10 steps to make investing as easy as cooking

Cooking any dish involves a basic procedure. Apply the same process to investing too and you will realize how easy it is to manage your money. Cooking any dish involves a basic procedure. Apply the same process to investing too and you will realize how easy it is to manage your money. Step 1 Check if all systems are Ok PUT AN INSURANCE PLAN IN PLACE Before you start cooking, it is advisable to check the gas pipes, regulator and electrical connections. Gas leaks from damaged pipes or faulty regulators; loose electrical connections cause sparks; old wirings trigger short circuits. These can cause major fires. Therefore, your kitchen should be well protected thru fire extinguishers. Likewise, your finances too should be adequately protected. One stroke of bad luck and your years of savings may disappear. This is where insurance comes in. Insurance covers are available for various kinds of perils. Choose a suitable mix before you begin investing and safeguard your finances. Step 2 Plan your menu MAKE YOUR PERSONAL FINANCIAL ROADMAP If you have time, you may prepare a 5-course meal. But if you need something fast, you may go for a sandwich. If you are a vegetarian, you will surely not have meat. In short, individual tastes, specific situations and the budgets differ. Therefore, your choice of dishes will be different from your colleagues, friends or even your family members. Similarly, each persons investment objectives, risk appetites, time-frames and taxation also differ. If you can take higher risk, equity may form 70% of your portfolio, with balance 30% in debt. In a medium-risk scenario, this ratio could be 50:50. Hence, dont blindly copy other peoples investments. They may be right for them, but not necessarily for you too. Preparing your own specific and personal financial menu is, therefore, a must. Step 3 Learn how to cook EQUIP YOURSELF WITH RIGHT KNOWLEDGE Ok, you have decided your menu. But do you know how to cook? You would agree that it would be a mess, if you make your dish without knowing the recipe or having the right ingredients. Same thing applies to money too. There are very few millionaires despite good incomes. Misselling is rampant. Frauds are common. These clearly indicate limited awareness about financial matters. Obviously, therefore, you must learn how to manage money. Surely, you dont want to end up in a financial mess! Step 4 Buy good ingredients BUY HIGH QUALITY ASSETS Surely you cannot make a good dish from rotten inputs. Howsoever good a cook you may be, you need fresh ingredients. Spoilt items will only give you a spoilt dish.

Similarly, bad quality assets wont make you rich. Bad shares will lose money. Bad insurance will not provide adequate cover. Bad property may not appreciate. In short, you are going to lose money with inferior financial products. Surely you cannot remain healthy eating only junk food. Nutritious food is essential for your (and your familys) health. An occasional junk meal may be ok. But in the long run eating high nutritional value food is a must. Likewise, you cannot become rich by investing in junk products. Good products are essential for your (and your familys) financial health. An occasional bad product may not hurt. But only a highyield portfolio will create long-term wealth. Step 5 Dont overpay for your ingredients KEEP A TIGHT REIN ON COSTS Ideally you must buy the best possible ingredients at least possible prices. Sure, you must maintain a balance between quality and price. Unless the quality is significantly better, it may not be worth paying extra. Why shell out more just for attractive packaging? Conversely, buying only the cheapest items may not always be good. These could be of sub-standard quality, which could spoil your dishes (and upset your stomach too). Same applies to your financial ingredients too dont overpay. For example, buying a combination of term plan + PPF would be more economical than an endowment policy. Again, the cost vs. quality balance is crucial. A particular broker may charge more but give better advice than someone inexpensive but failing to provide quality recommendations. Step 6 Throw away rotten ingredients WEED OUT THE UNDERPERFORMERS Food gets spoilt from time to time. Your vegetables may rot; bread may become mouldy; or pests may infect your cereals / grains. If you do not remove these stale items promptly, you will spoil the remaining good portion also. Likewise, your assets may also turn bad. Some companies may perform badly and your investment may depreciate. Changes in taxation may make some investments unviable. Some thematic funds may no longer remain market favourites. As a result, you may suffer outright losses or at best earn poor returns. Therefore, you must regularly throw out your failed/underperforming assets. Step 7 Use the right JUDICIOUS ASSET ALLOCATION

proportion

of

ingredients

Right proportion of the ingredients is essential; else you may get a distasteful dish. Even a simple thing like salt makes a big difference. You need just a pinch of salt in your dish. But put just a little more (or a little less) and you can feel the difference. Further, your diet should have variety. Your body needs carbohydrates (for energy), proteins (for building the body) and vitamins (for body systems to function optimally). Since different food items give different inputs, your diet must include rice/wheat (for carbohydrates); meat/eggs (for proteins); and vegetables/fruits (for vitamins). If any item is missing, your body will suffer some deficiency. Thus, right proportion and right variety is necessary for your healthy well-being.

Same with your investment portfolio you need a combination of liquidity (from bank balance); safe & regular returns (from fixed deposits); and growth (from equity/property). Thus, both diversity and appropriate asset allocation is necessary for your financial well-being. Step Give adequate LET THE INVESTMENTS MATURE 8 time

cooking

What will happen if you boil meat for a few minutes only? It will remain half-cooked. To make it palatable you have to boil it for 30-45 minutes. On the contrary your potatoes will be done much sooner. You must cook food for the required time, else it will remain raw. Same holds true for your investments too. In fixed deposits your interest will start from day one. But if you desire to make money in equity in a few days/months, your expectations are misplaced. You must remain invested for sufficient time, else it will not grow. Step Eat CELEBRATE YOUR MONEY 9 relish

and

Finally, cooking is over and all your delicious dishes are ready. Now you can relish them. All your efforts have paid off. All the hunger you had endured until now is about to be satiated. Great! Similarly, once your millions are made, you can start savouring your money. All your discipline has paid off. Having achieved financial independence, you are free to fulfil all your desires. Again, great! Step Change with REBALANCE YOUR PORTFOLIO REGULARLY 10 time

When you are young and your body is growing, you need more proteins to help that growth. But when fully grown-up, the requirement for proteins goes down. When you are young and your wealth needs growth, equity and property will help. But as you achieve your wealth targets your need for growth reduces and you can switch to debt products. When you are young, your body resistance is high. Your body systems are robust. Thus, you can take risk with your food habits. But as you grow older, you need to be careful about what you eat, when you eat and where you eat. When you are young, your risk appetite is high. Your financial system is robust enough to withstand shocks. Thus, you can take higher risks with your wealth creation. But as you near retirement, your risk appetite reduces. Thus, you have to rebalance your portfolio. Sanjay Matai is a personal finance advisor (www.wealtharchitects.in), author and online financial trainer. This is an excerpt from his book Millionaires dont eat cakesthey make them.

Futurebull-Portfolio check up
Posted: 20/Oct/2009 at 2:07pm

Dear TEDies, Please have a look at my portfolio and help me with your insights and comments. I am having arnd 20 stocks as i started with 35 and getting narrowed down as i gain confidence. Will further trim it to 10 by mid next year and eventually only five. Banking & Fin: Yes Bank 11% IT/ Software : Core Projects, Eclerx, Nucleus & 3i Info : 14.5% FMCG/ Oil Extracts: Zydus Wellness, Godrej Ind, KS Oils: 9% Pharma/ Packaging Lupin, Bilcare : 26% Transport/Logistics: Sical Log., TCI, SpiceJet : 11% Media: Network18, ENIL, Prime Focus, PVR: 13% Agri Commodity: Karuturi Global : 9% Hospitals: Fortis 2.5% Metal: Godawari Power : 2% Electronics: Mic Electronics:2%

Posted: 09/Nov/2009 at 11:19pm

exited Spicejet,Core Projects and Mic Electronics.. Sold some Pfocus and added some Bilcare after great results.. took initial exposure in Gruh Finance and Himalya International

Sold Godawari Power and bought more of Sical logistics today.. Keeping eye on ICRA, Zydus wellness, Max India and Sundaram Fin.. None of them seem giving any meaningful correction Tell me about it.. i kept waiting for a correction to buy into Mahindra Lifespace and instead of going down, is gone up further by rs.50.00... Now i take small entry the moment i decide to buy.. And then wait for correction, because if correction does not come, at least i have some amt. of shares instead of none... and if it comes, all the better. Vrishali, being a value investor i tend to invest in small steps...i read in "Intelligent Investor" that one should not buy a stock which has just risen too fast.. i try to follow that. i do keep some cash as presently holding 5% in all.. Sometime it pays and it becomes painful at times as well. This is the discipline Im trying to follow.. Like if nifty crosses 5300 i would sell some of the fundamentally/technically weak looking stocks and increase cash to 10% and wait for it to come to 4500-4700 to be fully invested again. It has

been working for me for some time. I have been improving the quality of portfolio by this way. I compared returns vs nifty/Sensex after this strategy and found that my portfolio has outperformed by wide margin. Dont know it would work in future Thnx Samir, took an initial exposure in Max India today.. Insurance as a sector is looking good. Bajaj Finserv, Max and TTK healthcare all of them are flying off late.. Insurance IPOs are due in next 9-12 months.. Cant miss any of them. sold 3i Infotech with some small loss.. was painful.. won't buy these leveraged services companies.. added Gruh Finance sold Himalya International yesterday as i'm having some doubt on the management of the company..and added Zydus wellness another solid FMCG stock With FMCG being the flavour of the day, i would rather be a seller of FMCG presently ( if i had any) than a buyer. I fully agree with you Samir. Dont run in the direction in which the crowd is running. At 215 levels, Zydus is trading at 22-23 times its trailing 12 months earnings. It has to consistently raise earnings by 25-30% to justify such valuations. I won't put it in the same class as HUL, Colgate or God Consumer, or such biggies. Zydus is a health and wellness play which is highly underpenetrated and has huge potential to grow and exploit. With it's leadership position in all the 3 segments, this should be able to deliver 25% growth in earnings and may surprise on upside. can call it more of an evergreen stock. Disclosure: I have a decent quantity of Zydus in my portfolio. Added Max India again Samir, you can see today .. Zydus Welness was on fire when whole of Asia is seeing blood in the desert.. Added Gruh Finance though looking weak yea thats because stuff like this is a very good defensive stock....i hope it stays on fire when the markets bounce back...would be nice to see that face of a defensive too....but yes...zydus is very good stock...one i really respect coz of its products... have introduced Hitachi home and added Patels Airtemp

Originally posted by FutureBull has anybody looked at Godrej Prop?.. looks expensive on PE basis

oh yes its very expensive and it was always expensive....why are u interested in this stock though ? wanted to have exposure to real estate for long term with ethical promoters.. could not find any except this one and Anant Raj Ind.

Originally posted by FutureBull wanted to have exposure to real estate for long term with ethical promoters.. could not find any except this one and Anant Raj Ind.

futurebull, this is not pure real estate company, i mean the business model is very different from other real estate companies. it does not own land but is executor of residential projects....

personally speaking i guess you should wait for oberoi IPO....its good and debt free real estate company....hard to find a debt free real estate company...and moreover it has very good brand name... Mahindra LifeSpaces is one of the best in terms of ethical management and good track record and performance. Why don't you take Bajaj Holding (though markets are reluctant to give full value to holding companies- but I have seen Jindal south west holding to jump from 320 to 1800 in four five months). Besides you will get free Bajaj auto with that holding I have two holding companies already and have seen them underperforming.. Network18 and Max India both offer value if you consider the underlying assets but they remain in discount mode.. Thats why looking at operating companies like UB Beer, thought of Finserv because of its valuable insurance business both Life and non-life have started throwing cash.. Look at Q3 results.. They are almost no.2 in both the categories i came out of Hitachi Home, Karuturi and Sical logistics.. all my dull stocks cleaned.. will focus on concentrating portfolio I am posting my latest portfolio as I narrowed down to 10 stocks recently and here is the breakup Lupin - 26% Bilcare - 16% Bajaj Finance - 12% Godrej Properties- 11% Yes Bank - 9% Eclerx - 7% Godrej Ind. - 7% Zydus wellness- 5% Srei Infra - 3.5% TCI - 2.5% got rid of Srei Infra.. felt that it would underperform and I felt i am short of understanding this company completely. now would wait to add Yes Bank/Zydus and introduce Page.. have rethink portfolio in this high inflationary environment selling Srei proved to be good move in hindsight..sold TCI as well. .long term outlook is bright but given the slowdown in economy and impending oil crisis it would not perform in near term.. increased weightage on Yes Bank .. new portfolio looks like below.. will increase exposure in Zydus and Eclerx:Lupin - 25% Bilcare - 15% Bajaj Finance - 11% Godrej Properties- 11% Yes Bank - 20% Eclerx - 6.5% Godrej Industries - 7% Zydus wellness- 4.5% Godrej Prop is probably only RE company which has 1)Joint development model -capital light so high capital efficiency guaranteed 2) large own land(almost 3600acre in Mumbai alone) so no need to be in the market to keep buying land to grow 3)Invaluable branding - they sell all the flats /apartments in no time.. just check what happened in Ahmedabad and Gurgaon I believe the model is quite scalable and proven over a period of time. It has been growing at 50% for few yrs now and as per my estimate it will grow 50-60% for another few yrs and you would not

deny the opportunities real estate developers have in India it is just that these players don't use it effectively.. we need housing and somebody has to work on that..similar apprehensions have been expressed about Aviation but I had multibagger in Spicejet because it was a different company within that sector Godrej grp has always created value so I trust them Added Bajaj fin and Godrej ind, entered in Page ind. and Agre dev. was tracking Magma Fincorp for last 2 months. will keep watch Basantji and seniors,I need a portfolio suggestion. I am seriously considering letting Lupin go and buy either Page, Zydus or Hawkins. Lupin has been 2 bagger for me and growing consistently at 20-25% and will keep growing for another 2-3 yrs at least. The dilemma is that it consists 20% of my portfolio and provides stability available at 18 times forward consensus earnings. I have Page and Zudys already and could consider adding. If you are ready to put 10% in a stock, why would it be a dilemma if it becomes 20%? If you are confident about growth potential of Lupin over the next 2 - 3 years, you should probably buy Page/Zydus/Hawkins with fresh money. Thanks Smartcatji, The real issue is Lupin has reached its terminal PE and only growth will drive the share price. This is a large company with complex operations around the world and increasingly difficult to model myself.It is a challenger and getting challenged too on various fronts. In comparison, consumption plays in India have multi-year to a decade long growth story. I wanted to make a choice between confident grower and increasingly looking shaky Lupin though i have full faith in the mgmt. No Smartcatji, It was Basantji who got me converted to buy Indian consumption stories. I took a hard look and was in two minds even before RJ sold (he has just sold 20% on initial holding). You would see my dilemma before. My reasons are as follows: Large pharma comp. will face growth challenges in Rupee terms. going forward. USD would depreciate a lot.I understood that if I could find quality and faster growth in smaller organisation then why not. It was largely due to relative growth. If somebody follows him, he should buy Orchid Chemicals. available very cheap, I am more interested in Piramal though. Bought more of Zydus, Yes Bank, Bajaj Finance,KKCL and Godrej Prop.

Originally posted by rajnsharma By simple calculation 250*20=5000. By the time you run out of cash NIFTY will be less than zero. Am I missing something?

When Futurebull said "add 10% to my stocks", it doesn't mean 10% of his cash levels but 10% of his overall portfolio size. Atleast, that's what I thought anyway!

Smartcatji, Could you share how much cash do you hold any point of time? and any downside target you are working with?

Absolute cash level does not matter - so its something I don't plan at keeping at a certain level. If I hold Rs. 10 Lacs in cash, I can average down to, say 10,000 Sensex levels, with some planning. And if I hold just Rs. 5 Lacs, I can still average down to 10,000 levels. What matters is how you

space your investments (Eg: invest every 500 or 1000 pt fall) or how much you invest (Rs. 50K or 100K?) for every X percentage fall in the index. I control my cash levels while averaging down by tweaking the latter - that is, my fixing an amount to invest. And going by the pace at which stocks in my radar are falling when compared to the index, I will probably run out of cash when the Sensex hits around 9,000 levels (very very rough estimate). Now if I'm wrong with my guesstimates (statistics says that there is 99% chance of me being wrong here) on the maximum downside, I'm totally fine with that. That is, if Sensex never hits 9,000 but bounces back to all time highs from 15000 levels, I would be quite happy about it. That's because significant portion of my assets are already in equity, and its really OK if I'm not able to deploy all the cash. What Smartcat indicated is applicable to portfolios with very large number of stocks. For those wishing to limit themselves to few stocks say 5-6 best way to deal with corrections is to decide various levels for individual stocks and maintain strict discipline in buying. There one does not have to look at the market levels, only the stock price suffices. Suppose I want to buy stock A from my cash hoard. Then if the price of A is rs 100 then i would first decide where the stock would end up in worst case scenario in the markets. Suppose that comes to Rs 50. then I would start buying 20% of my intended allocation at drop of Rs 10 each. The key here is to allocate that amount of fund to only that particular stock and not lose focus and buy something else from that fund since it becomes cheaper due to general market correction. This method is more suitable for concentrated portfolio where one is sure of the stocks one chooses and especially the worst case price which one predicts.(Though the stocks can go much below these also if markets decide to really tank )

Personally I have found this method of buying very good during market corrections. Often the worst case price does not come around and stock reverses much earlier, then I would keep that fund for some more time and look for opportunities in other stocks. latest portfolio: Financials: Yes Bank - 25% Bajaj Fin - 15% Consumption: Hawkins - 14% Page Ind - 7.5% Zydus Wellness-7% KKCL - 8.5% Agri Pi Ind - 8.5% Outsourcing Eclerx - 14.5% Some major changes. sold out Godrej Prop. and bought PI Ind and Eclerx. I have been trying to find stocks which could grow despite slowdown/recession. I found that companies like PI Ind. Arshiya and Piramal Glass have ability to make money in next 2 yrs despite slowdown. Due to leverage some of them might face problems but if we start seeing interest rate cut, re-rating would not be far away. I am looking to add some quasi-infra play like Arshiya intl and Ador Fontech. I am somewhat convinced about Piramal Glass and still studying La Opala.

Topic: HIT 2710 PORTFOLIO Posted: 13/Aug/2009 at 4:10pm

LONG TERM STOCKS PAREKH ALUMINEX 18 % LAKSHMI ENERGY 18 % TTK PRESTIGE 7 % GSPL 8 % HAWKINS 5 % PATELS AIRTEMP 2 % VIVIMED LABS 6 % APW PRESIDENT 2 % TIME TECHNO 4 % MEDIUM TERM ALLIED DIGITAL 5 % HEIDELBERG CEMENTS 6 % IOB 6 % OIL COUNTRY 6 % APAR 4 % ESCORTS 3 % Recently sold out of Natco, Orchid,Nocil and bought IOB and Heidelberg. Initially I had only three stocks namely PARAL,LEAF and TTK PRESTIGE but I wanted to diversify and hence booked profits in all three partially. My acquisition cost for PARAL, LEAF and TTK PRESTIGE are much lower because of booked profits and hence I intend to hold the rest for longer time. Recent buys include IOB, Heidelberg,vivimed,Oil Country,Hawkins, Time Technoplast . Escorts is purely bought on technical analysis of the stock. I am rethinking about Oil Country because of management concerns. (I intend to give it around 2 months to do its bit and reconsider) I FOCUS MORE ON GROWTH STOCK WHICH DELIVER CONSISTENT GROWTH AND OCCASSIONAL STOCK LIKE LAKSHMI ENERGY WHICH HAS A GOOD BUSINESS MODEL, BUT HAVE FALLEN ON BAD TIMES. ANY SUGGESTIONS FROM MEMBERS FOR ANY SUGGESTED CHANGES OR OTHER GOOD PICKS IS MOST WELCOME.

The time to back the cyclicals was in March 2009. They have now become a pure earnings play hence that relative attraction seems to have evaporated - at least from the way I see it.

Hi Subu, The only probable cyclical I see is Lakshmi energy although in strict sense it is not a cyclical. Regarding Heidelberg, I see it more as a value play with top notch management and good results every quarter since past many quarters.To me it looks like a rerating candidate because of cash in hand and pe. Apar is one stock in which I have very small holding. I view as more of a turnaround. Rest of stocks like Parekh Aluminex is a sort of FMCG, just as Vivimed and Hawkins and TTk Prestige seem to be all weather stocks. The newer babies like APW, patel's airtemp etc have valuation on their side. IOB is I feel one of the cheapest PSU bank stocks. I read a report by Kotak about 2 weeks back and was impressed by it.

Originally posted by SingleMalt Hit, it appears that you have exited VST Tillers totally. Do you plan to reenter sometime soon?

There is the small headwind of poor monsoon affecting sales of tractors and tillers for next one or two quarters. I intend to re-enter but I think stock will consolidate for some more time maybe till Sep quarter numbers. Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

Hi Subu, My first choice in the category you mentioned would be Parekh Aluminex. They are into AFC and Aluminium rolls where there is likely to be very strong demand going forward and justified by company's expansions. Another is vivimed labs which is a sort of fmcg ancillary company with products like triclosan and sunscreen ingredients. Heidelberg cement with its new promoters and cash on books is likely to increase its capacities and profits. APW and Patels Airtemp are sort of bets on upcoming companies. TTK Prestige and Hawkins need no introduction. Lakshmi Energy, a lot has been written and discussed about it. ADSL is a sort of medium term pick. Since it has given me good profits thanks to Nilesh Mahajan, I continue to ride it. Oil Country Tubular has shown remarkable growth since coming out of BIFR. Escorts is a technical pick. If it can cross 80-82 with volumes, it can give very fast returns. IOB was mentioned in a Kotak report as a buy at 88 with targets of 140 with valid reasons. Cy 09 eps is 24 and cy 10 is projected to be 19.7 and in CY 11 25. Following is their conclusion on the stock. Valuations adjusted for likely risks are not too expensive We currently model modest expectations in our financial model for IOB over the next few years: (1) NIM decline of 15 bps in FY2010E, (2) fee income growth of 15% yoy in FY2010E and FY2011E, (3) fresh NPL slippages at 5.5% of loan book in FY2010 and 3.0% in FY2011E leading to an increase in gross NPL ratio at 6.8% as of March 2011 compared to 3.0% as of June 2009. The current valuations at 0.7X PBR FY2010E appears

to factor depressed profitability in perpetuity, which is inappropriate, in our view. I dont expect my stocks to be multibaggers because I dont know which stock will turn out to be that but if my stocks give me reasonable appreciation, I would be quite happy. I try to be on the fair side of valuations. Regarding debt equity ratio my cutoff line is around 1 for growing companies because many a times during expansion phase the debt burden is quite high. It is how quickly they repay the debt that differentiates them from ordinary companies. Yesterday Ashish Chugh recommended Oil Country for targets of 75 plus on his stock pick in the game they play on cnbc tv 18. These people along with the channel seem to be collaborating to push up stock prices. I took advantage and moved out of it and got completely into idea for trading purpose.. Don't know if it was a wise idea. But I also checked on the promoters and was not very encouraged by their behaviour. As you say, I have been putting money into the markets literally from 2000 to 2008 but from Oct 2008 till date I have been making money, but still learning about investing. I like combining fundamental and technical analysis although at times both don't go together case in point being Nocil where charts suggest blockbuster but fundamentals don't support so I am waiting on sidelines, occasionally doing trading.

