an excellent play on India's infrastructure story and construction boom. They rent construction equipment like cranes etc to other companies. Last quarter (Q308) they clocked a growth of 111% in their profits and 65% growth in their sales! Most of their fleet of their cranes is booked for the next two years or so. It is reasonable to expect a 30-40 % growth rate over the next 3 years considering their aggressive capex plans. And thanks to the recent correction is available at a reasonable valuation. One should look to more than double his/her money in a couple of years! Not bad, eh! So you forgo an Apple I phone today, you are looking at an I phone plus a decent LCD TV two years down the line! Happy Investing!
For the last one year or more I have been inflicting my investment ideas and views on the markets on a group of close chums through a mailing list! As an alternative to adding more people to my mailing list, I am moving my investment/personal finance ideas mails to a blog format today, the 14th of February. Quite an auspicious day, I must say, Sensex just closed 800 points up around 5%!
Like my mails, this would not be periodic but sporadic depending on the kind of investment ideas that I read about or get from somewhere. No idea in this post is original... Everything has been lifted from or inspired by original research done by others. And of course, I would try and give credit or better still, hyperlinks to the original source. I try and collate ideas from disparate sources and present it here...I would appreciate questions, feedback and better still fresh investment ideas! Also this blog is meant for the lay investor and hence I have tried to avoid the financial gobbledygook and kept the numbers simple!
So what is in store for equities now that the markets are listless and future seems bleak? (Despite the last two days' rise!) Well nothing at all! Equities as an asset class have never been bad! I can't imagine any other asset class where a good stock picker with discipline can average around 25+% return YOY! Remember what counts is the companies we invest in and not where the Nifty or Sensex are headed! Warren Buffet goes even further to say that equity markets are not so affected even by the performance of the country's economy as much by the interest rates! And Indian rates are probably on their way down in the next few years! Note the use of the word 'Probably'!
Moreover a period of uncertainty as is now prevalent is probably the best time to enter equities. We now have time to review companies, their performance over a couple of quarters etc without the market running away! I am sure each of us have been in a position where we had decided to buy a stock at a Rs 120 levels and see it run away to Rs 210 levels by the time we actually found the money. Well that's not going to happen in the near future! We have the luxury of time to stop and think about planning our investments before crazy things happen. I remember a similar such period in 2002 when some of the best performers of the last decade were analyzed and recommended. To name a few. UTI Bank at Rs 29. J&K Bank at Rs 11, Bajaj Auto at Rs 600 etc!
Currently I like Sanghvi Movers. (CMP 251). This company is an excellent play on India's infrastructure story and construction boom. They rent construction equipment like cranes etc to other companies. Last quarter (Q308) they clocked a growth of 111% in their profits and 65% growth in their sales! Most of their fleet of their cranes is booked for the next two years or so. It is reasonable to expect a 30-40 % growth rate over the next 3 years considering their aggressive capex plans. And thanks to the recent correction is available at a reasonable valuation. One should look to more than double his/her money in a couple of years! Not bad, eh! So you forgo an Apple I phone today, you are looking at an I phone plus a decent LCD TV two years down the line! Happy Investing!
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