Hit, it appears that you have exited VST Tillers totally. Do you plan to reenter sometime soon?

The stock is now back on my radar. Today it was around 345. Let us see how much more down it can go. Bad monsoon will be an overhang on the stock. Incidentally the stock has 51 % market share in tillers. hence it is a sort of market leader Getting into cash. Offloading and booking profits. Capital preservation mode. Hitesh......Why are you checking out of TTK? The company still has EPS upside (new products, self sustained expansion, competitors also doing well, scope for efficiency gains..blah blah) Offcourse, booking profits never cause losses but why bother?

Agreed, eps upside exists. But I have booked out due to sharp run up and upside potential is limited at this price. I sold at 192 and already stock is at 183. I will re-enter when it comes down somewhat. Besides I am not too comfortable with the overall markets and when sharp corrections do occur, they do not spare any stocks. If markets do not come down I will sit on sidelines and keep on accumulating stocks like Patels Airtemp where I am getting stock dirt cheap. Elsewhere, if stock prices still go up, let someone else earn more money because he is taking higher risk..

Originally posted by Monkey How about trailing stop loss as a tool of riding the bull (however irrational it might get) and get out relatively easily? Requires tough emotional discipline though.

That might be a good idea but sometimes markets open gap up or gap down and then you would not be able to put stop losses in place. Sold some jayshree tea and goodricke. Bought some Plastiblends. good div yield in good and bad times. Baki sab Vivek Sukhani ke bharose. Looking at elgi equipments based on charts. Fundamentally and management wise also a good stock. Stock has broken out of Inv H&S formation although volumes are not very huge. Stock seems to be consolidating after a good move. Bought some federal bank and max india.

Originally posted by Circuit Any trigger or rationale to buy Federal Bank ?

Recently icici bank md chanda kochar talked about their intention to take over some bank in India. (it was alluded to indirectly, we can read in between lines) There are quite a few banks which could be potential takeover targets. Foremost would be fed bank. Even by itself, it is available at around book value, with cy eps at 28 and expected growth of eps by around 15-20 percent conservatively. Good CASA ratio of around 26 percent and capital adequacy ratio of around 20% Return ratios would be low around 14-15% and hence the stock is under pressure. At this price, a lot of negatives are factored into the price and hence I bought it. Also, the net npl is around 0.3 % I feel the stock has got good return potential. I tend to rotate some of my medium term picks when a particular stock runs up too much. I sell part of it and put it into something else I find attractive. Not too much new money goes into the portfolio in my case. Hitesh bhai, its a pleasure to know you... One question here, how do u decide ur exit strategy 10 only on the basis of % gain on investment 2) based on P/E & quarter results 3) Does time duration plays a factor? I mean if in a stock in 10 days if ur money got appreciated by 80%, will you book profit full/partial even if there is no change in fundamentals? These things confuse me a lot and frankly till now , i ve not been able to develop a well defined exit strategy ( one reason , I m in this game from past 3 years, just started as a beginner without any knowledge , 6 months and market crash, so , lost heavily as never worked on fundmentals, so exit strategy in profit ki baat hi nahi ati ,) but in past 6 months also, I have not been ble to develop a perfect exit strategy like i have on entry side... please add some value.. Many a times exit strategy is a combination of factors. Sometimes technical analysis provides a clear cut clue about the resistance zones. Other times as in the case of ttk prestige, my buying zone was around 120-130 and target was somewhere around 175-180 and the stock overshot it because fundamentals were very good. But I got out between 185-192 and stock is well above it. But I have no regrets because I have made almost 50 percent returns within 3-4 months. Now i have employed that money in IOB and Max India and Heidelberg as I see higher returns there. But many a times the reverse happens and while the stock you sold goes up, what you bought in its place just refuses to move. Another strategy I employ is to buy say 100 shares of a company and if the share rises about 2530 percent, I offload half of them so the acquisition cost for the rest comes down to a comfortable level.

So there is no fixed strategy for the whole portfolio. Individual stocks have individual exit strategy. For Lakshmi energy, 200 dma is around 121 where it will face resistance but my gut feeling is that it will overshoot it and then come back to take support at that level. Let's see how things pan out. Yes and that was the mistake i did last time, bought at exact 83, sold at 116..became lalchi n bought again at 116, even though charts showed a DOJI after touchin 121, i did not sell and it fell to 110 levels,had to average out and almost 60% capital was locked there, so, even though , even i feel, this time it should cross 121 level n should get to 140, i offloaded 600 shares yesterday at 115...holding 200 for long term.. But seeing a good support at 108, i think enter at 109 and exit at 115 as intra day strategy with tight stoploss below 107 does not seem bad idea if there is some free cash which is not planned to invest...2 rupee loss 6 rupee profit chnces.. lets see ....kya hota hai..... I got lucky there when I sold out completely between 113 and 120 and I invested half the capital in ttk prestige. I started accumulating lakshmi below 95 and kept on buying till about 75 and now sitting pretty. I think once we sell out of a stock, if we feel there will be declines, the buying should be staggered. In lakshmi, current move should make a higher top as compared to earlier high because there is the drought sector tailwinds to help it. I am going to book out half of my holdings above 130 (my target for this upmove is around 145-155) if indeed it gets there and keep the remaining half for longer term as the picture is bound to improve. It has been a dream stock for me along with PARAL and TTK prestige. In all of these I have wonderful rides even good trading in between. Now I wish to replicate in VST Tillers. Bought Mahindra financial PI inds is a fundamental pick so not too much concern about the stop loss thing here. Avg price for PI was around 750 pre split so now it is 375 per share. This ping pong in price probably is due to concerns about dec quarterly results. For me since this is a 2-3 year story I would probably buy more if it dipped further. I have got PI Inds as 15% of my portfolio. Regarding my favorite picks they still remain Mayur, PI Inds and Ajanta Pharma. Another undervalued stock is Indag Rubber. I am also adding Hawkins gradually over past 3 months. Started nibbling at GRUH Finance. These days I am more into trading mode due to the flip flops of markets. Betting 5-10% of portfolio on 3-4 scrips for around 15-20% gains.

Originally posted by Rehan Which company amongs Ajanta, Alembic and Unichem has a higher brand equity in terms of products.

Each company has a couple of flagship brands which rank amongst the top 100-200 in the prescription list. These are not fmcg companies where we can talk about brand strength. Here the bulk of sales comes from domestic prescriptions or from exports/APIs sales. Based on sheer consistency of results and valuations, I would tend to rank Ajanta as no. 1 pick followed by Alembic and Unichem both at No. 2. Unichem has posted good numbers if seen in the context of sequential numbers instead of a y-ony basis. I think next couple of quarters should see the company on a strong growth path as all the growth triggers are in place and the company's balance sheet is strong.

hit ji, i have a query on companies like ajanta, mayur etc which have shown consistent growth in the last 4 yrs or so. how does one know whether it has reached saturation?. obviously these are not strong brands or end user facing products (in case of mayur) . so a p/e rerating is almost ruled out. only was is they should keep earning in the same pace.. and other thing i noticed is that these have been around since 1990's. and their market cap is still less than 500cr. (note : am asking this because, i am moving to a highly concentrated portfolio and in the process i got rid of both ajantha and mayur although i kind of liked them) PE rerating is a function of market fancy. One has to wait for roaring mid/small cap rally for rerating to happen and that is when these stocks really fly. Till that time earnings take care of stock price appreciation. Regarding opportunity for both ajanta and mayur to grow, both of them are likely to grow strongly for next 3-4 yrs atleast looking at the developments going on in the companies. Bought some Page inds with a view to add more in a staggered manner. In a visit to their jockey store I was quite impressed with the newer (or may be i have not seen them too closely before) tracks, socks etc. I think this is one stock which could some day become a large cap looking at its offerings and market potential. I see a lot of patients with "andar ki baat" and surprised to see so many jockey labels even in so called non affording class of people. Ajanta Pharma creates new life time highs and closes at the level for the week. The company's earnings have reposed my faith but I guess some amount of re rating is yet to happen. Mayur Uniquoters also has shown consistent earnings and even better, -- higher dividends which makes it much more likely to be in the line for rerating. PI Inds after having performed price wise now has lagged down more due to perceived fears of poor results. I intend to give it more time of upto 2-3 quarters to see how the custom synthesis business shapes up with their new plant slated to be operational soon. I have been tempted to add more Hawkins to the original position taken around 1480-1500 levels but holding myself back. I think the next court hearing should be a pointer for things to come. Trading bets like Arshiya, HSIL etc have shaped up quite nicely. Initiated some more trading positions in KPIT, Zensar Tech(excellent set of q3 results here-- stock seems to be attractively priced), Eclerx, and Inox leisure. Technically, Sanghvi Movers seems ready for a bounce. Key learnings over the past few months have been to keep one's conviction intact and ride over rough times without panicking. Sooner or later, earnings are going to drive stock prices and if one has bought stock at attractive prices, risk reduces a lot and returns get magnified.

Originally posted by patra04 Regarding eClerx, are you eyeing this as a pure technical play or also a fundamental story? I have been thinking of opening a position based on the fundamentals.

I think most of the juice is out of Eclerx-- I think it went up four times after Manish Okhade put it up.Great pick by him. I am playing it only for a technical bounce. I think it could do eps of around 55-60 for fy 12 and dividend payout being high, dividend may

be around 28-30 per share which should provide some protection. Business wise the top 5 clients account for a lot of business. Agreed they got over that hiccup once when I think lehman collapsed, but I dont want to be betting too much on a company deriving almost 80% of its revenues from top 5 clients no matter who they are. Margins wise I dont see too much upside occuring here as I think they seemed to have used up most of the operating levers. Plus the valuations accorded to top tier software companies to the tune of around 20-22 PE would limit the valuations given to eclerx unless they take a rabbit out of the hat in terms of growth.

Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart.

What one needs to know is Page is no more a chaddi player. It is into socks, track pants, boxer shorts, bandis, women's inner wear, kids inner wear, Speedo range of products etc. Out of the total indian population of 120 odd crores, if one were to assume that only 5 % people are the potential addressable market for Page, then with all the above products, Page can garner minimum 500 (2 chaddis plus maybe a pair of socks or two pair of ganji) Rs per year sales from the above people then it has sales potential of around 3000 crores. I read somewhere that the whole underwear market potential for India is around 18-20k crores. And this market keeps growing at around 12-15% per year. Plus Page has the brand power and distribution network firmly in place. Currently page is around 3000 cr market cap on turnover of around 600 crores. So on turnover of 3000 crores it can go up to around 15000 crores. And the brand pull is so good that they can keep on extending the brands plus launch new categories which they feel comfortable catering to. All in all this can be a good compounding machine for those who want to buy and sleep and forget for next 3-5 yrs. It can easily give around 20% cagr returns on a conservative basis. If one is smart and gets in during a weak quarter or during some problem the company faces of a temporary nature, remember Hawkins then returns can be higher.

Regarding threats of Reliance or other bigger players, just look at the attempt of Reliance to enter the retail space looking at the success of Pantaloon and they seem to have landed themselves in quicksand. One cant make a brand overnight in the undie space. Thats where page has the edge. IDFC has broken the pattern of lower highs and lower lows this week by crossing earlier swing high of 136. So if the results are okay then it might continue its uptrend. I think a valuation of 25-30 though not low, but is realistic for a very good cash flow, high ROE & ROCE and high yield business and companies like HUL, ITC, P&G has been doing it for a long time. Now for China competition, I don't know how it is going to affect Page. I don't know if it is representative, but when it comes to food, clothes, cosmetics, etc we have a rule in our house - go for the best and most respectable brand. We cannot afford to forfeit our health at the altar of a few rupees. This may not be a representative case, but it will take a good deal of effort by any company to change my brand of clothes and food - and doubly so for any Chinese brand. So even if the high growth tapers off in 3-4 years, we will still have Page going at P/E of 20-25% and yield of 3% and a reasonable predictability of earnings - growth will be like (inflation + economic growth + productivity gains) 15%. Why should we be worried so much? Exited Arshiya Intl. Targets of 155 duly achieved. Results have been declared post trading today and on face of it look good but I think valuationwise it is fairly valued. Added more Sanghvi Movers today around 94-95 levels. This could be an interesting play on rebound on the infra theme.

Originally posted by princeofmass hit, your views on Mannapuram after RBI action and the policy that it is going to follow for gold loan companies. Is current cmp good to enter?

Govt intervention is always a risk factor in these kind of companies and hence they dont make a strong case for long term investment. If you are planning to buy for short term or medium term pop up, then its okay. Sold some PI Inds. I think the results are not so impressive.

Originally posted by prudentinvestor

Originally posted by hit2710 Sold some PI Inds. I think the results are not so impressive.

Hi Hiteshji, The exchange fluctuation played spoilsport in this quarters results. Compared to forex gain of 3.89 Cr in Dec-2010, PI booked 6.45 Cr loss in Dec-11 quarter. Even for 9MFY12 figures there is forex loss of 6.46 Cr against a gain of 4.70 Cr in 9MFY11 If one removes the effect of forex gain/losses the results are not that bad as it primarily appears to be. Also net interest expenses are steadily coming down which is also a good sign. What's your take on these ?

Hi prudentinvestor, Although its directed to Hitesh, I just want to come in here with his permission , hope you don't mind it Hitesh--The forex losses of 6.46 cr. that you are looking at comes into picture after you look at EBITDA and its the EBITDA which has suffered badly at just 16.10 %... This is way below management's own estimates which had put EBITDA margins for Agri segment at 18-18.5 % and CSM at 21 % +.....Although YoY EBITDA margins look improving but its not atall a good sign comnsidering the fact that PI's flagship brand Nominee has now attained a sightly mature status in the market. This might be one off but lets wait for the details. The key monitorable will be contribution from Agri segment as well as CSM order-book position and unless there is clarity on that front nothing can be said with confidence. To conclude, even w/o considering forex implications results are bad with the only positive being the reduction in interest costs. Once the details are known picture will be more clear. I think Mahesh has covered most of the details of results. Regarding forex impact its difficult to judge where rupee is going to go in the next quarter or subsequent quarter and hence better to be cautious on the companies which are exposed to vagaries of forex profits/losses. Actually hedging should act in stabilising the profits for companies and these days I see a lot of companies with outstanding forex losses which is like a hanging sword over them. e.g Astral Poly,

Jain Irrigation, Sintex etc. Maybe they should learn something from the way Tech biggies like infosys and tcs manage their forex hedging policy. Bought first tranche of VST Tillers and Unichem Labs today. Both have been on the radar for quite some time. I have been impressed with the management pro activeness in VST Tillers where atleast they declare their intent to ramp up the business. What they achieve needs to be seen but even if they end up close to their targets things could get really interesting. Any govt initiative to increase subsidy for farm mechanisation could work wonders for the company. Unichem -- I wanted to buy it cheaper but since it is not going down, I have decided levels at which to buy the stock. I think this could be a good company to invest in for someone with a medium term horizon for 1-2 yrs. good management, almost debt free, API business scaling up, expanded capacities slated to come up in next few months, and good sequential numbers shown by the company. I think if things get on track according to management plan, this could easily provide 50% return within a year. Manish, Most of the branded products companies are quoting at valuations which might not be too comfortable for the average investor. While selecting stocks I am not too bothered about brands and moats etc. These are not the only holy grails. If one can manage to find stocks which are grossly undervalued due to various factors, and can bet on these, one can easily get around 50-60% returns over 1-2 yrs. That amounts to 25-30% returns per year and after those returns are achieved one can again have a rethink. At that time if one does not find too much upsides, one can look elsewhere. While I was focussed on Ajanta, what I was focussed on was gross undervaluation for a company growing at a consistent growth rate of 20% over last many years. The rerating the stock is currently undergoing was bound to happen sooner or later. Ajanta does not have the proverbial market leadership position. you can go thru the thread to view the doubts cast about its moat and what not. But still it has managed to more than double within 12-15 months. If one were to assume similar situations going forward, I think VST Tillers and Unichem fit the bill. On trailing basis Unichem might look expensive but one has to treat it as a company which is going to undergo "turnaround", where profits are going to be back on upswing in next few quarters. With VST Tillers, a lot has been discussed. What I am enthused about is management intent to double its sales by FY 14. Till date they have not boasted too much about any future targets. So I would take their words seriously. If they achieve it then sales could be around 1000=1100 crores from current around 500-550 crores. Even if company manages net margins of around 8-9% it can do net profits of around 80-100 crores giving EPS of around 100 per share. And assigning a PE of 10 also gives a target of 1000. Thats a more than a double from current levels. Now coming to risks in VST Tillers, entry of some bigger players might stall its advance. But at valuations of a PE or around 7-8 with a clean balance sheet and some valuation comfort of its land at Bangalore, most of risk seems priced in. And if rerating happens to take the PE to around 15, upsides could spring pleasant surprise. Currently markets seem to be giving the cold shoulder to this company and I feel these kind of times are the right times to get into the stock. These are the kind of bets I always like. One of your great picks Balkrishna Inds was a similar undervalued pick which has almost doubled from your recommended levels. Among the much fancied group with steep valuations, I like Page the best due to obvious reasons listed elsewhere in the relevant thread.

Originally posted by Rehan I saw unichem financials. But maybe I dont get the true picture from there about their coming growth. What do you think will be there EPS down the road like 2 to 3 years from now?

Difficult to guess with these kind of sort of turnaround companies but my guess would be FY 12 around 8.5-9, FY 13 would be around 13-14. Company has historically traded in a PE range of around 15 due to negligible debt and high dividend payout.

Originally posted by excel_monkey Hitesh bhai how does orchid pharma looks from here after redeeming their FCCBs and half of the money came from internal accrualsThanks in advance

I havent looked in too much detail at Orchid anytime. The debt issues have always kept me away.. Two good pharma companies with debt free balance sheet and good prospects going forward are Unichem and Indoco Remedies.

Originally posted by excel_monkey Thanks Hitesh bhai Don't they look expensive at 15 when large caps quality names are available for 18 to 20 times? Also any take on FDC?

Trick here is to see it in light of its future performance. I expect FY 13 EPS at around 13-14 per share. It has operating cash flows of above 100 crores over last 4-5 yrs and practically no debt, once the expansions are over most of these will turn into free cash flows. Company is putting up new facilities in Sikkim and Baddi and in MP in SEZ. Problems it faced were of temporary nature viz. change in distribution model which led to inventory destocking and hence margin compression. They have increased the number of MRs to get more juice out of their domestic portfolio. I can see a lot of aggressive marketing in derma range from them. And they have quite a good range of excellent quality products. Plus they are focussing on increasing sales from Tier II brands like Olsar and Telsar which are nowadays upcoming antihypertensive. (life style drugs-- ek baar khao jindagi bhar khao) A look at sequential numbers for the last three quarters will reveal steady improvement in net margins from 8.5 in March 11 and June 11 to 9.64 in Sep 11 and up to 11.14 in Dec 11. These were as high as 19% in March 10 and around 17% in June and Sep 10 qtrs. I think even if the net profit margins settle in the region of 14-15% once all the things get settled, on expected sales in excess of 1000 crores, for FY 13, the net profit could exceed 140-150 crores and with 9 crores shares outstanding you can calculate the EPS. These results will start reflecting from q1 fy 13. At least thats what I am betting on. Problem with FDC is lack of visibility of topline growth. If they can somehow manage to show strong growth, then it is a great investment bet.

Indoco does not have a domestic business as strong as Ajanta or Unichem. But they have a niche in opthalmology where they have tied up with some foreign firms for supply of drugs for US and other markets. That is going to be the growth driver. Again a near debt free company.

Originally posted by shri1074 Hitesh Bhai,Muthoot finance which was one of trading bet has come back to the buying price. What should be the strategy going forward?

It is likely to provide a tradable bounce but strict stop loss of around 149 (on closing basis) needs to be followed. Fundamentally speaking it seems govt regulations are hurting the company. But they seem to be aggressively mobilising funds through NCDs. Bought Praj Inds today around 79. The stock price is in short term correction and holding above its 200 dema which is around 78.5. There is a rounding formation on weekly charts and for the medium term it can target levels of around 100 plus.

Originally posted by sureshbazi waiting for Mr Tulsian to give Buy recommend on Haldyn glass on TV so that I can exit on that day..good way to sell a stock

Agree. For the short term atleast you get a good tradable bounce to exit while all the mungeris watching him on TV are lapping up the stock.

Originally posted by rinkumalpani Have you looked at the charts of vip recently?

Earlier swing low of VIP inds was 73.50. recent high was 128. 61.8% retracement comes to around 94. cmp is around 98. I expect support to be between 90-94. That might be a higher bottom formation against earlier bottom. Lets see how things pan out going forward. Dhanuka is a good company in the agri space with a good balance sheet. But I think it is not likely to have the explosive growth likely to be seen in PI Inds as it does not have a big presence in custom synthesis. If I were made to choose only one of them then it would be Mayur Uni at cmp. Among stocks which I find attractive currently, I would go for Sanghvi Movers and Unichem Labs. Dishman Pharma could be a dark horse in the medium to long term.(1-3 yrs) If the debt and other issues of Dishman get sorted out then there could be a multibagger in the making.
Posted: 14/Mar/2012 at 11:47pm

Originally posted by baba Sanghvi promoters had pledged their shares .. I read it somewhere . Is that a concern ? Plus , the YOY profit growth is not looking impressive .. but , seems the management is good . I dont know much about the mgmt of both the commpanies . Hitesh bhai , Which amoong the 2 [ sanghvi / unichem ] which has a better mgmt . ?

Sanghvi Movers promoters have pledged 3% of their total holding which amounts to 1% of total equity. The promoters hold around 45% and have pledged 1%. Now you tell me whether that is a matter of concern? Regarding y-on-y growth you need to have a closer look at 9M and q3 fy 12 results. Reduction in interest costs has shown what effect it can have on the bottomline. And according to management commentary this interest cost is going to reduce further. So for next 2-3 quarters even if sales growth is tepid, profit growth will be stronger. And once the company and the infra sector gets out of dumps the sales growth will take care of further improvement in profits. To me Sanghvi looks like a safe bet to play the infra sector. Stock is available well below its book value also. Book value is important here bcos the assets are in the form of cranes which company possesses. Plus Sanghvi has very good depreciation policy. Regarding managements, I think both Unichem and Sanghvi seem equally good.

Originally posted by excel_monkey Hitesh bhai What has gone wrong with dishman and what would fix this once promising company?

Carbogen Amcis acquisition probably was ill timed. With the global downturn in 2008, CA suffered from some laxity in demand and since then the management is working hard to get things on track. And the debt taken for the acquisitions also started affecting margins. Dishman is one company where if things fall into place, there are chances of company recording huge profits. Enhanced capacities are already in place and if and when they are properly utilised, it can work wonders for the company. Janmejay Vyas is the chief there and he might have made a miscalculation in his acquisition but I feel that given time, he is quite capable of bringing things on track.

Originally posted by vasantcool Hit ji,Could you please have a look at Mujal Auto? The growth and price look good to me. Need your views.

Looks quite good based on the last few quarters. I guess the way the Hero group treated the minority shareholders while divorcing from Honda might be having some rub off effect on other group companies. Otherwise I think growth will be consistent with performance of Hero Motocorp. Valuation and balance sheet wise looks quite good. Bought Blue Star and Symphony with a medium term view.

Looks like this summer is going to be a hot one. Plus ground checks reveal that the AC companies have hiked prices to some extent as compared to same time last year.

Originally posted by koolvalue Hit Sir are you following Setco automotive.Stock is in continuous uptrend I tried to find some information about it in TED but there seems no thread.If you have some info please share with us. Thanks

No idea about setco. But looking at the charts it seems to be on a dream run.

Mar '11 Return On Capital Employed(%) Return On Net Worth(%)

Mar '10 28.38 37.37

Mar '09 22.84 28.21

Mar '08 18.17 23.75 23.08 31.57

Super impressive ROCE/ROE ... with just PE of 8 ... Has to have a dream run.

Originally posted by baba hitesh bhai , Is it time to start booking profits in Ajantha pharma / ?

Why so much hurry? Stock is posting new all time highs and not correcting much. Better keep riding it.

Originally posted by kmp_saij Dear Hiteshbhai,

What is your view on Shanthi Gears?

It seems "shanth" for long time.. no big up move is observed in last few months..

Shanthi gears mein bahut shanti hai. I have done ocassional trading between 37 and 41. Gives a cool 10% with very little downside risk if one buys at around 37. I think the fundamental story remains about it being a value pick. They have appointed a new CEO who should guide the company on the growth path but it will take some more time.

Why so much hurry? Stock is posting new all time highs and not correcting much. Better keep riding it.

haahhaha ok hitesh bhai ok .. will try to hold on .. but this is soo tempting .. more than 100 % i made in less than an year ..

fear of losing profits "fear " n "greed" >>> the two strongest emotions that run the stockmarkets !! The last time I made 100% plus returns was from sun pharma n lupin , but that was all over a period of 3- 4 yrs .. btw hitsh bhai , ' is it sensible to buy 20 share more of ajantha pharma / or shd i push the new fund into unichem / mayur / PI ? What do you sugGest ?

A monthly investment of Rs 500 (Rs 17 per day) for 30 years @21%CAGR can create a wealth of Rs 1.5 crores. !!! based on cmp and risk reward ratio, unichem. Portfolio as on March 12.

No. 1 2 3 4 5 6 7 8 9 10 11

STOCK UNICHEM LABS AJANTA MAYUR VST TILLERS SANGHVI MOVERS ZENSAR TECH ATUL AUTO BHARAT GEARS HAWKINS PAGE SYMPHONY, BLUE STAR

PERCENTAGE 20% 20% 12% 10% 10% 5% 4% 4% 5% 5% 5%

I have put up my investment theme in most of the top picks in the relevant threads on TED. I recently hiked my position in Unichem Labs. VST Tillers has been a recent addition after having exited earlier. I expect Unichem and Sanghvi movers to give good returns in next 1-2 yrs. Recent exit was in PI Inds, and Indag Rubber which gave good gains. Trading positions with good gains exited in various stocks like Arshiya, HSIL, etc and were converted into Unichem. Atul Auto and Bharat Gears are almost micro caps where I feel upsides could be good. Hawkins uncertainty has been a bit frustrating but I am holding on. Page seems rock solid but upsides seem capped unless they come out with mind boggling numbers. Symphony and Blue star have been positions for the medium term. Blue Star seems to be getting close to my stop of close below 185 levels.

Originally posted by smartcat Doc, do you have an opinion on "Covered Call" strategy? Buy some shares and write calls against it to earn regular income?

Yes it can be done to have regular income. Say you have 100 shares of Infosys. And suppose for example lot size of infosys is 100.(not too sure if lot size is 100 or not.) cmp around 2800. You can clearly make out that infosys is not going to cross say 3100 or say 3000. You can write call of that level and gobble the premium. If the option expires with stock price below whatever strike price option you wrote you have that income from writing the call. If the stock price shoots up then u gain from your physical delivery shares whose value goes up so loss is minimised. One will have to calculate exactly how much money can be safely made with this strategy. And one has to have a perfect idea about the broad trading range of the stock in question. Plus of course have delivery of atleast number of size equalling the lot size. This strategy is a perfect fit in a range bound stock. And to be avoided in (unless you are really adventurous and greedy) case of event risk like results etc bcos although premium earned is high, risk remains high. Idea here is to get paid for the time decay of option value with little risk.

Originally posted by Hrishi hitesh sir, can you help us by defining a bit on your style of investment and the approach you follow in deciding stocks. VST, Mayur, Page, Hawkins seems to be theme driven while Unichem seems to be value driven. Just curious to understand how you look at it.

I try to combine most of the types of investment opportunities taught by Lynch in his masterpiece One Up on Wall Street. There is no particular style of investment to which I am attached. Mostly my focus is on small and midcaps bcos these are the ones likely to give highest returns. Many people tend to look down upon these small cap and midcaps as cheap, risky and what not but in my experience if one makes enough effort to differentiate wheat from the chaff, there are opportunities galore. Hiteshbhai, I agree with your view keeping 20-50-100-200 yrs view. But in inflationary environment it is observed Large cap outperforms mid/small cap because of they have pricing power and they have ability to sustain/survive bad time. so keeping this view/fact in mind, I think we should allocate some part of portfolio in high quality large cap irrespective we are passive or active investor. We can change % allocation based on time we are in.

Own whatevers feared, shun whatevers beloved.

Originally posted by Hrishi Thanks Sir but few more questions, if you could please answer 1.Do you base your decision based on any typical data points like RoE, debt, dividend (I remember you saying 15% dividend payout ratio, some time back to confirm profits are real) 2. How you keep a tab on so many stocks (for every decent stock you have a point of view) ? Do you keep screening stocks and then keep under watch few before buying. 3. On Mgmt, how do you check. ( After TED i started reading annual reports, checking the independent director's credential educational and reputation, search for news on promoters in Google and see videos if available, but still this is tough to crack. ) 4. How you decide weight to a stock in portfolio. Do you give importance to stock or sector it belongs to. (Are you like no no for few sectors, say airlines or sugar) Sorry for too many questions.

Number wise my reply to ur questions. 1. Once some company comes on my radar, there are some things I do look for and those are level of debt, the kind of growth likely, dividend payout, promoter holding, ROE as a preliminary screening kind of filter. 2. Regarding keeping tabs on many stocks, I have been blessed with good memory. Plus I store most of the reports or my observations on any company on my computer just to have some reference notes if I need them later on. 3. Management -- my experience is that it is often difficult to judge the management. So if they have high promoter holding, give good dividends and guide the company on the growth path, I dont bother too much about other noise surrounding them. 4. Regarding portfolio weightage, I dont have any fixed formula. I make sure that my top 4 -6 picks constitute around 60-70% of my entire portfolio. Sectors I avoid are commodities (unless there is absolutely compelling or there is a short term trade), airline (very few people have made money here). Basically I dont have any fixed investment style but try to stay within my area of comfort and competence.

Originally posted by prudentinvestor Based on the above, what do you suggest at a decent entry point for Unichem. Also what are your specific expectations (regarding growth) from domestic formulations,overseas subsidiaries and export growth .

FY 12 is likely to be subdued if compared to fY 11. This is a story for Fy 13 onwards. Regarding entry points one can gradually accumulate on declines or predetermined levels and build up position. Unless the capital restructuring announcement comes about, stock is likely to be range bound. Regarding growth expectations etc, I dont go too much into forecasting. What I look for in pharma space is a good company with good management and good balance sheet at reasonable valuations.

Originally posted by vasantcool Thank you for your post but AJanta, Crisil, Eicher Bata, Cravatex, Mayur, VST go up by 8-15% in a day. I am getting frustrated like a small kid. Need to have some patience and get out of greed. But seeing Watch list going up by 50%+ and portfolio by 12% depresses me.

Have a look at your name on TED. vasant "cool" Need to keep cool while investing. Dont look too much at portfolio returns on a day to day or week to week basis but make sure to buy good companies at good valuations and returns are bound to follow. I had similar frustrations off and on when Ajanta was oscillating between 175-225 and I thought markets were mad to neglect such a great opportunity. The key to making money remains to spend more time in the markets-- i.e to remain invested for the longer haul. You must not be aware of the different phases in the market. But experience will teach you that the watchlist going up by 50% and your portfolio by 12% is rather good than watchlist going down by 25% and your portfolio going down by 50% Over a longer term, it matters how your stocks fare better in bear markets rather than bull markets. You need to be patient enough to play the markets. Remember RJ's quote that markets give equal opportunities to both buyers and sellers. Instead of chasing prices, it will be much better to zero in on a select group of stocks and be concerned with their fundamentals ( and not price!!!). Wait for predetermined entry levels or equity-SIP to enter into those and hold on to them till the fundamental story remains strong. While going through value investing by Montier, came across a wonderful sentence. IN THE SHORT TERM BEING EARLY IS INDISTINGUISHABLE FROM BEING WRONG.. Many a times in small and micro caps these are the problems I have faced. We tend to get into a stock early on and often it takes an awful lot of time for the stock to get some sort of market fancy or get noticed by institutional investors etc. Till that time it is often very difficult to not get frustrated out of the stock you are holding. The key to successful small and midcap investing seems to be high levels of conviction followed by loads of patience. Small Caps could easily do nothing for 7-8 years. Also volatility is a big factor in them. You need extreme conviction as in bear markets best of small caps could go down even by 75%. Not to mention the rewards they can give over a period of time. They could make your entire portfolio capital free.

Originally posted by kmp_saij Dear Hiteshbhai, what is view on Vinati Organics now.. After long time, finally it has started walking.. will it start running and finally flying any time soon?

The chart looks quite good. Next resistance could be in the region of 95-100. If the stock manages to cross that then it will be in a free zone.

Originally posted by excel_monkey Hitesh Bhai I could not understand the unichem corporate action How would merger of holding companies would benefit the minority shareholders Also been through the documents they have filed but the jargons confused me more

To put it simply, the "special situation" mentioned by Hitesh bhai, is cancellation of equity subscribed by holding companies. What it means is, the networth will substantially reduce while the profits remain same, hence this will boost EPS significantly. This is more like a large scale buyback, except that there is no cash outflow from the companies side. The decision is pending court approval, so as-and-when that goes through stock may see a huge jump. That is the "special situation". Apart from that company has more pain left in next two quarters, but will be on a strong wicket by Q2FY13 and one can expect strong performance from FY14 onwards. Disc: Long positions. "In my whole life I have known no wise people (over a broad subject matter area) who did not read all the time none, zero. Investing requires a broad knowledge. - Charles Munger

Originally posted by excel_monkey What I am unable to understand is what benefit would the holding companies derive out if it? There is no cash outflow After cancellation the stake of promoters would come down and that of minority go up? That means the promoters are sacrificing their stake for sake of minority? It had a 40% run up since announcement

Prudent Inv has put everything perfectly in a nutshell. Group companies were in the past merged with Unichem and in lieu of merger were allotted shares of Unichem. Now some smart shareholder/group of shareholders probably went to court and a court convened meeting was called details of which are there in the announcement someone put up on Unichem thread. According to that and what I have read, the chairman Mr Prakash Mody has put up a proposal to cancel the allotment given to these companies and those shares will stand cancelled. This amounts to around 30% of outstanding capital. And in the same resolution, the chairman has spelt out that in lieu of cancellation, the amount utlised from capital redemption reserve shall not exceed around 5.66 crores. Effectively from current market cap of 1200 crores 30% is being reduced which amounts to 360 crores worth of benefit to existing shareholders at a cost of around less than 6 crores. Benefit should only happen to shareholders and not to group companies.

There is no IF here. Only WHEN. That makes it a special situation.

Originally posted by baba Doc . , what is your take on mannappuram ? can I start nibbling ?

AVOID. When the govt is bent on destroying some business (e.g SKS) then U never know the downsides.

Originally posted by footy hitji,Did you move out of Astral? If yes, please could you share why? Has its story changed?

I had gotten out quite early from Astral somewhere before the Lubrizol deal was announced. It was around 185 levels then after which it hit high of 200 plus due to deal announcement. Was looking to re enter at lower levels but the spectre of forex losses etc surfaced and then I moved on to bharat gears which I found more attractive. Originally posted by tejas.k i have a question on ur strategy for companies like these that have shown good sales/eps growth over the past 3 or 4 years... obviously we don't have a good earning visibility for these. and then there are things like brand name, scalability prospects etc... my question is , what is the trigger for exit? do u wait for flat/negative quarter? if yes, how many quarters ?

essentially I focus on sales growth without worrying too much about margins unless there is a drastic fall which cant be explained. What I have observed is that with small caps any small blip in margins tends to be punished severely even if it is a stock at a PE of only 5-6 (which means markets dont expect any growth from them) Here one can contrast it with Hawkins which has been reporting howlers since past 2-3 quarters and still stock is at a PE of 20-25 trailing 12 M EPS. This to me implies too much hopes of things turning sweet. this will materialise also but how much sales and profit growth comes about is to be seen. What one can do is to book partial profits on sharp spikes so that the rest of holding becomes extremely cheap. I had bought more than my desired quantity of Mayur at around 104 and 115 levels. I offloaded half my holding at around 232. Effectively whatever Mayur I hold now is free. Thats why one needs to keep looking for newer ideas to keep the money rotating if one is focussed on small caps or less fancied scrips. Contrary to what people keep quoting, I personally feel absolutely safe investing in relatively unknown small caps. But thats the way I have felt all along since past 2-3 yrs of investing. Maybe bcos I dont have to worry too much about retiring on my investments.

Originally posted by rajnsharma Thanks for a detailed explanation Hit2710.

Whatever I could read in your portfolio thread ------to me it seems, you look for opportunities which might come in future and have some issues currently, resulting in mutlibaggers. Isn't Hawkins a similar case?

Thats what basic essence of investing for me has been. But valuations have to be in my favor. In Hawkins I think it is not grossly undervalued at current juncture. Sold some symphony. Stock seems to be up around 13-14% all of a sudden.

Originally posted by tejas.k Its at a TTM PE of 40. In my opinion, its not overstretched. There are a lot of quality companies (earning visibility) with a P/E lot higher than the earnings growth.

Well it might not be overstretched but its not very attractive either at these levels. Plus this price prices in a lot of positives about the results. So with only a 5-7% position here, its a dodgy decision for me since I find other stocks which from current juncture might offer much better returns. Lets see how things pan out. Now I have a stop of around 3000 in mind for the stock. A 40 PE stock will fall very badly if the results are not up to market expectation. Market is expecting Page to do a 35%+ every quarter which may not come true. Last time stock fell almost 25% from the peak. This time hope the same happens . I am keeping that money aside to buy again if it falls. In fact I was almost 40% in Page and now it has come down to 25% which should be good enough exposure. Small cap investing seems to be involving two distinct types of risks: 1. Earnings volatility of the company itself as these companies many a times do not have the size or often the expertise to handle some variables like raw materials, policy changes, demand problems etc. 2. Market reactions to various news -- positive or negative often without clearly understanding the impact of the newsflow. This seems to be mainly due to low level of information, (many a times management is quite uncommunicative), plus some jittery investors who invest in these stocks who tend to bail out at even a whiff of trouble. Those who can handle these kinds of risks amid high level of conviction are more likely to come out winners.

Originally posted by kmp_saij Dear Hiteshbhai,

I feel unconfortable because of D/E ratio > 1 for Sanghvi Movers. Can you plz throw some light on this. I want to learn when & how we might avoid high D/E in some cases. Intresting thing about investment is things have to be looked upon case to case basis. Does management has shown intention to reduce debt in near future? Have they undergone capacity additions recently?

RoE also NOT above 20% in last two yrs. But they are having very good NPM. They are having

NPM of service company kind. Does this indicate they have some moat ? or their business model is such? Do competitor also have similar NPM?

Coming to Sanghvi Movers's debt, it has been taken to increase number of cranes which is necessary to keep up the growth. It is an asset heavy company. It buys cranes and then rents it to other companies who need cranes of various capacities. According to last concall posted by shontou on the Sanghvi Movers thread, management has declared its intent to reduce debt and over next few years become nearly debt free. They have targetted capex of only 25 crores for fy 13 and with cash flows of around 200 crores per year they can easily take care of debt reduction program. About them having moat, basically the crane renting business operates on low Return on investment levels and hence for any new entrant it does not make sense to invest too much in a business that is going to generate low returns. Plus Sanghvi Movers has pan India presence with its depots etc well spread out and hence is in a better position to maximise capacity utilisation of their cranes. I dont know too much about any strong competitors or what kind of margins they enjoy. In case of Sanghvi Movers there seems to be some undervaluation which one can exploit to one's advantage.

TC Ser's Portfolio
See if you can get your hands on FMCG [Eg: ITC, Colgate, Pidilite etc] and consumer brand [Page Industries, Hawkins, Berger Paints, Castrol] stocks at a purchase price of around 20 P/E - you can hold them for a long time. You can also pick a few PSU banking stocks [Eg: PNB, Indian Bank etc] - but you need to research well and be choosy. And then you can play around with those 0.5 to 4% weightage stocks for getting those extra returns. I think you have a good selection of stocks and you can keep your core portfolio intact and play around with the peripheral stocks to some extent replacing one with the other as and when the opportunity presents itself. Basically I feel there are too many stocks in the portfolio, but that would be an individual choice. You can divide your portfolio sector wise to get a better idea of what percentage allocation is there to a particular sector and then things would become more clear. Here is what I would do to your portfolio in terms of modifications: ICICI Bank 10% (reduce or get out completely) TCS 15 (add some mindtree/mphasis) OIL 12 ONGC 5 NPHC 8 (add more) UBI 1.5 BOB 2.5 IDFC 5 (increase holding on declines) Jyothy 5 (increase holding on declines) This amounts to 64% And in the rest 36 % (roughly two thirds you can accomodate the others --

Out of which I would exit Everest, Idea,DCB,Omaxe,JP,(to me even Yes Bank seems expensive but it has momentum going for it) and some others and introduce Blue Star VST Tillers Basically I dont like banks, cyclicals etc to form core of one's portfolio. Another thing is you have got some stocks very cheap but that doesn't mean you can't sell them. You dont have to fall in love with them. In your portfolio, I dont see too many winners in a big percentage because a lot of space is occupied with the biggies which are not going to outperform markets in a big way.

Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. Latest issue of Dalal Street has come out with a comprehensive list of promising midcaps .The list includes several names already well covered by TED.Its good because now these stocks will catch the fancy of thousands of mainstream investors. Some of these scrips are VST Tillers, Wendt India,Vadilal,TCI,TTK Prestige,JBM,Mayur Uniquoters,Swaraj Majda,Munjal Auto,Minda Industies,Natural Capsules,Nitta Gelatines,Elgi,Gillanders Arbuthnot,Hind Dorr Olivers,Indag Rubbers,JK paper,Navin Fluorines,Insecticies india,Banco Products,Deep Industies,Diamines & Chemicals,Ankur Drugs,Camlin Fine,Grauer & Weil,GST,Shardul Securities I HAVE RECENTLY ADDED 1)Mazda 2)Patel Airtemp 3)Mayur Uniquoters 4)Simbhaoli Sugar 5)Manjushree technopack 6)Munjal Auto so all in all I am vigorously following TED Have added Infinite computer solutions & Jubilant foodwork in my portfolio thru IPO route Today on listing day T Rowe Price the famous American investing giant purchased nearly 18 Lacs shares@ 197 of Infinite Computer Solutions from NSE n BSE.SO the second litmus test of purchase by a big FII is pased after the Ist litmus test of heavy oversubscription.They already had purchased 3 lacs shares as anchor investors.Besides them Carlson fund,Citi,Bharti axa,Reliance MF,Alden,CS & Lloyd George had purchased nearly 17 lacs shares as anchor investors. SO its a blue chip with expected EPS of 20 in march 2010 & 30 in march 2011 available very cheap.I bought some more shares in addition to the allotment from IPO. in ipos one has to be very selective but thats fairly easy. There are 2 raambaans for sureshot returns on ipo. no 1 is the qib n hni oversubscription figure . u apply only if oversubscription is decent enough in these categories 2nd raambaan is buying on listing day by reputed fiis n mutual funds.if the 2nd raambaaan is also fulfilled i generally don t sell n hold on for along time. hence i am still holding on to OIL,COX N KINGS,DB CORP,JUBILANT FOOD,REC. AMONG current IPO BESIDES PERSISTENT SYSTEM one shud closely watch intrasoft technologies opening on 23 rd march.in future ipos jaypee infratech,ashoka buildcon,technofab,talwalkars,glenmark generics,SJVN are solid cos n lets wait for their pricing but they cud be trailblaizers of 2010.

TCSer, Any idea about the business of thinksoft and why it has been beaten down from 500 odd levels to below 200? Anything fishy? thinksoft was more of an operators play with very poor response in ipo.most of the float was cornered by dubious operators who continuously jacked up the prices continuously for months which attracted investors n suddenly offloaded after the stock went into trade to trade category. similar play was played in texmo pipes n pradip overseas listing tomorrow is alos expected to go the same way. btw congrats on your conviction on mayur uniquoters. also purchased 1 share of jaypee power venture the erstwhile JP hydro so as to be eligible for quota reservation in the forthcoming JAYPEE INFRATECH ipo. the record date for the quota is April 22 2010. JP group project execution skill is legendary like reliance.SO JAPEE INFRATECH CUD be an interesting bet. TALWALKAR IS NOW 0.8 PERCENT OF MY PORTFOLIO AND SJVN SHOULD BE AROUND 2 PERCENT OF MY PORTFOLIO.I AM THINKING OF HOLDING BOTH THESE COMPANIES FOR MEDIUM TO LONG TERM. BESIDES I HAVE ADDED HYDERABAD INDUSTRIES,GUJARAT AMBUJA EXPORTS ,BRAHMPUTRA INFRA N MORE PENNAR INDUSTRIES IN MY PORTFOLIO. I think one shOULD pile on talwalkar more. Today Reliance mutual fund has purchased nearly 15 lacs shares implying my 2nd Raambaan of buying by reputed MF is through.mind you total issue size itself was only 60 lacs shares so nealy all the floating stock has been mopped up n QIBS any will not be selling more of this scarce n unique share . we should continue to see fire works now in view of low floating stock n excellent projections . An EPS of 13 in march 12 with a CAGR OF 80 PERCENT FOR LAST 3 YEARS can give a PE of 20-30 easily to this company implying a possible price of 260-390 . prof mankekar,ramesh damani n other players have alockin of 1 year on their existing holding and all are long term players

Originally posted by vivekbhauka hi viv the weeds of today could become flowers of tomorrow.and flowers of today becomes weeds of tomorrow.

This should normally not happen if the companies has moat and good management. It may be possible that a particular company does not perform in the market due to valuation issues but it should not becomes a weed from flower. While for many people that itself becomes equivalent to a weed, these companies normally recover and then generate good wealth.. It is clear that management integrity is the first mantra to make any long term money. When looking at midcaps/small caps dividend and taxes paid become so important to understand the company/promoters..

One has to be choosy about IPOS. yOU NED NOT DISTURB YOUR CORE PORTFOLIO rather pledge them n use the OD money against these shares to apply in good quality ipos. Some of the good ipos to look forward to based on pedigree only are GSPC,COAL INDIA,EIL n other PSUS specially where retail investors get 5% discount. \ boond boond se ghara bharta hai. Added some liberty phosphates first thing in the morning .lucky that got locked in 10 % circuit after 1 hour.x othet phosphate fertilizers play like khaitan fertilizers n rama phosphates were also locked in upper circuit.after capitalmarket report seems rerating of phosphotic fertilizers sectors is happening. also added small qty of PTL enterprises ERSTWHILE PREMIER TYRES which is an Apollo tyres subsidiary having REPUTED ARTEMIS HOSPITAL IN GURGAON WITHIN ITS fold. BESIDES my core portfolio new addition to are 1) Stanchart IDR 2) REC 3) COX & KINGS 4) SJVN 5) NHPC 6) IL&FS TRANSPORTATION 7) DB CORP 8) HINDUSTAN MEDIA 9) OIL 10) INFINITE COMPUTERS 11) LIBERTY PHOSPHATES 12) United Bank 13) HYD INDUSTRIES 14) PENNAR INDS These are my recent addition in my portfolio over last 1 year. I have sold n pruned some of my holdings based on earlier advice of fellow teddies My older core portfolio comprising of TCS,ICICI BANK, ONGC, BOB, UNION BANK,IDEA, AHLUWALIA CONTRACTS,PATEL ENGG,TECH MAHINDRA,GITANJALI GEMS,TATA STEEL,MIC LECTRONICS,ROYAL ORCHID,TRIL,JYOTHY LAB,MUNDRA PORT,DCB,EKC,YES BANK.MANJUSHREE,JP ASSOCIATES,GSPL,ABG INFRA,RIL Teddies please give your valuable opinion on what to retain & what to hold both from old & new portfolio additions. I intend to sell or SWITCH into something more attractive following scrips from my portfolio NHPC,SJVN, IDEA, PATEL ENGG,TRIL,GITANJALI,TATA STEEL,ROYAL ORCHID. 3I INFOTECH,INFINITE I am carrying some loan @ 12% as OD as well thats approx 16% of my portfolio. PL SUGGEST SOME NAMES FOR SWITCHING . All advice welcome.

Originally posted by TCSer

HitjiPlease study Bajaj Corp from IPO as well as buying on listing day perspective.

Bajaj Corp I studied recently. Basically it is a bet on bajaj almond drops oil. almost 85% revenues from it. And they offer it at around 22-25 times PE which might not leave too much for the retail guys. But I would rather bet on marico in similar space. would like to wait for something like VA Tech Wabag. Yes Vatech is definitely a good bet. With regards to Bajaj Corp here are a few salient features - Zero debt Co - Very little depreciation - Factories situated in HP,UKhand enabling tax free status for next 10 yrs. - Negative working capital - Tremendous distribution reach built over 20 years. - Huge potential in light hair sector itself - Only non cyclical company in Kushagra bajaj stable who is an aggressive promoter with 84 % stake - Hair oil has real beneficial benefits arresting hair loss resulting in addicted users something akin to ITC cigarattes - No wonder highest EBIDTA margins in FMCG sector next only to ITC. - Tremendous QIB response already resulting in 20 times oversubscription and anchor investors like GS,FT,Birla,Reliance,Axis,ICICI MF - Price inelasticity of its main product - Crisil rating of 4 - Keokarpin & Marico hair & care light hair oil left way behind in last 5 yrs. As such you need to give 25-30 PE in consonance with PE PE of FMCG sector. This years EPS on post issue capital is 28 .With doubling of capacity thanks to new Himachal factory , huge demand of product,10 % price in may ,increased EPS can comfortably touch 35-40 in march 11 & 12 . This implies a price of 875- 1000 rs on a conservative PE of 25. Bajaj have left a lot on table for Indian public with 85 % promoter stake BAJAJ ALMOND DROP BIGGEST STRENGTH IS THAT IT ARRESTS HAIR LOSS.It has got 300% more Vitamin E in its formula developed over 20 years which helps in re growth of hair follicle. Users are addicted to it & keep on buying irrespective of price increases .Please speak to alcal kirana or supermarket owner n get the first hand feed back.THEREFORE IT HAS GOT PRICE INELASTICITY AS ITS BIGGEST STRENGTH. everybody loses hair n is afraid of losing hair including todays youth.India has age old tradition of using hair oils which will not disappear overnight & the Hair oil sector has a huge CAGR growth over last several years. Increasing penetration in rural sector & conversion of coconut oil users which is sticky & seasonal ensures THAT GROWTH POTENTIAL REMAINS HUGE IN INDIA. INDIA HAS GOT THE LARGEST NO OF MUNDIES IN WHOLE WORLD. ANCHOR INVESTORS LIKE GOLDMAN SACHS, FRANKLIN TEMPLETON , RELIANCE ,ICICI,AXIS ,BIRLA SUNLIFE N LARGE NO OF FIIS ARE not for LISTING GAINS.THEY HAVE ENTERED FOR LONG TERM. Please name a few other companies which have got PRIC INELASTIC PRODUCTS OTHER THAN ITC. BAJAJ ALMOND DROPS APPEAR TO BE ONE SUCH PRODUCT. Bajaj Corp received good response with 20 times QIB , 53 times HNI & Retail 6.6 times over subscription. Could be a good buy on listing with target price of 800- 1000 rs EPS expected to be 35- 40 Rs in March 11 & pe of 25 prevailing for FMCG sector..

prakash steelage looks good for above 170 surely.....watch this out. but risky. Alok thanks but one thing I have realised the hard way is one should not sell the stock just because its the numbers are too large to track. As long as growth is there & one has carefully evaluated before entering as venerable Vivek Sukhani says one shud stay invested irrespective of small qty & stretched portfolio. I sold out early recently M&M, Mundra port, Nitin Fire, ARSS, Jubilant, & several others just for heck of selling. But I am fully selling out as well the recent IPO allotments like HMVL,Technofab,Man Infra,Talwalkars,DQ,Persisitent,Intrasoft Having said that the better option is to switch from laggards of your portfolio to something with more assured growth.SKS Microfinance with expected EPS of 60 in March 12 is in my opinion one such stock.I am thinking of converting NHPC , SJVN , Patel Engg into my IPO allotments of SKS Micro@ 935 & maybe EIL @275 & Bajaj Corp @ 650.Shud I buy more SKS micro on listing Whats your take on it? TCser I think SJVNL and NHPC are the same things . NHPC is a gem and must be locked up as per me. CIL and Power Grid in the future will do well better than most. I am talking to both YES Bank and Jubliant as a realtor in Patna. THE TARGETS AND GROWTH OF JUBLIANT AMAZE ME, also the people are not only targeting new stores but also think in terms of store sales increment year on year. I wont enter this now but when and if it drops it will be on my radar. I think YES BANK will do better than SKS as the target for 2012 is 750 branches that in itself is phenomenal and yes they are very conservative. As far as EIL goes it will do better than any on listing . Rational cost of finance in SKS and Bajaj Rs 2.5 for each time oversuscribed in the HNI section so to break even Bajaj needs to trade @ Rs 800 or more and SKS @ Rs 1100 .The appitite for EIL is great in DII and in FII I cannot say the same for BAJAJ as they are akin to Emami and Jyothy both thse are gems on their own but arnt traded very much. Born To Golf forced to work.

What is everybodys view on Gujarat Pipavav IPO closing on 26 august. Its a subsidiary of world leading shipping company APM /Maersk & crisil has given a rating of 4/5 I purchased Modison metals today but missed out SBBJ by a whisker. The stock got locked at 20 % . Manjushree technopack EPS of 11 in March 11 & PE of of less than 7 even now makes it very attractive. Novostar intl the discoverer of multibagger stock like TTK prestige,Amara raja ,Bajaj electrical buying into is another comforting factor. Exited completely from Prakash Steelage at good profit. GGPL IPO has shown tremendous response with HNI category being oversubscribed nearly 83 time QIB 13 times n retail expected to be around 8 times. Should give handsome profit on listing in 2 weeks Hoe Teddies have applied in strength. I think in this time of heightened bullish time venturing into secondary markets specially well known large caps & midcaps is turning risky specially iin short term. We need to continuously find nuggets in small cap like Manjushree which move very fast or like Modison which doesn't move at all.

I think one needs to stick to good quality & reasonably priced IPOs in retail quota like EIL,SKS Micro,Baja corp,Prakash steelage & GPPL which gives at tims 2-10 % returns on listing. There is plethora of IPOs waiting to hit the market. What to do with NHPC going ex dividend @0.55 paise on 7 september,SJVN ,Patel Engg, 3i Infotech & Tech Mahindra. These have been the biggest laggards in my portfolio. Should I convert them into Manjushree even now or something else equally promising.Manjushree management has assured 30 % CAGR for next 5 years & they have walked the talk so far.Whats the teddies take? The biggest wealth is created when smallcap turn into mid cap & the mid cap into large cap. Who is this Shruti Lodha who has purchased 82000/- shares of Manjushree on 27 August 2010? Any relation to RS Lodha of Birla corp family? Bought Delta corp on 9 sep on SA reco. Partly converted my SJVN holding into Ashiana Housing. Ashiana is one of the cleanest real estate company available at a single digit PE & promoted by BITS Pilani & LSU technocrat with a stellar track record . SKS Micro touched 1340 today. Similarly OIL,ONGC,ICICI Bank,TCS,Union bank, BOB ,ILFS transport,Jyothy lab ,REC,Pennar,Stanchart ,DB Corp touching or near 52 week high. Rare to find such large cap names touching new highs. FIIs buying in full swing. Applied in Ramky IPO fully as Raam Baan seems to be working. QIB oversubscribed nearly 5- 6 times & retail firm allotment. Ramky is one of the few cos having good skill set in Wste water management sector. As per BL & BS the PE for march 11 is 11-13 @ 468 rs. But anchors have entered at 425 so cud be priced lower. Good execution track record, technocrat promoters, high margin water sector focus, huge Anchor investor interest . A company to be closely tracked. Amonst otehr good IPos closing on 27 september are Cantabil, Va Tech, Ashoka buildcon & techpro. All good quality co available at decent valuation. Ramky price fixed at Rs 450 a good 18 rs lower than 468 the book at which the IPO was oversubscribed 4-5 times. A good gesture on part of promoters. Credit Agricole & Soc Gen bank associate co Amundi capital has taken a hefty stake in the company as anchor investor alongwith FIdelity, Swiss Fiance Corporation,Axis MF & Birla sunlife MF.

Firm allotment of 210 shares to all applicants in retail. should be a good bonanza as the EPS would touch 32 rs in march 11 & around 40 rs in March 12. What PE should one give to this co which is gowing at 49 % CAGR for last 4 years,has better margins than its peers as its has a major chunk coming from water 7 waste water sector. Can be a very good pick on listing for those who missed out applying in IPO Market is screwing bad ipo's even though they could manage to get subscribed ! One of the ipo is quoting at 50% less price it offered. IPO's are always risky in the bull market and there are many people who want to cash listing gains !!Only the best would survive out ! I am looking forward to see the Sea TV going down by 30% so the merchant bankers will learn the lesson ! How does one find Oberoi Realty at 100-120 rs IPO opening on 6 october n closing on 8 october i find it good, but that will not make me money..only if QIB, HNI, FII, DMF, FMF, PF etc find it good, that will make me money i find it good, but that will not make me money..only if QIB, HNI, FII, DMF, FMF, PF etc find it good, that will make me money Congrats TCSer ! Career Point has opened with a big bang. Though Eros is a bit disappointing. I have bought some Eros around 190 and plan to accumulate more if it goes down further. Don't have guts to buy Career point at this rate. I had SKS micro but sold it off once the red eye of the government fell on the sector. As for inactivity after doing homework, I have M&M and this is the only stock I am holding since long long time. My portfolio right now 1. M&M 2. Godrej Consumer Products 3. Ashiana Housing (Thanks to TCSer) 4. Kewal Kiran Clothing (short term) 5. IL&FS Transport 6. Inox Leisure (short term) 7. Zydus Wellness (Thanks TED) 8. Jubilant Foodworks (I get in and out of this frequently!) 9. Yes Bank 10. V-Guard (Thanks TED) 11. Shriram Transport Finance I am holding on to all my allotments of Career Point. My 2nd Rambaan came through with HDFC & Reliance MF buying big quantity today on listing day around 520. Education sector is a 35000 crore opportunity with very few listed option & none by an IITian Promoter specially in tutorial space. Eros is also a hold for me. Next good buy on listing option with 1-2 year perspective will be Ramky Infra on 8 october

What hv u done with Ramky? I am still holding onto. I will wait til 1-2 qtr results.Infra sector is not fancied due to poor execution skills but Ramky

execution skills are nice n water sector focus gives them better margins. Order book has increased to 12000 cr in sep 10 from 10000 cr in june 10 I am holding onto CP as Reliance & HDFC mf purchased almost all the floating stock alongwith anchor investors. Similarly no sellling so far from me in Vatech, Tecpro so far as these are long term decent plays on 40000 cr water sector opportunity & decent BOP plus material handling opportunities. ON Asoka Buildcon I also have similar optimistic views as its a oldest n major BOT player.The quality of its road constructed by is awesome.Have u travelled on the oldest such road East Coast road from Chennai to Pondicherry? Similarly Dhule Bypass is 8 year BOT road still spic n span after 8 years with nil maintenace cost. Upside of huge traffic growth on Indian roads thanks to huge boom in Indian cars,LCV & HCV industry is best captured by BOT players like Ashoka which chose its roads carefully after studying traffic data n focus on Western India. NHAI had estimated traffic at these roads to grow around 6 % while its growing at double the estimate.All this upside is best captured them which is much better than fixed return Annuity players like ILFS transportation which has fallen infact after ashoka IPO . Please give your views should i temper my optimistic views on ashoka or not? Tomorrow I will be selling Sea cable tv for sure dear there are some aspects we have to have in mind.there are maket sentiments and valuations. so normally in a bear market when sentiments are bad,the best stocks to buy ,as u also look for safety then(and dont buy because of fear)is to buy companies backed by assets eg-banks,powergrids ntpc toll collection companies of the worlds.always safe.and large cap companies backet with assets like tisco ,cement etc but in wo a bull run,as we experiencing now,asset backed companies tend to be laggards.because...if u think bull run will run for 1 year....asset backed company fundamentals change slow in next 1-2 years...and in the meantime a bear market may struck...so returns gets low...but still provides some safety...except banks which have higher beta.they fall down more out of asset backed companies.and commodity companies....high beta. mid caps small caps fly...and large cap hig beta like commodities and banks.infrastructure and power will be slow as earnings take time to ramp up. infrastructure companies growth depends on execution and that depends how fast it able to ramp up...will it ramp up before a bear market.that is question.if not..they will be dicy to play on 2-3 yrs growth prospects..as bear market may come in net 2-3 yrs.who knows. in a start of rallies...just see whats rising...and just be with it.simple.having 2-3 yrs projections are risky in bull runs...we already seen in last fall. so play markets accordingly Sold Sea TV cable allotment at 120 a tidy 20 % return in a fortnight. I am an incorrigible optimist so holding onto all my allotment of Ashoka Buildcon, Ramky Infra,Tecpro, Va Tech,CP,SKS Micro,EIL & Eros. All this comprises roughly around 12-13% of my portfolio taken together.Of these Ramky alone comprises 5 % of my portfolio thanks to 100% allotment in retail category. Is the allocation right or something amiss? From secondary had also added DMC Education in small qty which moves in a zig zag manner from UC TO LC OR VICE VERSA.Seems to be the only 2 nd listed education company focussed on Tutorials.

A CEO promising listing gains is the worst thing. He should promise business, stocks price will follow. This is indeed a long term stock, value creation with Government taking reforming steps. Just like OMCs/ONGC etc. About premium to Coal India..Agreed..NMDC also commanded rich valuation due to small float and scarcity. But look what management did to old long term investors (neither gave bonus nor rich dividends and launched FPO at almost half the price) So its yet to be seen how Government of India treats Coal India and its investors in future. I would say the treatment for NMDC long term investors had been pathetic. Coal India is Def a buy and worth full application, but gains may not be very fast and very huge, thats what I feel.

Originally posted by TCSer H Kumarji Will it be a trailing stop loss or issue price stop loss or some other stop loss? Trailing Stop Loss. Another good news is that Tulsian is advising against the IPO, with my experience it is always good to bet opposite to him. It will be sure shot positive if not at listing over some period. Converted some of my NHPC holding into Liberty Phosphate first thing in morning when the price moved on upside. I try to follow the rule of averaging on the upside instead of down side. Turned out to be a good decision as the share was soon locked in the upper circuit. Who is this Hitesh Shashikant Jhaveri chap who is heavily buying n selling Liberty Phosphate alongwith Rama Phosphate since last 6 months.He has been inolved in JK agrigenetics,Nexxoft,Raj packaging,Varun Ind,Kale con which hv all turned into doubler/tripler if not multibagger Better strategy in my opinion is to convert Khaitan fertilizers into Liberty phosphate due to 1) Capacity of both Khaitan n Liberty are approx same 2) Capacity utilisation of Liberty much better then Khaitan 3) for 100 shares of khaitan u will get 300 shares of Liberty 4) Khaitan too heavily concentrated in Nimrani region of MP due to most of its manufacturing over there while Liberty evenly spread out. 5) Liberty located in Udaipur ensuring close proximity to Rock Phosphate mines n sulphuric acid from HZL 6) No overhang of cyclical soya business in Liberty unlike Khaitan 7) Market cap of Liberty only 110 cr while that of Khaitan 210 crore 8) Liberty is the oldest operating SSP fert co operating since 1976 through ups n down 9) Experienced Memon promoters totally concenntrated on the single business. 10) No 2 so will hopefully work harder 11) Long term raw material supply agreement in place Patience the most important virtue is again being tested in case of Bajaj Corp. Marico is also heavily advertising the Nihar almond drop oil posing a new threat.Lets wait for next 1-2 qtrs results Discl I booked my losses after average first quarter result.

I prefer SCI over MOIL for long term, currently conditions are not best for shipping stocks, valuations are already low compared to their earlier peaks. If government gives good discount on SCI, then that will be a good buy. if that happens there would be more interesting buys such a situation REC, PFC, Coal India etc Originally posted by MR TED I want PGCIL to fall below issue price dramatically, so that I can buy more

SCI has a decent dividend yield of nearly 4 % which should act as a good downside protector, Hovering below its 52 week low n BV of 160 implies it can touch atleast 150-160 provided the fresh supply of paper thru HNI & retail of FPO is absorbed. MOIL would give you only refunds so returns will be much better here. I think my IPO investment story is coming to a sad end thanks outgoing SEBI chief Bhave policy of increasing the retail quota to 2 Lac rs. Now one will not get good allotment in good quality IPOs & bumper allotments in poor quality IPOs which might get oversubscribed just because of retail quota only. Did Bhave really wanted to abolish all sorts of quota as he first went after employee quota reducing it to from 25 lac limit to Rs 1 lac limit & now this havoc with retail quota? Whats teddies view on this & can SEBI reverse this step under new SEBI chief? TCSerji For Tata Steel, i feel you should get out in current market rally @ close to 650 - 700 Chances r that u will get below FPO price in few months. In metals, best is Hindalco, because their Can business via Novelis is noncyclical to a great extent. Most of portfolio is opportunistic acquisitions when stocks were available through IPOs priced competitively. ONGC & OIL were similar buys @ 400 n 800 odd. Over the last decade resource cos like these have been the biggest wealth creators n the trend will continue in future as well due to huge demand worldwide. Hence intend to hold these along with Coal India for long time I carry around 20 % leverage on my portfolio size. Should I continue with it or reduce it or finish it? I am carrying some real lemons in my portfolio which I recently entered into like Ramky Infra,NHPC,Liberty Phosphates,DCB thru both IPO & secondary route. Any views on above? Leverage is a double edge sword. If you can handle it real well then may be ok but not for lesser mortals including me. I would drop all lemons except NHPC (should hold its value going forward and can be used to switch to some better growth story if market falls further).

If my overall portfolio performs even 10 % in a year that takes care of the interest cost on 20 % leveraged portion plus a tidy profit.

I have built up my entire capital using leverage as did not inherit much but used it mainly in IPOs since 2003 which worked quite well.Now with enhancement in retail limit to 2 lac rs the charm has gone out of IPO market. So need to rethink my strategy. NHPC even if it reached 32 in 1 year implies 30 % return.1200 MW new of renewable zero raw material cos shud come up by March 12 adding to 5300 MW. Ramky Infra NPM,OPM ,ROE.DE,Promoters share,execution track record are much better than competitors but the infra sector is getting derated.Pe is only 6-7 on March 12 basis. DCB is on a turnaround path after 2 years of losses under nasser munjee ex hdfc n idfc. Liberty is a 25 year old SSP which survived the real tough times of pre NBS era.Post NBS all SSP fertilizers shares are making merry. lets see what happens. Any body else tracking these cos Also TCSerji, I agree to your resources point. But what worries me about Coal India is by what happened to NMDC. Long term investord held on to NMDC, which had huge government holding, and price was high because of low float (similar scenario in Coal India where Government holds 90% and plans to disinvest some more every few years..acc to min 25 % float rule, they shld disinvest another 15% in next 3 years) Now, when FPO for NMDC came, it had to be kept at huge discount (no choice) and now we have a realistic valuation. What do you feel will be the fate of Coal India under similar scenario? Resource are becoming scarce n expensive as the years passes .Coal India listing is a major positive. ONGC used to sell all its oil @7 $ per barrel prior to its listing in early 90s.Post listing only the price was increased. In Coal India case also the prices are 50 % of world price n are bound to increase in future. TCSer very valid logic the days of discounted coal would soon be over What people don't realize is that Coal India is one of the largest energy company in the world Totally agree on resources and prices. Also, from 2015-17 onwards, when they sell more of washed coal, profits will surge. Just have 2 concerns and need to look at the developments closely 1. Environment Issues/Clearences 2. New Mining laws - 26% profit sharing etc. Also, I am very bullish on Gas related companies in long run. OIL and ONGC, the big difference that I see is that the percentage of revenue from Gas is much more in OIL as compared to ONGC (not saying ONGC is less compared to OIL but just a thought) Also, next 3-4 years for GAIL should be very interesting when they double there Gas transmission and also enter numerous cities for distribution. Any other excellent company in GAS for long term?

Originally posted by TCSer I carry around 20 % leverage on my portfolio size.

Should I continue with it or reduce it or finish it? I am carrying some real lemons in my portfolio which I recently entered into like Ramky Infra,NHPC,Liberty Phosphates,DCB thru both IPO & secondary route. Any views on above?

Leverage magnifies the pain in a down market. Especially when there is no conviction in stocks held. If it was me, I would start with a clean slate and reduce stocks that I am not convinced in and go into cash to give myself time to clear my head. Leverage for me means simple Overdraft facility against shares on which I pay monthly interest. I HAVE BEEN HAVING A BULLISH STANCE HENCE invested 120 % of my portfolio. Thats been my position normally but i reduced my leverage to zero in April 2008,panicked in Feb March 09 n sold all my Maruti,NTPC,Power grid n converted the proceeds in FD @ 11-11.5% Now since August 2009 onwards with NHPC & OIL again started building the portfolio.OIL balanced my losses of NHPC n started more scrips in my portfolio which are still there like Cox & Kings,REC,DB Corp,Infinite,IlFS transportation,Coal India,Power grid,Tata steel .All those Fds have been also liquidated except for small 5 % of my portfolio. In Sep 10 - Oct 10 got badgered again due to Ramky,Liberty Phosphates,DCB and now 120 % invested. Havent touched much of my older core holdings like TCS,ICICI bank,ONGC,BOB whose rise has cushioned my losses . In the meantime exited at profit several IPOs like Jubilant food,Talwalkars,prakash steel,SKS but also suffered steep losses in Cantabil,GPPL,Bajaj Corpetc. I also got an IPO allotment in real estate a 500 m plot in Gnoida in 2004 which has been a 5X return if I sell it n offcourse stay in my own house So friends whats your view on my portfolio n strategy to be followed. Leverage does plays a very important part for investors like me who did not had much capital to begin with. The funda I understood was that it will take ages if you wait to save 10 lacs n then invest.On the contrary one could easily get a loan of 10 lacs n then invest the same important consideration being what you earn shud be much more than what you give. I remember I had only 1 lac odd rs in 2003 which was sufficient for only 1 IPO application of Maruti.But due to IDBI bank financing facility I was able to apply 7 applications n got firm allotment of around 2000 shares of maruti @ 125.Then instead of selling I pledged these shares with HDFC bank ,got OD facility n again applied in good quality IPOs n the cycle went on n still continuing.

Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays I wish we don't discuss virtues of leverage here, because in trying to emulate one successful TCSer, many novice investors will burn their fingers badly, never to return to the markets again. If nifty goes down another 500 points which is not unlikely, you'll see leveraged position taking its toll on several investors.

Having said this, I can't suggest another formula for building a sizeable equity portfolio if one doesn't have a meaningful starting capital. Not sure if our new generation believes in slow & steady...ultimately it's an individual call. I was using the OD money only in IPOs so that would have saved my skin. Yes I think 2003-2006 was the era when IPOs specially were priced reasonably n also the employee quota limit were 25 lacs n retail limit 1 lac. Now the promoters n investment bankkers are extremely greedy .Also investing in secondary market is dangerous plus the returns in primary have dwindled greatly. Recently I got out of my several laggards in the portfolio like Patel Engg, Gitanjali gems,Jyothy labs,Omaxe,Ahluwalia Contracts,Anant Raj ,Pennar Industiies,Hyderabad industries. But I converted them into solid cos Like Yes Bank, Coromondel Intl, Tata steel which have again gone down by 20-25%. I am thinking selling following cos from my PF like Royal Orchid hotels holding since its IPO in 2006 @ 130, Modison purchased @ 40 few months back, Firstsource @ 64 ,Everest kanto @ 32,Power Finance @ 75 Views invited from teddies n any scrip to convert it into? Can page industries still be purchased as I have always lost out on it thinking it to be very expensive on PE basis? Prof mankekar is a low profile bajaj Institite professor who is credited with discovering several multibaggers like financial technologies, Pantaloon, n large no of other scrips Dont be too optimistic however there is a possibility of an upside when insurance companies start going public or when govt relaxes foreign ownership limit in insurance companies

Originally posted by MR TED anyone tracking Max India? It looks like a good turnaround story and in a sunrise sector of insurance and healthcare?

well i have the following in my portfolio at this juncture...even if markets go down...the following stocks are always buy on good dips of 20-30% frm cpm..which im happy to add.and have sold most of my new ideas/innovative ventures for the likes of manjushree..liberty phospate etc etc holding:note:i only buy and hold COMPOUNDING STOCKS.ELSE SOME RESOURCE COMPANIES.BANKS--INDIA GROWS--BANK GROWS.SIMPLE. RESOURCES BECAUSE IF I GO WRONG ON BANKS FOR TIME BEING I WIN ON COMMODITIES.SO ITS A NATURAL HEDGE. LAST ..NOT THE LEAST...BUY AT LOW VALUATIONS.HENCE THE SECTORS I KNOW...JUST PUT MONEY ON VALUATIONS.NO USE BEING INNOVATIVE TO BUY DELTA CORP..KOUTON RETAI AT 100 VISHAL RETAIL AT 100 ETC ETC AFTER THE FALL...FROM THERE THEY AGAIN LOST 80%.HA HA.THATS THE EASIEST WAY TO LOOSE MONEY...BUY A STOCK THINKING IT HAS FALLEN ENOUGH. HOLDING;;;;;;; sbi tata steel oil india power grid rec psu banks--on buy list evergreen

crains india coal india ing vysya bank only reduced to these stocks...and had sold most between 5500-6000 index. the mid caps of the world....no use to go for innovative ideas when u can get good stocks. its best to buy those type of stocks in a good bear market.so i have exited all .even if markets go up...its good ...if it goes down..i know my holding of stocks are not going to fall much...if they do fall.....then also i will be well off. At least not like people holding punj lloys from 200 levels and still dont know whether to buy or not....at least the shares i hold i will me more happy to add then at 50% discount.so its good that stocks fall ...hence i make money both ways. holding banks as they are the best sector...nifty up 8% yoy..Bank index up 28% yoy..i had said this since 2-4 years...and still say it for net 15 years.so no use applying risk elsewhere...simply buying bank index/bank etf...on good corrections (i say at 10-15% downs)....u will always outperform...i dont diversify much ...whats the use.if i had bought infra real estate telecom whoa so ever i would have lost....even if i had titan etc ...and lost on real estate ...i would not have performed better than bank etf's..banking stocks....financials(pfc rec indiabulls finance. including as they are also compounding stocks) i never see good companies being discussed here on ted....page industries ekc, liberty phosphate, delta corp..etc etc....just not the type of my investments criteria...its only a losing bet in them. Hope u all make safe investments....
Edited by vivekbhauka - 13/Feb/2011 at 7:12pm

I somewhat agree to ur points of buying the obvious stocks in a bear market than going for innovative ideas. Since you are very bullish on banking for longterm, at CMP if u had to buy 1 bank out of HDFC bank, Axis, ICICI and SBI which one would it be. Also, please rate these four as per best bets for say 10-15 years according to you Thanks
Edited by MR TED - 13/Feb/2011 at 8:23pm

well simply putting up things. sbi is at 160000 cr market cap.reliance market cap above 3 lac cr.tcs infosys ongc above 2-2.5 cr lac market cap. im sure without doubt sbi will command a market cap of above 3 lac cr in years to come...4-10 yrs...and i wont be surprised to see sbi in ist 2nd company in terms of market cap in india.sbi earning now 12000 cr...can u imagine what it will earn after 10 years.surely above 30000-35000 cr... so sbi at 3 lac cr is certain...ir respective where sensex or reliance is...look at allahabad bank central bank etc...albk was at 80 in 21000 sense in 2008 boom...in 21000 now in 2010 it was at 240...sensex same...same goes with all banking stocks. so even if i see sensex at 20000 after 5-8 years(possible because sense was at 4500 in 1992 and at 2002)10 years same sensex.its possible.even if it goes to 40000 sense it will correct to 20000 in a bear market in next 10 years....so 20000 is there always for me.. so i can earn only be investing in financials which would be much much higher with same sensex levels ...so im not betting on sensex...just hold/buy financials..even iif i want to trade/speculate i do on financials.so no use thinking anything else in stock markets. in face all financials are good...but differ on valuations/when u buy etc etc. hence for me first i have to make a list of only buy/hold stocks ...and then just buy as time goes .... my list--market cap expectations over 5-10 years) hence u can see current market cap and expected to calculate ur returns....equity dilution keeps me back to give my targets...as if equity dilution does happen then stock rate targets gets diluted..so i dont give targets.

sbi---easily a 3-5 lac cr market cap hdfc--potential 2 lac icici bank-potential 2 lac yes bank--potential 30000 cr axis bank--one lac most psu banks-like vijaya bank,syndicate,united, dena, idbi,iob,most of them... however im most bullish on ing vysya bank at current market rates...i see it a 1200 rupee --so its the best buy now.... rec,pfc,indiabull finance,mm financials,gic housing finance, qualify for financials too...im bullish on them also just as banks. targets are very high after 5-10 years..so no use talking...its just that this is a compounding sector...which will keep earning more and more as (like a fd--u get interest on interest ..then again interest on interest)so just u have to deal in compounding stocks...thais is financials... hence it not about if i buy now or wait.etc etcc....just buy according to total money u want to put...sbi is good below 2200 now... now i will buy ing vysya bank.nibble sbi at 2500...will be happy to see it come below 2000. its like becoming happy to buy cheap....u have to feel happy even tough u have bought some shares in financials at high levels...because u get opportunity to buy cheap....ULTIMATELY U WILL MAKE MONEY IF U CAN WAIT FOR GOOD PERIOD. Tata Steel and Tata Motors frequently come out with rights offer. It is like collect dividend every year and then after a few years we have to buy the rights issue leaving zero dividend. Books on Buffet especially warn one in buying stocks of commodity companies. Because they have to keep investing in heavy machinery frequently to upgrade. And the returns are never extraordinary as it is a commodity paly. So you will never get alpha returns. YES in cyclical stock one thing is for sure . They are not buy & hold types.Entry n exit is the mantra. However if Tata Steel had not been foolish enough to Buy expensive Corus n that too through open bidding with Severstal just imagine what would have been the price of Tata Steel. Just see the performance of Bhushan steel I missed purchasing it at 56 in 2003 & see its price today at 1500- odd n Bhushan does not any iron ore or coking coal mine of its own unlike Tata. Bhushan steel has been a major client of ICICI bank who had ample confidence in their execution capabilities plus 10- 20 year old track record of Bhushan. The co got re rated once their execution track record got established n their focus on flat steel business ,Sumitomo tie up Given that ICICI Bank rates/rerates many entities I'm not able to repose complete trust on it's ratings (esp post Subiksha episode)..... TCSer Sir anything about the business which made it look like a sure winner like order book? I'll also check out the annual reports to see what one could have seen........Off course, a macro guy would have figured out that Steel will do well What was the characteristics of Bhusan Steel which one could have seen and bought then?] In my view, some of the factors that separated Bhushan from the steel pack of yesteryears were:

(1) Their tie-up with Sumitomo of Japan in late nineties for automotive sector was good. It worked well for them, and they went for another strategic partnership with them around 2003-04 for automotive CR steel sheets. (2) They expanded capacity almost every alternate year for forward integration, and kept up with the steel cycle. (3) If i remember right, they also came up with some patented products in galvanised sheets. (4) Contrary to popular investing opinion, i think they were never light on debt front. (5) In hindsight, their geographical expansion of production facilities in all regions - north, west, east, south is quite admirable, and gave them cost advantages. Disclosure - No holdings, only passive tracking. But it has been a money spinner for long standing shareholders. To be a successful business owner and investor, you have to be emotionally neutral to winning and losing. Winning and losing are just part of the game. Management clarified that REC has been conservative in taking exposure to merchant power projects. Currently, none of the power projects financed by REC sell more than 30% of power on merchant power basis (40% in case of hydro projects). Management also pointed that during Jan-11 there has been a rise in merchant power tariffs due to pick-up in power demand. Maintain OPF We expect RECs earnings to grow at 19% Cagr over FY10-13 (ex write-back of tax in FY10) led by 23% Cagr in loans. We retain OPF reco with target price of Rs320 based on 2x forward PB (cut from 360). Improvement in liquidity conditions and investment outlook for power sector are key re-rating triggers All banking stocks moving to new highs.It seems that the interest rates have peaked or would be shortly peaking out due to - GOI 2012 borrowing amount reduced to 2.51 trillion from earlier estimated 4 trillion rs. - Oil price coming down resulting in lower inflation & interest rates No wonder SBI bonds N5 series is now touching new high of 10452 . Question is how long will the party last?
Edited by TCSer - 30/Mar/2011 at 12:05pm

Well friend SBI bonds were the 2nd investment I made in Bonds.I went in for listing gains only as money was borrowed from LAS.My broker friend who was forking out forms n who gave a handsome commission of 0.85 % told me about it alongwith some other friend who only invest in IPOs. They are traded just like equity on stock market. My other Kapoot Liberty Phosphate is also showing some movement at last. This Kapoot forced me to do lot of study .My conclusion is that SSP fertlizer sector is moving into next orbit & is getting rerated.have been in touch comapny officials & sector watchers for last few months.Indian soil is hugley deficient in Sulphur leading to very poor productivity & SSP is a cheap souce of sulphur. Due to new NBS policy P(Phosphate) of SSP & DAP have got equal treatment for the first time,consequently price of SSP got reduced & sale soared. GOI increased the subsidy from April 1 N hence June qtr reslts wud be real good as March 11 qtr maybe poor due to hoarding of stock.Liberty is a 35 year old whcih survived the worst of times. PE is abysmal 2-3 & topline bottomline booming.My other pick Coromondel Intl reaching new high due to same reason.

I like Fertilizers sector, but not sure about subsidy and policies. Tata Chemicals is a diversified play on agri. I am in search of a good fertilizer stock for long term hold. Are PSU like RCF or NFL good bets and will the policies be liberal in future? If you have done good study on Fertilizers, can you please explain the organic/inorganic etc like major classification and types and companies which are leaders in them and future prospects of each type of Fertilizer classification. Any good website source will also be helpful. Thanks! Contrarian bets at time create huge wealth. Coromondel Intl was one such bet & SSP sector can be other such bet. Look Market is slave of earnings. How long the market can ignore price if earnings improve quarter after quarter. NBS was a gamechanger for many fertilizer cos. Coromondel wud be the best bet alongwith Tata chemicals. Tata Steel has been my oldest holding @ 200 since 1992 which has now barely moved to 600 odd after 20 years. Not much to write about mainly because its a cyclical stock & the disastrous Corus buy. Just compare it with Bhushan which has been a 50 bagger in 7 years inspite of no captive resources. What are the positive factors of tata steel inspite of cyclicality? Should i convert my tata steel into Zydus wellness,jubilant food,hitachi ,whirlpool,vesuvius or foseco india? My other laggards are Ramky,NHPC,Liberty phosphate. Shud i do that n if yes which stock from above or which other new stock? Sorry no idea about Vesuvius, Foseco and Jubilant. Hitachi..... i like a lot and i feel business wise they'll do much much better They've tremendous scale opporunities ahead and this is like a dream stock for me....(unfortunately when the time came to buy it i could not buy more than a small amount since i've delisting concerns) Whilrpool's again has a lot of business potential they're putting in a lot of money but then i'm not sure how it will all pan out...their management is extremely bullish Was talking about recently acquired Tata steel thru FPO route @ 610.Immly after FPO every research house had a target of 700-800 n now thanks to softening China HRC prices the entire steel sector is going thru a down turn. I am stuck in ONGC & OIL but the div yield is the saving grace.

Originally posted by TCSer No one interested in EIL, NHPC, REC, BHEl, PFCI has PSU coss toatally lost it charm ??

When you have such a good businesses like Page, Titan,Hawkins,HDFC Bank,ITC Nestle,Yes Bank and list go on even other consumer companies like zydus,GSK consumer etc..so why you wanna give ur money to lethargic PSUs..Boss 100 Rs invested in Page & 100 Rs invested in NHPC is same..so you ask yourself where you feel that you will get growth...if you wanna buy Power then I would say you buy JSW energy, Adani Power..

Fear can hold you prisoner. Hope can set you free.... This is a strong remark against all the PSU which is not probably correct - There are world class companies like EIL, PFC, REC , BHEL there which have been doing good things despite competition. The only thing is that infrastructure as a sector is neglected right now and valuations paid earlier for all these stocks was quite high. So that is why the stocks are correcting. There is nothing wrong in them per se. Only valuation and recovery in sentiment towards industrial stocks is needed. I have not used word "Wrong" I said that they are lethargic & too much govt intervention....Just compare 5 years CAGR return of BHEL even with L&T & you will come to know the answer... And I flow with wind..as of now we have consumer plays wind, then I will invest in god consumer names now, to ride the wave for at least 2-3 years 7 after that will access where the wind blowing now:) and one more thing...Apart from SBI all PSU bank get almost single digit PE but most of the private bank has PE at least 15 or more than 15...tha's also shows that mkt don't give good valuation to PSU, but one thing is sure..you will very rare find satyam kind of cases with PSU..so they are safe play..so as FDs... RJ created his biggest wealth by investing only in PSUs .Infact for well over years his favorite maim was PSUS ,PSUS PSUS only. The biggest wealth is created in contrarian mode at times. EIL,REC.NHPC,BOB.UBI,PFC are all world class very competitive healthy dividend paying cos which are run by technocrats n not IAS babus. They should be good compounder of wealth over times. The govt intervention is highest in banks and Oil marketing companies where the politicians are using companies for their interests. That is why banks and oil marketing companies are not the place for investments for weak hearted. I myself do not own any PSU banks for the same reason. However they are also favoured in different ways by the govt and if the companies are small enough for babus to leave them alone then they can do good job. EIL is a case in point which can compete with genuine competition also. Also you do not have corp gov issues with these companies which are a big question mark for adani etc groups. So right valuation and right companies are what you should bank on. EIL might be one off case (And I dont know much about EIL)...but as I work in telecom , so I know what govt has made BSNL & MTNL...you know most of the world's govt owned telecome companies are either privatized or they are competing well with competition, but I think BSNL will go bankrupt in next 5-10 years...and I don't think I need to say anything about Air india:) And lets see how govt able to save BHEL from onslaught of Chinese companies...I think BHEL is already feeling the heat....So PSUs ONLY can work in Monopoly situation & once they are OPEN for competition, they can not not able to stand on their feet & need govt support...I Hope Indian govt will able to save at least BHEL... I am having BOB @ 230 & Union Bank @ 110 thru its FPO in 2005 & see they have been one of my better performing stock. Just see the div yield of 7-8 % I also had Canara Bank @ 35 ,UCO @10.IOB @24, PNB @ 31 & 390 all allotted through IPO/FPO but due to similar bias against PSU inefficiency & babudom sold out early .My brother is still holding them . PSU banks have got a big advanatge of being headed by a career banker & not by an IAS babu & they have been great wealth creators. PSU have got excellent pedigree of managers.All thru 70s to 2004-05 they were the first choice of toppers in colleges.If ministry is headed by a competent clean minister like Suresh prabhu & arun Shourie in NDA regimes all these very PSUs like BSNL, NTPC were the best performing one giving a bloodied nose to pvt sector competitors. Just remember what a best performing CEO was Late Subir Raha of ONGC who purchased pvt sector MRPL @ 2 rs share from Birla. He was unceremoniously chucked out by Congress due to hime being a clean n performing n non Yes man

CEO. Problem is more with corrupt lot of ministers in UPA 1 & 2.Chidambram appointed competent PSU MDs like OP Bhatt ay SBI .Present FM Pranab MUKHERJEE IS lacking in this skill big time & is susceptible to lobbyist pressures through his OSD Omita Paul the biggest fixer in Delhi. BoB from 230 to 800 something now in 6 years...Compare it with HDFC Bank or say even with Axis bank and see the difference...And you yourself Now admitted why I was more critical on PSUs...Yes govt intervention indeed...OP Bhatt has taken SBI to some level & Now see the next few years with new MD...So you can not relay on PSUs specially when they are headed by Mr raja,Sharad Pawar & Kapil Sibbal like corrupt Ministers...What a good & competent Technocratcan do when your minister dont wanna listen you & busy in making money by milking these PSU
Edited by ash7979 - 28/May/2011 at 11:41pm

PFC & REC are more or less into same type of business but REC used to get benefit of capital gain IT benefit due to the foray into rural electrification. My other kapoot Liberty Phosphate is reforming very fast. He has become an accha bacchha . lot of delivery based buying happening n price also moving up. Hit bhai your technical analysis urgently required now. June 11 results shud be great due to increased subsidy from 1 April 11 . The macro story of Indian soil crying for sulphur from SSP is turning true. Pe only 2.8 , Book value 61, interim dividend already paid, market cap of only 91 crores makes it an attractive buy.

Originally posted by mechos TCSer, got some Liberty phosphate today.. good luck to us :-)

Now that you have shown conviction please also show the patience. Wait for next few quarters results. Market is the slave of earnings .How long can the market ignore the earnings is the mute question. This policy of converting your laggards into solid companies is an excellent way of increasing your portfolio yield. yes Khaitan is a no 1 ssp co capacity wise but also has the commodity soya business which acts as a drag.Jubilant ind can be more closely studied as the sector rerating is happening. RCF also in planning to start SSP manufacturing. Liberty does have an advantage of sourcing of RM from abroad due to its 25 year old track record. capacity utilisation is also at record high for them Entered into Dhanuka Agritech n increased my position in Coromondel Intl & Mayur Uniquoters by converting Tata Steel n some NHPC Will be applying in Shriram transport NCD before leaving. The interest is attractive at 11.6 % with incentive n interest of 8000 rs for 5 lac application.The rate is quite high n if interest rates peak out then it cud be a bonanza. Entered into PI Ind & booked profit partly in my Coal India IPO allotment post MMDR announcement by GOI. Hi TCSer, don't you think the new mining law will benefit coal India in long term because it will enable faster and more land clearances now. Also, Coal India management can further push for an increase in price citing the new law as a reason? Yes maybe but Bech ke Pachtana is always better then Kharid ke Pachtana. But RBS is giving a target of 315 n Citi etc hv also downgraded so one shud get an opportunity of buying at lower rates.Yes may be now Coal India will adjust its existing CSR expenses n let more

clarity come out ..Hence only partial profit booking. But GOI is bent upon screwing all its companies by its adhoc announce meet n subsidy burden. Whether its ONGC, OIL or now Coal India. Never trust this UPA govt. yes, government cannot see any company making good profits. They will find ways to use its profits somehow somewhere regarding oil & gas everyone talk big changes which never happen, like finding ways of subsidizing the real needy people only (most subsidized diesel goes into tanks of SUVs and generators of big companies)
Edited by MR TED - 09/Jul/2011 at 8:09pm

Entered into Bajaj Electricals & ABC bearings by converting some DB corp ,a Coal India holdings PI ind seems to be a long term hold with FY 13 nos to be the key . Puneet resin gives a yield of 3.6% even now with good nos consistently coming in past n expected in future as well. Also entered in fag bearing n indusind bank. Why Fag sir, not SKF? And why now, both have already run a lot. I think for FAG forward PE is around 12-13 only for a sort of monopolistic MNC with good brand, zero debt n auto penetration level still abysmally low in India of ratio of around 10-15 per thousand huge growth is assured.

Puneet resin 70% of turnover comes from trading n 30% from manufacturing which is meant for exports .Most of the imports are from Korea it seems. Exports are done after value addition on imported RM n is the brainchild of Aditya Kapoor the CMD son. The earlier era of 80s n 90s were time of opaque accounting so maybe now the management is getting ethical due to changed environment of India. But no doubt about opportunity as most of their products are having huge demand as soles in footwear sector n replacement & OEM demand in auto sector. Competitive advantage also seems to be there due to few brands plus distribution strengths plus the age old relationship with international majors n hardcore experience in the sector. Management now buying their own stock is a major positive. Most importantly the entry price at present is so cheap that lots of imponderables are automatically taken care of.
Increased my position slightly in Astral Poly & Puneet Resin Views invited on La Opala Glass a 120 crore market dividend paying old co operating in consumption sector of kitchen . JUST STUDY RISHIROOP RUBBER. Promoters are steadily increasing the stake ,zero debt, good growth,very cheap valuations,possible dividend candidate in 1 year . I think there is still some time before Rishiroop is investment worthy. Some points to ponder: 1) Its operating cash flows have been negative thrice in last 5 years 2) Higher liabilities than assets 3) Earnings have been -ve for last 4 years out of 5. 4) No dividend 5) Im uncomfortable with any co with less than 60% promoter share. 6) Both profit margins and ROE are very low. Just my 2 cents.

Yes at first glance your apprehensions appear correct. But the biggest comforting factor In Rishiroop is the constant buying by promoters over past n now the stake has increased to 47% from 42% just the way stake was increased in Puneet Resin & then the dividend was declared. There is no debt on books. There is good demand for the products being traded by them n theor own brands as well. Possibility of dividend declaration which will render the current price most attractive. In todays India entrepreneurs have understood the importance of market cap of their cos which gives great respect in society. Market cap increases if the PE increases n to do that all past practices of cooking books n not sharing your wealth with your shareholders is a bi NO. At Rishiroop the promoters are highly educated IITians & MS from USA .Think they have understood the importance of corporate governance n hence maybe rerating of their cos is underway. I am thinking of investing in following companies. Rather I will be converting my laggards into them Whats the take on 1)Cosmo films a 3 PE 6% div yield com pany & 2)Jay Bharat Maruti an ancillary to Maruti a 4 PE & 4.5% div yield company? what about following companies as well 1) MCX 2) ELGI EQUIPMENTS 3) GODREJ PRPOERTIES 4) SUBROS 5) MAJOR CEMENT COMPANIES I stay in Mumbai Suburban area & I can assure you - Godrej properties is a good bet if you have 10 year horizon - simply becaus they have an awesome landbank. MCX - I have picked up in IPO & I am going to keep it for a year. I opine - if it appreciates in 1 year - then it will appreciate in long run. otherwise I will exit that stock I know ELGI equipments by the virtue of being an electrical engineer. it is into electrical equipments & is a well-known company from the older times - i am not sure when it got listed. But surely a respected company in terms of its products. it also invests in development if not in direct research. so i am bullish on elgi equipment. MCX is a stock for the long term. Commodity volumes are bound to increase at ah high CAGR given the very low penetration of indian investors. With MCX commanding premium share, the share price will rise consistently with the EPS. Also there is substantial cash per share ( investments in mutual funds, pretty liquid). This is more like a low capex services business with high scalability at very low incremental cost. Holding on to IPO shares @ 1032. Will add more at 1100-1200 levels, if opportunity comes. Entered into Subros with a small qty.PE 6 ,dividend paying 30 year old co,good prmoters,denso having stake,almost monopolistic car ac market . Main reason is that the results were down in last qtrs due to strike in Maruti.Now that the strike is over these ancillary cos shud also recover. Jay Bharti Maruti has reached 57 from 42 when recommended. Views Invited

Cons 1. Subsidy has been increasing and above expectations for exploration companies 2. Further, Gas transportation margin issues, cng rates etc affecting future prospects of OIL which is open and eager for diversification inito Gas transportation etc 3. Ad hoc policy of government 4. No clarity on diesel deregulation 5. Although Petrol deregulated still Marketing companies bleeding by selling below market rates. As all PSU is family, ONGC OIL compensate with higher subsidy. Catch is refining companies can demand the loss on petrol at later date but subsidy sharing frm ONGC and OIL once gone is gone 6. A recent rating downgrade by Moody for ONGC and GAIL , bringing it closer to soverign .. as policy dependent Pros 1. Government always help these exploration giants time and again like in Cairn deal, exploration clearances, auctions, overseas acquisitions 2. Huge reserves and potential and undervalued compared to global peers because of Ad hoc Policy 3. Decent dividend Only those who believe in gradual policy improvement and willing to be patient should hold. I am losing patience now. What about you and others? Yeah me too was doig that, but when you see growth in Consumer and financial stocks and also see a policy paralysis in government and finance minister who simply fights daily issues, u tend to get frustrated holding such companies. At least i am feeling that frustration now :) Also, just curious, if subsidies end, biggest beneficiary will be ONGC? So better to hold OIL or ONGC, if we hold? yes dividend is the saving grace in both OIL & ONGC.For me the dividend yield in both these cos work out to around 5-6 % at my purchase price. But now these will be topmost switching candidates alongwith NHPC & REC on upside if I find a better option. Entered into Bajaj Finance after switching from Cox & kings due to 1)Huge size of opportunity 2)Ethical promoters 3)Reasonable valuation with PE of around 10 n market cap of 3500 odd crores 4)Samir Arora liking for NBFCs catering to Indian consumer sectors. 5)Maybe the only listed player catering to consumer finance business amongst NBFC. Views invited. Have you compared it to M&M Finance? Similar company with higher emphasis on rural financing. M & M finance is more focussed on rural sector with m & m products with its own pain of huge collections n NPA problem. BFL is more of a play on Indian consumption space . BAJAJ FINSERV N FINANCE IS A BIG CUSTOMER OF TCS. Quality of management is superb valuation is still cheap, opportunity size is huge. What more can one want? Ever since Maruti strike which ended 3 months back.Maruti price has already recovered substantially while ancillary players r still languishing. Few days might be too long. Remember Jay Bharat maruti is now around 63 when I also waited for few days @ 42.At times too much analysis leads to paralysis. Entered into Setco Automotive.

Setco Automotive Ltd (BSE: 505075) counter on Tuesday witnessed a significant buy of 3 lakh shares by the FII, Morgan Stanley Asia (Singapore) Pte, which amounts to around 1.70% of the total shares in the company. This significant buy was undertaken by Morgan Stanley in BSE. StockExplain had earlier reported that Morgan Stanley had bought 1 lakh shares amounting to 0.57% of Setco Automotive on Friday. With Tuesdays buy, Morgan Stanley has quadrupled its holdings in Setco Automotive within two consecutive trading days. The noted FIIs total stake in Setco now stands at 2.27%. The actual stake may be higher as only buys/sells above 0.50% stake need to be disclosed according to Indian rules. Morgan Stanley has invested Rs 6.96 crore in Setco Automotive stock during the last two trading days. Morgan Stanleys continued buying is likely to have an impact on Setco counter, as, with a 2.27% confirmed stake, it has become the third largest non-promoter investor behind New Vernon Private Equity and Reliance Capital Trustee Company. With Tuesdays buy, Morgan Stanleys st ake has surpassed that of Ares Diversified which held 1.36% stake as of Q3 end.
Edited by TCSer - 21/Apr/2012 at 4:04pm

Originally posted by Vivek Sukhani Mr. Dave I have many picks and I will hereby try to organise them: 1.Ballarpur Industries Limited:No.1 player in paper industry. Has excellent susidiary in food processing. Wonderful business leader as its team leader(Gautam thapar). Good sales. Good rethanistion of its subsidiaries.... they have sold/hived off Paperbase Limited and APR Packaging. 2.Electrosteel castings:Simply too good in my opinion.India has lot to do manage its waterresources. 3.Pidilite Industries: Big market leader in adhesives. Very agressive in opening up newer avenues.Good capex plans. Excellent promotional campaigns. Hobby Ideas is likely to be very successful.Patout rise for at least last 10 years. 4.Alfa Laval:Excellent player in process technology equipment. Rarely gets its due share. 5.I like all the 3 big shipping companies.... GE, Varun And SCI. Too good financials to be ignored. 6.Asian Paints:Market leader in paints. Very good corporate governace, Prvides for dimunition in value of investments in subsidiaries. I admire its practices. 7.Plastiblends:Emerging very big in masterbatches.Plasticshas a very bright future in any case. 8.BASF: I like the financial performanceof this co. Good expansion plans. very good bonus candidate. 9. Hindustan Sanitaryware: Wonderfully aggressive. 10.Foseco India: Metallyrgical chemicals have a bright future given the way steel plants are coming up here in India. Excellent dividend yield. 11.Opto Circuits: Excellent business play.Continuous bonus for 3 years. 12.Chambal: Good businesses. good Dividend. 13. havell's: We all know its bonus track record. Too good a management. 14.Albert David: Excellent financials.Continuous increasein dividends for 4 years running. This list may go on and on..... ya Vipul, I have this habit of losing my cool...... but I am limiting that to my personal life now, and will not allow it to spill-over here. Somehow, I believe that investments must have the following qualities: 1. They must be unique.

2. You must be able to relate yourself with them. It must not be in contravention with the principles one himself follows. I will give an example here to illustrate. My dad has tremendous problem with being leveraged. But then at times he recommends stocks which are much leveraged. Thats in my opinion a compromise with one's principle, something which can never let you feel easy. 3. Loss-minimisation as a strategy works better over a longer term than profit-maximisation. As investors, we should try to generate alpha, rather than absolute returns. 4. There has to be a sense of pride in holding one's portfolio. This pride has nothing to do with returns. 5. Dont ignore obvious facts. We must get rid ourselves of mental inertia. At times, we should take a deep pause to feel where we are actually standing. If interest rates are going up, and if the direction has changed, one must get out of sensitive sectors. True, they may continue to defy gravity for some time, but ultimately core fundamentals cannot be denied for long.

Originally posted by Vivek Sukhani Mr. basant, I was reading tata investment's Annual report yesterday night. Seems a very decent prospect and a wonderful play. the returns may be modest, but its investment portfolio is one to emulate. In case, you have some recent report on that, will you be kind enough to share the information? Regards, Vivek

Tata Investments is becoming more of a fear to me rather then an oportunity and I have tried
learning out of that fear. See if a stock stays value for 2 years then there is a problem. By this time I would have been happy if Tata Investments was no more a value but a growth/momentum because that is how we would have made money. If that discount stays for ever the margin of safety is optical and I'd better invest in a good MF. I do not want it to become like a Sundaram Finance or a VST or Maharashtra Scooters. In fact this is also the biggest fear in my mind about Network18 or Aditya Birla Nuvo but since these two companies can consolidate accounts I think they need to be looked differently. To me investing has to be a time game. Things have to materialise in 3 years. If they do not there is something wrong with the strategy.
Edited by basant - 20/Apr/2007 at 10:38am

I guess Smithkline consumer belongs to slightly different category as there is little competion as they own all leading brands - Horlicks, Boost, Viva and Maltova. But then this also makes their growth potential limited.

GE Shipping and Aban Loyd have such good profit margins. But these two companies generate revenues from assets which depreciate every year. Any idea what kind of depreciation percentage is taken for ships every year?
Which is good in my opinion......when I attended adhunik's agm this year, I asked them the question if the depreciation they have provided is low.....I would like my companies to retain cash by way of cash ...however, the trick no longer works as extra-ordinary provisioning leads to creation of deferred tax asset and hence on the EPS front the impact is not as huge as it would have been in the absence of deferred tax asset.....however, its the best legal way to retain cash...... Boost, horlicks, Viva and maltova are the present offerings. Am not sure whether they are also into Eno, Crocin and Iodex. With health drinks, the competition mainly emanates from Cadbury's Bournvita and Heinz's Complan. Although Bournvita is slugging it out with Boost and Horlicks yet Glaxo can tackle it easily.

I will now keep some tab on century enka and seshasayee paper. both have done quite good on the results front. Century enka is available at a discount of nearly 35 p.c. to its book value and has a rich yield exceeding 4 p.c. Seshasayee is doing great guns in tranforming itself. they are doing 12 rupees ina quarter and even after the project goes onstream, we can expect even more stellar sort of numbers although they may get artifically bad owing to depreciation and interest being charged to revenue rather than being capitalised after the project goes onstream.
Also, Kanoria chemicals has declared a bonus and a stock split. Along with JK paper, Albert david and sah petroleum, Kanoria has been a puzzle for me......now even it has done what i wanted to do. And JK paper has increased its dividend, and I believe its time to let my wolves run after them...... By the way, congrats to you and PKB, your Larsen was on super fire.....the heat seems to have no end.. and results were mindblowing as well.....this company is doubling profits with glee. For Larsen, the universe is also not the limit. Well, such plays are similar to schablona india, lahoti Overseas, Orient Beverages, Ladderu Finance, Acknit Knitwear, Dhandapani Finance and there are many small caps. At these moment I am into Orient Beverages and Schablona india and although both are non-dividend paying stocks at the moment but very soon in a year or 2, they may come in that list. Orient beverages has a book value of 60+, is available at a price of 18-20, has exclusive distribution rights of Bisleri in the states of west Bengal, Orissa and Jharkhand. Schablona is doing quite quite fine as well. My dad is also asking me to get into Aekta Limited which I am avoiding at the moment although its also looking promising. To be very candid, i like these small cap games as I am a witness to my dad converting his 320 rupee investment in Gijarat NRE cOke into 50000 rupee plus in leass than 5 years time.....so I am never averse to such an idea , the only thing is that i have to assure myself that management will not come out to sell the shares. However, such games should be played with great deal of caution.

Yes, I fancy a fat dividend income and also I have managed to beat sensex handsomely owning no less than 200 stocks in the family's portfolio and if I would get a greater say I will only increase the number This is an amazing feat. Only two mutual funds in India (that I know of) - Fidelity Equity Fund and Sundaram Select Midcap - hold 100+ stocks in their portfolio and still manage to beat the Sensex. Vivekji: There is a book (I have read) from John Neff which I think you will appreciate and recommend great proponent of value with dividend investing - though I am not made of the same fabric (more of a growth with value kind of philosophy) - he is a great clear thinker and may well be worth the read (and re-read): http://www.amazon.com/John-Neff-Investing/dp/0471197173 Well Tiger, there cannot be any hard and fast rule to it. Although the way it is structured in my family's portfolio, we neither need dividend nor do we need capital gains to run our home, so distribution choices are not there. However, I do need dividends for making repurchases. Now coming to the spirit of your question, I believe a company must maintain a balance between dividends and retention. And perhaps thats why I go for mature companies. I admire companies which cultivate hard-core investor loyalty. With companies that have loyal set of investors, the downside will be protected. True, prices do tend to go up and down owing to speculation but the stock is not likely to fall below its true worth. thats what differentiates between an Infosys and a RS Software. Tiger, please understand dividend constitutes an important element in gains. When I purchased Opto at 158 three years back it used to give 3 rupees as dividend. there was nothing so spectacular about that . Then came a bonus for 1:2. The number of shares increased by 50 p.c. So, assuming i bought 100 tickets, the shares now stand at 150. Again next year it declared a bonus of 1:1. The number of shares increased to 300. Now it declared a dividend of 5 rupees a share on enhanced equity. that means I pocketed 1500 rupees as dividend. Now on an initial outlay of 15800, if i am pocketing 1500 rupees annually thats not bad at all. Also remember, its tax free income. Now this year Opto has declared a bonus of 1:2 again. So, the number of shares atands at 450. Now suppose if it declares a dividend of 4 a share, I will pocket 1800. This works

out to nearly 11.5 p.c. tax free income. Also Tiger, I have never said this approach suits everyone. I use dividends as a monitoring tool and less as an income tool. Also, circumstances of operations are very different. I know my dad's aversion to selling stocks so i know I cannot exit big at any point of time. So, I have to be with very stable horses which will not let me down during hard times. So, being a yield monger is a matter of choice as well as chance for me. Sandeep, I am full time into equities and I love my stocks so managing them is not difficult. For me , equities is more like gardening and like a gardener if he sees more plants he only gets happier and hence for me the more good companies i see in my portfolio, the more confident i become....... Hi kannan, I work under Sr. Sukhani who happens to be my dad. However, there is a small portfolio where I take most of the decisions. This is what Sr. Sukhani calls a grooming process. Although I am relatively new to this world of investment yet have been hearing about it since my days of reasoning. And I was groomed to be a dividend monger by my grand-dad so habits die really hard. Regarding confidence, I will not like to say many things. Its your last purchase that will determine your fate. You may make 100-baggers but if you lose 99 p.c. in your final purchase you lose all your gains. So, I am neither confident nor fearful. I generally dont play too many games and I start pumping hard when I see markets misbehaving with my stocks. that has been my approach all this while. I am thankful to Lord Almighty, that all this while I have managed to cultivate my own style and owing to Lord Almighty's blessings have managed a decent money which I wouldnt have made in case I would have been working for some-one else. All I am now trying to do is to set up a cash flow which can fed into investments more regularly and in a more large fashion. Have you studied famous desi investor Mohnish Pabrai's style? He closely follows Buffet's philosophy. I am tracking his transactions lately and saw some interesting buys.

Originally posted by basant

Originally posted by smartcat Dad visited the factory as a shareholder or under some other capacity? Will I get persmission to enter Reliance's Jamnagar factory if I wave my demat account statement at the gates? It all depends on how many digits it takes to fill up the quantity column. Oh not at all.....quantity is totally irrelevant. Factory visits are officially announced (at the discretion of the management) at the AGMs for the members attending the AGM. A day is fixed for the visit and eligible members go there. Although I must say here most of the members take it as a picnic rather than trying to learn something new. However in my dad's case I dont think thats the purpose for he is a total vegetarian and avoids all type of junk foods. But he does attend many factories out of curiosity to learn more. I think time is becoming ripe when one should start looking at MNC pharma companies. People have started to talk in terms of Price to Book value for such companies. That alone is a very good indicator that things should not go very worse from here on. Typically, the rule of thumb says that bottoming out takes place in case of Drugs, FMCG and IT when people start talking about Book Values. I know it may be sounding very foolish but companies like abbott, Merck, Novartis , Pfizer are looking quite decent at these levels. Dont know the upside but downside does not appear to be very high from here on......

Originally posted by Mohan

Originally posted by Vivek Sukhani did a small exit from Tata Steel and Tata Power and made an entry into Shipping

Corporation.... Please share the yield numbers ? Vivek bhai Exit price of tisco=Rs.826 Exit price for Tata Power=Rs.1282 Total amount receivable=Rs 2108 Dividend receivable from them=Rs.15.5+9.5=Rs.25 No. of SCI bought with 2108=Rs.2108/248=8.4 Dividend receivable=Rs.8.4*8.5=Rs.71.4 Entry price for TISCO=Rs.66 Entry Price for tata Power=Rs.11 Total initial investment=Rs.77 Jack-up in yield=((71.4/77)-(25/77)) Kindly note that I am not adjusting TISCO's investment price for the bonus. I am going by the way we compute the cost of investment from the income tax point of view. My dad has mandated me a target of jacking the dividend to rs. 100 in a year's time. He insists on recouping more than what we have put into them, every year. I made such a good deal in banking during my starting days in oriental bank of commerce , vijaya bank, union bank, bank of india. then after that the interest tapered off. Am still holding on to SBBJ, SBI, allahabad and state bank of travancore. SBBJ has been more than a 25 bagger for my family portfolio excluding dividends. So has been a SBT. however , AB is not that sort of profitable. had a small quantity of icici bank which was a complete eye-sore for me. sold it for ongc and now thats becoming profitable. now that company is planning to list its bacchas. somehow this company know how to get more and more money. hdfc i bought in the fall of may 2006 but sold it off after making nearly 3 times from that company.

Same holds true for Novartis and Wyeth also to some extent. Both are giving dividends of around 2025 Rs per share. Internationally also Wyeth has had a big restructuring with a new CEO in place things are looking good on the international front, hope the same happens in India as well.
Wonder why they havent really gone for a buy back when prices were at the lows say about 2-3 months back. I assume they have some decent investment plans and hence didnt go for the buy back. Wyeth is an excellent company. All the MNC pharma are quite decent. When it comes to brands, Pfizer scores very high. Astra Zeneca has gone for bonus debentures, HUL style. Abbott is going for a buyback for the second time in 2 years. Has some excellent OTCs like Ibubrufen and digene. Novartis is also equally good.

Originally posted by Vivek Sukhani well, I will also not like that. i will like the parent to continuously hold on to value all by itself rather than getting the bacchas listed. Somehow, this concept of value unlocking by getting the shares of bacchas listed and to face the music of the market puzzles me a lot. So, its better to keep the market guessing about the value of OVL and to continuously reap meaty dividends from OVL, I believe, is a better strategy. The aim should be to extract more and more out of these bacchas and to allow them liquidity only to the point necessary. I completely agree. This listing of subsidiaries is a very short term approach. Even parent companies with listed bachhas are often undervalued when you take into accnt mkcap of the bachhas into account. Case in point is M&M. When they listed Tech Mah., m&m stock shot through the roof. But if you look at their valuation now, even their core vehicles, tractors and spare parts business don't seem to be fully priced in. So, for a short term spike, why would you want to get into the long term headache of dancing to market tunes....seems like a losing propo to me.

Case in point is M&M. When they listed Tech Mah., m&m stock shot through the roof. But if you

look at their valuation now, even their core vehciles, tractors and spare parts business don't seem to be fully priced in The problem with M&M is - both the core business (automobiles) and subsidiary business (software) is going through a bad phase. So Rupee goes back to Rs. 45 and interest rates fall down again, M&M will shoot up. And M&M would have gone up anyway - whether Tech Mahindra was listed or not. The listing of subsidiaries to 'unlock value' - this stuff happens only in India. You don't have Citibank or HSBC listing its 10 subsidiaries - but not our Indian companies. ICICI Bank will give birth to 10 companies. I wonder if the problem is with the books our Indian management reads - there is probably a chapter written on "How to Unlock Value By Listing Subsidiaries" and many promoters seem to be following this judiciously. The company did a dividend cut just before it went for a buy-back. I get ready when a company especially an MNC does a dividend cut and that too drastic, without any significant dip in profits and without assigning any reason. I know people make an en-masse exit during that period but you should be able to understand such ploys. There is an unlisted pharma MNC called Organon India. It was previously known as Infar India. The company has also done a similar thing but this year I landed up with a dividend of 47.50 rupees per share. A company like 3M India, doesnt pay any dividend yet in my opinion, its an excellent company to own. I utilise my dad's knowledge in making judgements on non-dividend paying companies, dividend cutting companies. Foseco India has a very clearly well laid out dividend policy. And they have made it known public by publishing it in their Annual report. They have set their hierarchy of needs of capital. Any surplus left thereafter is totally distributable. Its a small very well managed company. For me Foseco has been a company to invest when I locate no other avenue to invest. Foseco occasionally pays special dividends so that distorts the entire comparative yearly analysis. If you come across any shareholder of Foseco India, just ask him what kind of dividend this company throws every quarter.... Macmillan I have lost complete track.

Originally posted by kannanravi1

Thanks for elaborating on the dividend cut ploy. 3M India does seem to be a great company but at the current price seems very overvalued (purely from a PE standpoint)
Hi Kannan, in my investment career of about 3-4 years, I have always been thinking like you but then 3M India has never looked cheap in the worst of crashes. Even I am unable to buy a single share because i also think its all in the price. Thankfully though, it has now become relatively cheap, a logic which I generally dont apply while investing. But somehow I am feeling positive about 3M India owing to the expansion they have here in India. Lets see how things fan out..... Sold a part of sbi and made a move into Goodyear India and jk tyres. Also got rid of a part of aditya birla nuvo and made it go into jk tyres and castrol. got rid of some tickets of larsen and also sold a part of gt offshore and made that go into allahabad bank, foseco india and jk tyres. Okay let me explain: 1. Selling Larsen and buying Allahabad bank: I assumed Larsen will earn 80 rupees a share this year. But with 1 ticket of Larsen I can buy 30 tickets of Allahabad bank. Now, Allahabad bank pays rs. 3 as dividend. So, with 30 tickets, I can net 30*3=Rs. 90 a dividend. When I can get a cash flow of that the amount which larsen will make per share, why the heck shall I bother. Note, I am comparing Allahabad bank's dividend with larsen's EPS. Effectively, it implies dividend yield greater than earnings yield. Thats essentially the trigger. 2. Selling GT offshore for Foseco india: Its like making your girl happy before Valentine's day......foseco india is a company which I love and I wanted to buy it still more.....so it was my

love for a company that led me to get rid of great offshore. also, i like companies which buys cheap assets and sells expensive assets. Look at GE shipping, its last 3 asset contracts has all been sale of ships. thats what you should do when the asset price shoots up abnormally. I somehow believe GE shipping is far better at timing acquisitions and selling assets than GT Offshore. But will not get into GE Shipping as of yet, will wait for it to sink further before making into it. So, what could have I done with money and hence decided to satisfy myself by getting Foseco India. Also, the dividend yield of foseco is quite attractice compared to the earnings yield of GT Offshore. The earnings of GT offshore may be higher than Foseco's dividend but GT offshore is something i dont like it. Its more of a decision based on personal choice rather than any sound financial principle. 3. Getting into Jk tyres: What could I have done tell me, i still had some money left.....Jk tyre's asset strength is mind blowing. Look at its market cap and look at its turnover. The company in all probability will also declare a higher dividend, so decided to make a try there as well.

Originally posted by India_Bull Vivekjee, With due respect to your dividend investment philosophy,-L&T is growing well, increasing order book, margins, and there are lot of triggers in this year including their power foray, listing of L&T infotech.. If one compares L& T with Allahabad bank, Allahabad bank, gone nowhere in this bull run, pls correct me if I am wrong it never crossed 100 from 70-80 in the last couple of years, whereas I would guess L&T has been appreciated 30 times in last 4-5 years (Refer Mr.Naik interview), In such scenario , does Allahabad bank still looks better investment option ??

Well, I am a dividend monger. I play for dividends. I am not into business models and value unlocking and stuff like that. So, I am not saying Larsen has peaked........but at this price i am happy to book out. My costing for Larsen stands at 218 cum bonus. So, I decided to eat out a bit. I am not fully out as well, so there's nothing to worry....will instead like it to still go higher so that i can book out more and more. As Vivek rightly said, value and growth are from two worlds...I prefer to think growth is from Venus and value is from Mars. One is passionate, going with the crowd and is all about cashing in on hopes and emotions. Value on the other hand is cold, calculated, risk averse, going against the crowd approach. I myself am a growth investor turned value guy. Growth just didn't seem to fit my style. It was too active and passionate for me. I rather prefer, the calculated risk approach of value, where I know the risks upfront and invest with a very long term horizon (3-5 yrs) (never sell anything before atleast a year is up for tax reasons). The whole value style suits me because it helps me sleep better at night I guess. I am not too bothered about selling excepting when a stock rises unreasonably high. I hate it when a stock does that because now I have to make a decision as to sell or hold. I rather prefer to buy a stock when it is seriously undervalued and hold on to get the dividends and cash out if I find a better bargain. In the interim, I may hold on to a stock for ever and keep adding if it is undervalued. (The whole idea is to buy a rupee for 50 ps and hold on till it reaches 1 rupee or cash out when you find and even more tempting bargain. This example is not fully reflective of my style though, since stocks also give you dividends in the interim, and the fair value of the coin may increase from a rupee to 2 rupees in future). I am merely trying to show what in my mind is the difference between growth and value investing (there are different schools of value too but all share a common philosophy of buying bargains dividend bargains, earnings bargains, asset bargains, restructuring bargains, bankruptcy bargains etc.). Plus, I would not also care much to have a tussle between value picks and growth picks in TED. I don't think it is necessary because each person should pick a style based on his temperament (and in my mind you can make money either ways as demonstrated by the fact that there have

been investing greats on both sides). Once you know what fits you best, then there is no more choice to be made...and there is peace to be had:)

Growth is a component of value. Its just that value investors dont rely on growth. Value investors minimize risk by looking at the worst case first. They choose investments with a built-in margin of safety.
Thats why value stocks are the best way to follow Warren Buffetts famous rules: Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1......

Originally posted by tigershark vivek sukhani do yu have this one in your double century portfolio VST INDUSTRIES last yr paid rs 20+ this qrt dec07 has shown a 50%+ increase in np npm has increased from 13 to 18.margin expansion is always great for a stock.9 mnth eps 30 stock price 396. Although always on my radar, never got into this. ITC has a sizeable stake in this and I prefer that over VST. Infact, before i load onto VST, I will like to get into Godfrey....... got rid of some larsen and bought some tickets of kanoria chemicals, foseco india and century enka.

Originally posted by gemseeker

Vivek ji,
I also added some Foseco . Foseco has been my favorite as this is a good dividend paying stock. But Larsen is equally good. This company has such clearly well laid down policies for operation. It functions more or less like a robot. An absolute no brainer.....no guru talk required......the more it falls the more happy I get. However, most of the times there is a buyer at those levels rather than seller at that level. Whenever it falls big, observe the bid/ask spread. This company simply throws dividends........ Extremely nice to hear that Foseco has also been your favorite....... Sold off 400 tickets of electrosteel castings and made a move into kanoria chemicals.

In 1993 , I got an allotment of 100 shares of Foseco at 70 Rs as FERA companies were fancied at that moment. Since then I have been adding this in small quantities and now get Dividend equivelent to my 1 months income. This company has thrown too much dividend. One should also have some high dividend yield stocks like Foseco. A blend of some high growth stocks along with some high dividend yield stocks is the need for today.
Good gemseeker, you have even made me increasingly confident. Let me illustrate the reason why I like( err....Love) Foseco so much: 1.I have a habit of immediately calling up for the Annual report as soon as I buy the shares. Foseco, alongwith Infosys and Abbott India, has been one of the rare companies which made the Annual Report available on my desk before the shares were actually credited to my account. 2.This company not only throws dividend every quarter but has a habit of declaring special dividends every 2-3 years. 3.Corporate Governance and following of disclosure norms is excellent. Everything appears to be so standardised. One of the ver y very rare companies which disclose the name of all their employees alongwith their photographs in the Annual report. Only a company which has tremendous belief on its employees and is not fearful of them being poached will ever do such a thing. Its also one of the very few companies which has a clearly well laid out dividend policy. They also have Whistleblower policy firmly in place. 4. Financials are excellent. Practically debt free...whatever little debt is there, that is sales tax deferral loan. They have been constantly increasing their EPS quarter on Quarter, except for one quarter when the EPS was exactly the same as the previous quarter. For a company in the chemical space, its an amazing feat.

5.Most importantly, no one ever talks about it. Its one of those silent hero type of companies which will always deliver irrespective of the conditions of the market. It has the capacity to go for a buy-back at the height of the bull market, when all the other companies are busy in liquidating their asset. On the negative side, this company went through a very tough 2000-2002 period. The company went nil dividend. It was making huge losses during that period. There was perhaps some sort of a management conflict that was going on. May be, some sort of a clash with thapars, am not sure about it. However, since then the company has totally firmed itself, there is no drags on the balance sheet, is in absolutely strong financial health. Vivekjee, New year gift from me !! (from dividend pt of view) Now when I scan a stk (I also look at the dividend yield just for an academic purpose though) (Dont know if you already have it !!), Its MTNL, this stock is available at almost its 52-week low. A strong book value of Rs.184, good dividend of 40% and an attractive P/E multiple of around 12 compared to the industry average P/E ratio of 37. P.S- I have no interest in this script Sold a few tickets of shree cements and made it go into century enka and kanoria chemicals. Of all the results I have seen for this quarter, India Glycols has been the most stupendous one.......absolutely mind blowing!!!!!!!! Great Eastern has also been great, but I believe it was quite expected from GE Shipping. Great Offshore has also been good. Schablona is again great. So, has been foseco. Century enka's results were quite expected. The company is simply interested in depreciation, for the time being. Ultramarine was excellent and thirumalai was so-so. Glaxo consumer has also thrown a so-so result. The biggest disappointment has been ONGC. With crude at such high levels, the result was way too mediocre.

Pidilite and Asian paints' results were also quite quite decent.....
For me it works like this......if I pay a 3 p.c. yielding stock at X and suppose it falls to X/2, then the yield goes up to 6p.c. Now, tax-adjusted yield on a bond in India generally comes between 6 and 7 p.c. And hence at that stage I will be able to get my bonds into such stocks. At the end of the day, there's no formula to make capital gains.......and so I work with a hardcore numberbased approach and I dont scratch my back where my hands dont reach.....so, I have no option to ignore such articles like this at the dustbin's value Hi Vivek, Have you looked into the restructuring of Rane group? From my basic understanding an investor with 100 shares in Rane Brake gets 100 shares of new manufacturing company and 75 shares of Rane Holdings. I couldn't find any more details on this. Do you happen to have any? From the face of it, this looks like a good deal for RBL investors, but I would like to dig deep into the specifics of the proposed structure. I believe you are right. even I am this plan in my head. However, in the middle I decided to abandon my plan for acquiring a bigger quantity of RBL as the tyre stocks look more appealing to me and hence got myself some quantity of Goodyear India and JK tyres. There's a big misconception that value stocks dont perform bad during crashes and dont do well during bull runs. In my portfolio, the biggest shock in this crash has been a century enka which is off nearly 35 p.c. from its high. Although I am not feeling jittery and infact I am planning to cut short my voluntary trading holiday just for century enka and glaxo Consumer.All stocks do bad during a crash. However, with them I will always have the confidence so that presents an opportunity every-time it falls. Infact I can see that great 2003-2004 period returning in some time. Now many high yielders are available on the plate, many high book value stocks are available on the plate and many cash generators are available at a great price. Something like a Voith paper, which has a cash balance of nearly 100 rupees per share, is totally debt free, earns 4-5 rupees in a quarter , has book value of 180 rupees, is available at a price of 155.

I look at such cases as special opportunities. And there are now many like voith paper. Somehow, I believe its going to be one of those years where one can make terrific returns and beat the Sensex in such a manner that can take care of 5 years of underperformance afterwards.

Something like a Voith paper, which has a cash balance of nearly 100 rupees per share, is totally debt free, earns 4-5 rupees in a quarter , has book value of 180 rupees, is available at a price of 155 Reminds me of Trent in 2001- 02. COmpany was available at Rs 60 with Rs 120 per share in cash and a dividend pay out of Rs 6.5 per share! Any further details on Voith Paper? Multinational company with a german parent, wonderful business opportunity as it manufactures felts which is used in paper-making and fibre-cement making process, is a global leader in that space. With so much of expansion in paper happening, opportunities will be there. Also with rupee going up, this company should benefit as it also does some trading in imported goods.

Kanoria Chemical's debt-equity ratio has been increasingly since last 5 years. Any specific reasons anybody know about? Abhishek. The company has gone for very aggressive expansion. The management appears quite focussed. 2-3 years down the line, we will start to see the full impact of these expansion measures. Initially, expansion hurts as depreciation and interest cost have to be absorbed but thereafter the turnover starts to expand and things start to fall in place. Some updates on the stocks which are on my watch list (meaning, I am yet to buy them but am watching all announcements and any other information that I may my lay my hands on) now: 1.Sundaram Brakes( yes, am yet to take a call) 2.Asian hotels 3.Oriental Hotels 4.Asahi Songwon 5.KEI Industries 6.Kovai Medical 7.Sasken Communication. 8.Balmer Lawrie Some stocks on which I have changed my views: 1.GAIL( From accumulate to sell on rallies) 2.Shipping Corporation( From hold to sell on rallies) 3.Castrol( Add and add significantly on significant dips from Hold) 4.HUL( From Hold to Add on dips) 5.Glaxo Consumer(From Add on Dips toAdd) 6.Abbott india( Add) 7.Voith Paper( Add from Add on Dips) 8.DIC India( Add from Add on dips) 9.Vesuvius India( Add on Dips from Hold) 10.Pidilite Industries( Reduce on significant rallies) Vivek Have you ever had a look on Godrej Consumer. Every year they pay very lucrative dividend. 300% ++ Please let me have your views Nice company but somehow I dont have any fancy for this company. Dad has a small quantity and he is still sticking with that. Many a times I had asked him to get rid of that when it used to hover around that 150-160 odd levels, but he didnt citing the same reason as you are doing. Now, this company is asking for money from its shareholders, instead of giving them through a buy-back after the price has dropped so much......I have a terrible dislike for companies which ask for money from me. They hurt my cash flow planning and I dont get amused at all.

The point is, what is the overall dividend amount......its just 3 rupees on my 120 odd rupees. Am I not better off with my HUL, which pays me 6 rupees on my 210 odd rupees. Thanks Vivek for your views. I have no inkling for this company. Can you please elaborate on "This company is asking for money from its shareholders" They are coming up with a rights issue. Vivek and rakesh, I chanced to read this conversation and thought I should add my 2 cents to it. Hope you guys don't mind. Godrej consumer, to me, is a great company purely because of the great efficiency with which they manage capital (very high ROE). A high ROE means that they are investing my money more wisely and efficiently than the average company. I was a bit crest fallen too when they asked for more money through the rights issue. But thinking again, I felt that if somebody is investing my money good, why would I feel bad to give them more? If I completely owned Godr. consumer, I would rather give them my spare cash than try to find another company to invest in. I am not an advocate of rights issue because it is most often equity dilutive and returns dilutive, but for this company i would not think twice before I give more (same is the case with Tata Steel). Also, if I am not mistaken, the godrej group has made a habit of buying back and going private on a lot of their companies. I would bet my 2 cents that down the line (10-15 yrs hence) they would follow the same approach with Godrej Consumer. They have also done buy backs in godrej industries....just my 2 cents kannan I have a question for you kannan. What drives high RoE? High RoE can be achieved by 2 ways: 1.Earning super-normally. 2.Keeping Equity small. The second reason is very tricky. For a company like a Godrej consumer, as the payout ratio is very high, equity( i.e Equity Share Capital+Reserves and Surplus)is kept small. FMCG businesses derive their working capital from their customers and suppliers, so they can afford to keep the payout very high.And thats why RoE looks very great. I am wondering, what will be the RoE of Colgate this year?????? Castrol's RoE this year is also mind-blowing. But then do they merit outright buys???? I will say, pause a moment. In case of a cent percent payout company, RoE can be held very high without zero growth. All you need is to keep on earning what you are earning and keep on distributing that back to the owners. I think, for us, as investors we should be bothered on what the company is earning on its market capitalisation. RoMP is a fancy term for Earnings Yield. A thing becomes a buy when its RoMP is very high and is also sustainable. Kannan, I view things a bit differently. I want my companies to earn very big on my investment. What they do on their reported equity is of little consequence so long as I get adequate return on my invested price. Vivek, Thanks for the excellent analysis on ROE. I completely agree with your understanding of ROE. I am on the same boat as you are both in my understanding of ROE and use of ROMP. Where I differ is that I try to think like the sole owner of the business (my hope is that one day I will be....haha:)..dont tell adi godrej). Hence, a high ROE business is more attractive to me than a lower one. I don't care much for growth, but want my company to keep paying me (sole owner) back as much of its earnings as possible while still investing what it needs to keep the business sustainable long term. Once I like such a company, I still look for ROMP. I buy when I think that the CMP is atleast fair valued or hopefully undervalued. But the difference is that I only watch the subset of high ROE (and other criteria) companies. Also, at CMP I have a 'Hold' status on Godrej. So in that way, we both are on the same boat as far as not considering GCL to be an attractive buy now.

kannan I think that since we agree on so many things, there will be some people (and especially the watchful eye of the 'cool man') who must be wondering if we are advertising through one another. The fact of the matter is most investors relying on quantitative methods will agree quite commonly. The reason is, quantitative studies are much more objective. So, in case the decision making tools are similar, the output will be similar for a given set of input. Now Kannan, I try to keep the earnings yield of my portfolio very high. So, for every incremental investment, I work out if the earnings yield will get incremented too. Perhaps thats the only reason I am not getting wild on Castrol although I am hugely positive on this. If the filter be such rigid, it becomes very difficult for me to fit in stocks like Godrej Consumer there. However, sometimes sector biases have to be adjusted for in the sense that FMCG will always have a lower Earnings Yield and Oil and Gas will always have higher EY. But even if I decide to make room for that, I still find daburs, Maricos and Godrej Consumers to be not cheap enough to make a case of outright buys. Dad keeps a dairy wherein he takes note of everything. My aim is to meet my dividend target for the family's portfolio, through yield enhancing churns, and to keep track of cash flows. Its not as tough as one thinks it to be. To check if I am meeting my targets I keep an excel sheet wherein I keep my list of dividend paying companies and keep it updated with all the churns. The beauty of div yield stocks is at least you see some appreciation, when the stk tanks you will see dividend yield increased, growth stks ka aisa nasib kaha !!! Appreciation is something which is not in our hand. Yield stocks also fall. But in case you go for yields, you will get a lovely cash flows, something which helps you in wrong times. Sandip Sir, I may be sounding like a sadist, but somehow I dont like my stocks going up a wee bit. Dad is a very big critic of my approach as he calls me unmethodical, but whenever he looks at the DP statement, he feels very good. Somehow I am addicted to this methodology, cant help it..... Vivek, You can look into Avaya GlobalConnect. That may fit your portfolio. Company is available at bookvalue and yield is V good. No debt. p/e '08 is abt 8. They don't need capex to grow. Their fixed assest are only 20cr. and working capital is 80cr. Market leader and throwing cashflow. Mkt leader in their business. Till Merck doesnt utter a word about buy-back, this stock at best will be will-not-fall-majorly-in-acrash type of a space. Although safety is a good thing to look at, but purchasing for this reason is a bit mind-boggling. We want to see good operating results and not divisional sell-offs and hiveoffs, thats why I am not happy with the way Merck goes about its business. Abbott on any given day is better. As a matter of disclosure, I am holding Merck India Limited , purchased at 2 levels...will surely not be a seller but dont feel like adding them. However, I am eagerly awaiting its Annual report. I think this year, its cash and investment balance will simply blow the roof..... I am pretty much hopeful that a buy-back is surely on the anvil for merck....lets see... Vivek Thanks for pointing out important dividend yield stocks .It has made my job easier . I will start a separate thread for the same and since you and Jain follow the method of Graham in picking stocks that have : 1) Good dividend yield 2) Low or zero debt 3) Price equal to less than book value . So it will be useful for others who are interested in these sort of bargain hunting during bearish times .

Vivek, The thing I like about Foseco most (and feel free to object if you have a different opinion) is that they have found a way to keep generating money without adding on assets. Look at the gross block...it has been very steady over the past 5 yrs. This means that they are adding on very little to their assets, or rather I should say, they are not compelled to pile on assets to stay competitive. This shows tremendous market comfort. And even more amazing is that they have found a way to increase their earnings without investing more into assets. This is absolutely great. And because they dont feel compelled to invest more in assets, they feel comfortable to give away almost 7580% of their cash profit as dividends. I typically like such companies that do not reinvest too much in assets to stay competitive and instead pay out most of their earnings to investors either in terms of dividends or stock buybacks or to a lesser extent- acquisitions . Foseco is truly a cash machine. I am looking at the right price to enter. I think this bear phase has brought it within reach. Hi Kannan, For me, Foseco becomes a buy anytime I see its down about 9-10 p.c.I dont know how you got this constant gross block figure because I remember in the Annual Report of 2006, they did a very decent fixed asset purchase. Not very sure about this though, and have to check. After GE Shipping, this is the company which I like so much. This has not been any bagger for me, yet it suits my style immensely. Its not talked about at all. It throws so much money. Maintains such high disclosure norms. I am quite optimistic about its business outlook as well. With so many steel plants being set up, foundry chemicals will be in even greater demand. They shall do a 40 rupees cash earning this year..... In any case, I am not a neutral person when it comes to speaking about Foseco. However the kind of psychological support it provides is really priceless. Its a delight, in one single phrase...... Regards, Vivek NAV of a shipping company takes into account market value of its vessels whereas the book value takes into account the historical cost of the vessels. With metal prices going through the roof, old ships command a very good price. This is one business where the operating assets are increasing in value and the operating income is going up so very high. No wonder, promoters of Great Eastern have again started to accumulate shares from the market. And I dont claim that i am a very busy person. I have plenty of spare time when its not the season period. Things only become very tough during the first half of the year. Second half is basically for accounts and tax related work. Went through Annual Report of Vesuvius India. This was of the best read I have had this year. This company has become debt-free, invested in fixed assets and is very aggressively expanding capacity, also invested in working capital(other than cash and bank), increased dividend and the best part is, with all this thing being done, has also increased its bank balance. What more do investors ask for?

Originally posted by basant

Some companies pay dividend just to create a repute in the market. I remember Tv18 paying dividend and doing a QIP in the same month. SO basically it means nothing.
Others like HUL pay off just to keep the return ratios high or else cash earns 8% whereas their own operations have RoCE of more than 40% so paying off makes the numbers look attractive. True......thats why everything has to be seen in conjunction. And never trust Indian companies' dividend policy, under no circumstances. Be satisfied with a lesser yield from an ITC or a Lever but dont bet on the dividend of any indian company. Thats why even though Great Eastern may be my most favorite stock but whenever I sit to do an endurability study of my family's portfolio, I dont place it in the league of castrols, Levers, ITCs.

Originally posted by vijaygawde

Vivek bhai, Do you track Avaya Global Connect? Avaya GlobalConnect (CMP: Rs.163) - Book value Rs.149; last dividend 45%; 52-week high/low Rs.414/147. Current year expected EPS is around Rs.20. Can we connect with this TATA company? Regards/VJ
Hi Vijay Sir, Avaya Global is Manish dave Sir's one of the most liked companies. However, I have not not looked at it. I am busy in filling up my old favorites and am delaying adding anything new for the time being. Moreover, I stay off from service oriented companies. Somehow my faith with asset rich companies and product companies is very high rather than pure service providers. However, the stats look quite beautiful. I will do a toss-up between Avaya and Voith and see whats better. Voith has a higher Book-value, is likely to earn more but pays lesser dividend. So, I will call for a copy of the Annual report from Avaya and try to make up my mind. Thanks for dropping by and reminding me about Avaya Global. Regards, Vivek If the princess is beautiful, she is probably a frog cursed by an evil witch. A few years from now, after I meet my financial goals, I will probably be a value investor too invest in steady businesses growing at 12% CAGR with minimum dividend yield of 4%. Smartcat

In markets & in life, one shouldn't marry someone because a friend feels she is good looking. Borrowed conviction could be dangerous. Kulman
On a completely different 180 degree perspective I buy stocks only for capital gains and nothing else. I only want a decent capital gain from my stocks (without losing too much on the other). Somehow the idea of waiting endlessly has never appealed to me Basant Well.....the problem is, a bird in hand is worth 2 in the bush. When I landed up in this field I got an orientation and I prefer sticking to it. I believe I have never said that one shall only load up castrols and nothing else. My most favorite stock has always been Great eastern Shipping and its revenue and profit growth can dazzle anyone. The thing is we as individual investors who trade with our own money, who dont enjoy the affordability of getting wrong in a massive manner, who think they are not smart enough and powerful enough to influence stock prices on their own, who believe they are likely to be helpless in case stock prices move in an opposite direction, AND INSPITE OF ALL THESE , YET WANT TO BE ONLY IN EQUITIES, they have to get stocks like Castrol in their portfolio. Safety comes at a price, Sir. That price is in the form of loss of opportunity. These stocks are not trumps. I have never talked about appreciation in them. I post here for discussion purpose only. I reiterate I have no idea what earnings they will do next 5 years down the line. I dont have that eyes that can see the future so I have to behave like an ordinary stockpicker , who has less than average intelligence compared to big analysts.

Originally posted by Vivek Sukhani

Hi Vijay Sir, Avaya Global is Manish dave Sir's one of the most liked companies. However, I have not not looked at it. I am busy in filling up my old favorites and am delaying adding anything new for the time being. Moreover, I stay off from service oriented companies. Somehow my faith with asset rich companies and product companies is very high rather than pure service providers. Vivek, First of all stop calling me sir. It is also not correct to say my most liked company. Most liked companies keep on changing with price. Avaya was out of my radar for long time but came into range with price. Company is at p/e of <8(trailing) and around BV. BV is important here bcoz almost everything is liquid and very small fixed assets. They need only working capital for growth as they don't manufacture anything. Service income is guaranteed once equipments are installed and is growing steadily. And all income is almost free cashflow though growth may slow down. yes....life has to be kept simple. if anything comes at the cost of simplicity that has to be dumped. Thats why i am not trying to venture too much here and there. Under ordinary circumstances , to see a BASF at 180 odd, I would have gone wild at it but now I am trying to be patient. I go for Ultramarine, Foseco, Castrol etc. when I feel like improving the yield of my portfolio. I go for voith paper, century enka when I feel like improving the book value of my portfolio. Stocks like BASF help me do both moderately. Personally speaking, my portfolio is divided between no-brainers and very risky type of stocks. I have a very decent exposure to chemical stocks, to cement, to shipping, to steel, to power, to oil and gas. Similarly, I have a decent portfolio to paper, consumer non-durables( staples), stocks like exide, castrol in the auto ancilliary sector( those which will consumed irrespective of vehicle sales), tyres ( similar to those like castrol etc.) However, i do keep in my mind that any churn I do, most of the fundamentals like book-value, dividend has to be improved. Perhaps thats why I could sell a larsen for a foseco, or a hdfc for castrol. The only issue which I carry with my dad is that I try to price in everything and when I see white elephants getting too expensive i dont mind selling them whereas he keeps on sticking to them by giving me example of stocks like ITC etc. Vivekjee, My observation is that FMCG (since you have studied a lot on ITC and HUL) and high dividend yield companies should be bought when the market is bullish (You will get them at attractive prices), when market crashes everyone wants to take shelter and they become expensive e.g. in the bear phase FMCGs are ruling at their year high levels and though we assume that yield increases when price falls , how does one cope up with these investments when they start declaring less dividends and even growth slows down in bearish phase. On the other hand one should load up growth companies in the bear phase as growth companies get butchered in panic and during crash and available at cheap rates. Gopal Sir, It has become fashionable to criticise HULs, ITCs and the likes. People derive pleasure in talking bad about them. So I dont blame you for your post. I really fail to understand why do people talk so much of past.....really baffles me. What use is this information to anyone????? What has not happened in past may jolly well happen in future. people trade with different objectives and that must be clearly understood by people. For me, it becomes imperative to load MNCs because I am very aggressive with certain sectors like chemicals, cement, shipping, steel and oil and gas which are extremely cyclical. I use FMCG as a balancing tool in my portfolio. I am not looking to make supernormal profits out of them. So, if i have to infer from your statement, I will say, at least I made a return equal to the return I would have made had I kept it liquid. I think these stocks have served that purpose. Sold off some IFCI (legacy), Balrampur Chini( not a legacy but was still sitting on a decent profit) and rolta( after having made 7 bagger) and went for GHCL( gujarat heavy Chemicals limited). What are the characteristics you look in a balance sheet before you pronounce it 'uncomplicated'?

No debt, no investment, no revaluation reserve, no securities Premium balance,no miscellaneous assets, no major contingent liabilities. A century enka is also available at a significant discount to book, but if i have to go for a choice between a century enka and a voith paper on the basis of discount to book NAV, I will go for voith Paper. The reason being, as an investor I dont have to worry about the earnings because i am pretty confident that solvency is pretty much intact. Balance Sheet plays , I think, must always be initiated in troubled times. Good to see your conviction remain intact. For me if a 80% grower starts growing at 50% I sell out. But then markets have no single strategy. My investments are always stacked with opportunity cost and also I cannot afford to wait/lose because I hold very few companies with large sized bets. Talking about Balance Sheets have you looked at Andhra Paper?

If you could tell the future from a Balance Sheet then accountants and mathematicians would be the richest people in the world. I could be buying & selling stocks recommended here.Read the DISCLAIMER.

Originally posted by prashantmohta Talking about Balance Sheets have you looked at Andhra Paper? --------------------------------------------------------------------------------------top line is growing....up operating profit is still going.....up but net profit is going down effectively eps.....down Dear Friend, thats not balance sheet....thats P/L for me. Basant Sir, I will look at AP. But with paper companies, the strength is in their P/L , not in balance sheets. Most of them are debt-ridden. Perhaps thats why I offered my entire family's holdings in Ballarpur in the buy-back. the best paper stock which I am finding at this moment is a Seshasayee Paper. I get into JK Paper when I feel like increasing the yield of my family's portfolio. So, paper stocks I play differently for different reasons. Paper stocks like Fertiliser stocks are doggy type stocks. I did pretty well with fertilisers, entering at right time and booking out at right time. Now, again chambal has again shot up and again I will book out. I intend to do similar thing with my paper stocks, going in and coming back. I load them up when people misbehave with the prices and i offload when I get more than my comfort level. As far as conviction goes, I set up my levels after I decide on something and thereafter I get into that thing. So I buy more if it comes down and it has been working well for me........ As expected, this time around, the amount of dividend is negligible. this is the reason i was asking people not to get into foseco in a biggish manner but to gather it in the range of 350-400. this is what happens when a company gets into expansion mode. They try to cut down on dividend to expand and foseco's Annual report has clearly indicated the same. I believe I have also said it somewhere on this thread that this year, the dividend is likely to be less from foseco. the results are pretty okay. Only thing to make out is how has that other income of 1.56 crore come there. Expenditure items are okay except that Other expenditure has gone up quite sharply. Results are pretty much on expected lines though. It will take some time before the effect of expansion kicks in. FAG has also struggled in the last quarter, if I remember correctly. Somehow I believe when the companies get into the expansion mode in a big manner, current operations suffer for some time.

Overall, bearings shall do well as it used as a consumable in most of the user industry. Demand is not that price elastic and even though competition may be intense, yet quality conscious users generally prefer bearings from reputed names rather than fakes and spurious bearings. glaxo good set of numbrs.skf also has been flat expenditure has been the culprit i think high input costs has started to eat into margins.regarding glaxo at a forward pe of 13.7 whats the upside? Tigershark 33 p.c. growth available at a P/E of 13.7....no debt, huge cash flows, wonderfully powerful brand, dividend payout growing on back of earnings rather than financial restructuring. I hope I knew the answer to your question on how much upside. I have just revised my note call on the accumulation band for Glaxo from 500-550 to 550-600. I think a lot of companies which are becoming OEMs to Nano and Maruti will take a good beating too as they will be squeezed hard to keep prices low. My own exposure to auto is via Amararaja Batteries. I stayed away from Exide on hearing that it is the OEM to Nano.

Originally posted by KACHAM Vivek.. I have a general query if you are okie to answer.. how do you research for the companies fitting your criteria.. is it like you analyse many companies.. and find one..or you go to a website and search for companies with say mkt cap >x and div.yield>y .. iam trying to find a source where i can get list of companies satisfying certain conditions (my own criteria )and would like to know if you or any TED know any website or place wher i can get that... Hi kacham, I search in a very old fashioned style. i sit with newspaper and a highlighter and locate companies which have a decent enough yield/book-value/earnings for me. Thereafter, I go deep into individual stocks. For doing thorough studies, I use Microsec's site, BSE's site and Myiris. After I feel okay with those studies, I call for the Annual report to satisfy myself with the facts.

Originally posted by rohitsud04 need to know if i can buy sesa goa tomorrow ... virtually running off today !! My selling sesa before the january crash was a mistake....was never comfortable with selling Sesa, but was under tremendous pressure from dad to book out after having made more than 25 bagger without considering the dividend. Sesa is a lovely company, no doubt about that at all. the only issue I have is with the group...somehow have never found Vedanta group to be very shareholder friendly. Had it been with Mitsui, I would have still asked you to get into Sesa, but with sterlite group, I believe, you need to study further. Sure, prices may still move up further. But you would like yourself to be surefooted before you go aggressive. However, in case you are totally convinced, then you should follow your instinct independently and get into it without any fear. Seeking opinion on something you are very convinced, rarely helps your conviction. You may ask for an ECS Mandate Form from the companies which are sending you the dividend warrants at your residence. You may fill in that form and send it across to the company. In case they wont send it to the country you are currently located, then you may make an application and submit it online( most of the companies have a full fledged Investor services Department nowadays). However, i am at a total loss to understand that when you are holding you shares in dematerialised form, how come you are receiving cheques at home. i hardly recieve dividend cheques, all I receive is intimation warrants. Companies no longer mail the warrants nowadays. Mostly all dividends get electronically cleared.

If not me, my postman, will go berserck even at the thought of getting all my dividend cheques by mail. I recieve very very few cheques nowadays. My account gets electronically credited for the dividends. I believe you guys need to revisit your agreement with your Depository partcipants. What is the staus of the standing instruction for dividned payment. Do check that...... This dividend game can otherwise become quite stressful, in case we have to check on whether we are in the receipt of dividends or not. One remote reason can be that your domicile branch may be at a place where ECS facility may not be available. or it may selectively available for certain banks. I, being in calcutta, have never faced such a problem.

Originally posted by Vivek Sukhani I believe you guys need to revisit your agreement with your Depository partcipants. What is the staus of the standing instruction for dividned payment. Do check that...... Vivek I am not sure if its anything to do with the agreement with the DP , btw very few companies send div cheques these days . May be its more to do with the agreement b/w the company and the registrar. Yes, thats what.......I hardly recieve dividend cheque nowadays. The problem appears a very strange problem, is all what I intend to say.

SChablona was delisted for several years and the mangement did nothing to get it listed. I held some shares bought in my days of ignorance and jumped out of this burning train sometime in 2004-05 (not sure of the year) as soon as it started trading.
I am not Buffett to hold a stock for 10 years without seeing a quote on the same. Basant Yeah sure......No one is equity markets can be unsuccessful, if he: 1.Has ensured a regular cash flows for himself. 2.Picks stocks on individual merits, and manages to keep his ears closed. I believe you seriously need to work on this second point. Just an observation and hope you dont take it otherwise. I am not a veteran player in any manner, infact I am younger and inexperienced than you are. The thing is apply my dad's and grand dad's principles without any fear, thats all. they may have themselves deviated from their rules, I , however, have always stuck to the hard-core principles. I have always picked stocks on the basis of three pages, Balance Sheet, Profit/Loss Account and Cash flow Statements. Hi Kannan, I buy non-dividend companies when I see a case of improving fundamentals not being taken into account. When I bought Prism, it was a non dividend paying stock. orient beverages is still not a dividend paying stock. When I bought Schablona, it was at a decent discount to book value. People were not even sure that it was carrying a positive net-worth. I believe a small part of the funds can always be made to work in distressed cases.

John D Rockefeller said, "The only thing that gives me pleasure is to see my dividend coming in."
I will never buy ge ship for the div, i will buy it for the business. the business of transporting hard goods like coal, ore, grains, crude, into India and away has a long way to go before it plateaus out.so a 25% growth is possible for the next 3yrs.thats on a pe of 4.5. Tigershark If tea is what interests you, buy balmer Lawrie, Andrew yule, Gillanders Arbuthnot. The queue when tea distribution is done for balmer will give you another perspective on why investments is done.

Are you aware that tendering shares in an open offer does not make you eligible for long term capital gains. That is why the market price is always lower then open offer price. Basant ya.......I will claim long term benefit by taking advantage of indexation or pay 10 p.c. of the gain.. i wont be eligible for 100 p.c. exemption. That ways, the gain will be 24*0.9=21.6 On an investment of 250, we will make 21.6 in roughly 3 months time hence on. That works out approx 35 p.c.p.a.( post tax). Tax is not a big issue. the bigger issue is how many shares that is being tendered will be accepted. BASF has a floating of 50 p.c.. they are accepting 22 p.c. Given the way price has behaved over the last few years, we can expect at least 70-80 p.c of the float being tendered. That makes the proportion of tendered shares being accepted as 22/35 to 22/40 levels. You make this a delisting offer and see how prices shoot up, like it did for syngenta. I believe, BASF AG may be contemplating a veribund in India. German parents dont seem to have confidence in Indian children. I am producing a write-up which I had prepared on Voith not very long ago: At a time, when we as investors, are forced to analyse so very hard to look for hidden assets and liabilities (and most importantly, being made to price such assets and liabilities), what if we are presented a simple balance sheet which has no borrowings on its liabilities side, no investments on the asset side and strong cash balance on the balance sheet at a price which is 18 p.c. discount to book-value, and at 6.43 times its latest reported EPS?? I know a term called value trap is being used very commonly nowadays. But before painting this stock as a value trap, pause for a moment and think about the ways in which you can lose money here. What is its likelihood of this being a value trap? In my opinion, a value trap has one of the following attributes: 1. Inflated, One-Time and Non-Repetitive Earnings. 2. Inflated Assets 3. Hidden Liabilities. Now I will try to locate whether this stock has got such value traps. I believe, the most common manner in which a lay investor gets trapped is by relying on unsustainable earnings. So, we as prudent shall not just rely upon current years earnings but shall look into the previous few years earnings as well. For Voith Paper Fabrics India Limited (previously known as Porritts and Spencer Asia Limited), the previous three years EPS stands at 22.87 for Year Ended, 30.09.2007, Rs. 21.23 for Y.E.30.09.2006 and Rs. 18.13 for Y.E. 30.09.2005. So, we may reasonably say, as far as earnings go, there is little doubt about it being fudged. Now, let us see the break-up of Earnings generated from operations and earnings generated from interest income. For the Year Ended 30.09.2007, PBT stood at 14.14 crores. The Interest Income for the said period was 2.69 crores. PAT stood at 10.05 crores. With an equity of 4.39 crores, Interest Income translates into Rs. 6.13 per share. However, this income is subject to income tax, so we need to compute the post tax Interest Income per share. The company has earned a PBT of 14.14 crores and a PAT of 10.05 crores. (1- PAT/PBT) is the tax rate and this works out to be 28.93 p.c. To make calculations a bit easy let us assume it to be 30 p.c. So, the 6.13 per share of pre-tax interest income, which this company makes, translates into 6.13(1-0.3) per share of post tax interest income. This works out to be 4.29 per share. Now this company has reported an EPS of Rs. 22.87 per share. Of this income, 4.29 rupees per share has been generated from interest income, the balance generated from operations. So, EPS generated from operations work out to be 22.87-4.29, i.e 18.58 per share. Given the stability of EPS of the previous 3 years, we can safely assume that the company can generate 18.58 rupees per share on account of its operations alone.

Given all these information, let us work out its balance sheet may look like after 5 years time. We are assuming that this company retains 15.58 rupees per share every year, after paying 3 rupees per share as dividend, and keeps it locked in Fixed Deposits. This almost sets like an annuity structure with the contribution amount of Rs. 15.58 per share. Reinvestment rate is assumed to 8 p.c.and this is derived by dividing this years interest income by average cash balance as shown in its Annual report. The company has earned an interest income of 2.69 crores, has opening cash of 28.91 crores and closing cash of 38.46 crores. Thus the average cash balance is (28.91+38.46)/2, i.e 33.685 crores. The company made pre-tax interest income of 2.69 crores, which translates into a yield of 2.69/33.685, i.e 7.99 p.c., which is approximately 8 p.c. Before we proceed further, let us look at its balance sheet in a slightly graeter detail. The total balance sheet size is 79.51 crores, all financed by equity and absolutely zero debt. There is a deferred tax liability of 1.18 crores.Asset side is represented by 26.62 crores of fixed asset, 52.89 crores of Net current Assets which include 38.46 crores of cash. All this translates into 60.60 per share of Fixed Asset, 120.41 rupees per share of Net Current Asset which include 87.56 per share of cash. Now, I will like to see what its cash balance per share will look like after 5 years. I am assuming that the company will have a profit from operations per share, after paying dividend at the rate of Rs.3 per share, to the tune of Rs. 15.58 per share. Besides this the accumulated cash will derive interested income. The opening cash balance will earn 8 p.c. pre-tax for next 5 years. Earning from operation per share, after paying dividend at the rate of Rs.3 per share, at the end of year 1 will earn interest for 4 years. And the second years cash retained per share will earn for balance 3 years and so on. I am presenting the table which shows the likely cash balance at the end of 5 years: Years for which Terminal Value Cash interest at the end of 5 Structure Post Tax Yield earned years Beginning of year 1 87 Generated for Year 1 15.58 Generated for Year 2 15.58 Generated for Year 3 15.58 Generated for Year 4 15.58 Generated for Year 5 15.58 1.056 1.056 1.056 1.056 1.056 1.056 5 4 3 2 1 0 114.2 19.4 18.3 17.4 16.5 15.6

Likely Closing Cash Balance per share 201.4 So, at the end of 5 years its asset side is likely to be represented by 60.60 rupees per share of Fixed Assets, Net Current asset of 234.25 rupees per share which will include 201.40 of Cash per share. Thus the aggregate book-value will work out to be 234.25+60.60 which is approximately 294 rupees per share. We are assuming that the depreciation amount provided in the P/L Account goes directly into replenishing Fixed Asset. We are also assuming that no further investment is made into working capital. Constant dividend pay-out at the rate of Rs.3 per share is also expected. Interest earned has been assumed at 8 p.c. per annum being liable to taxed at 30 p.c. thereby translating into a constant post tax interest yield at 5.6 p.c. per annum. So, what is stock worth to a shareholder if he holds for 5 years? In chaste arithmetic terms, it will be worth its book value at the end of 5 years and all dividend earned during that period. This works out to be 309 per share. The discounted present value for this set of cash flows assuming a cost of capital of 10 p.c. p.a will be 309/((1.1)^5). This works out to be 191.55 per share. I think I have addressed the concern regarding it being a value trap. I have tried to explain that earnings are sustainable, I have not expected any revaluation of asset and there is no attempt made by me as to discover the value of the real estate it has. I am viewing this company as a

going concern likely to remain a going concern as it is. As there is no borrowing on the Balance Sheet, there is no FCCB/ECB funding, I dont think we have a case where there is any case of hidden liabilities. There is very chance that equity will have to be diluted at the expense of earnings per share to finance the growth. There is no pending warrant conversion and the sanctity of share capital will be maintained under normal conditions. When you think about this, just imagine the extent of strength that has been built into this structure. I am discounting a cash flow, which is earning 5.6 p.c. p.a. of interest, at 10 p.c. I believe, this ensures sufficient protection is built in for investors. If I structure this like bond with CMP at 141, with coupon of 3 rupees a bond, maturity value of 294, the Yield to Maturity is working out to be approximately 17 p.c.!!!!! Only low-grade bonds carry such high YTMs!!!!!! Does this stock warrant such a high YTM. For this we need to look at its business in slightly greater details and have to bring in subjective analysis. The company is into the business of manufacturing felts, which is primarily used in paper and fibre-cement industry. This company is a multinational with German parent (VF Auslandsbeteiligungen GmbH) and is the only manufacturer in India, producing the entire range of paper machine clothing. Voith Group is a very recognizable brand worldwide when it comes to paper machinery clothing. With paper industry likely to expand in a majorly big manner, demand for felt is not expected to decline. Because of appreciating rupee, this company can be a beneficiary as it is sourcing 77 p.c. of its raw materials( in value terms) and 59 p.c. of its stores and spares( in value terms) from outside India. True, competition may be there but its not a a company which will get derailed owing to volatile commodity prices as its reliance upon commodity price is not very high. Also, at the CMP of 141, one can also expect a buy-back offer and that may itself be the trigger required for this stock to get recognized. However, this assumption is right now in a nature of imagination, I am not asking fellow investors to look at it from that point of view. Am just talking about a possibility, just that. Even if a buyback offer doesnt come, investors looking for preservation of capital can look at it. I dont think a multinational with reasonably strong operating profits with such a huge cash balance per share, absolutely zero debt and no undirected investments, need to be priced in such a conservative fashion. Sure, it will not get the valuation of a growth stock in all likelihood, yet it deserve a higher multiple for all the qualities I have just enlisted for itself. All I am seeing is a pricing mismatch of approximately 26 p.c. In my opinion this stock deserves to be at least 191 rupees, and is quoting at 141 and this translates into a discount of 26 p.c. I think if the management decides to be little bit conscious about the Return on Equity, it may spring up a buyback offering and that will make investors look at it. Also, given the prospects, one may prove to be correct in assigning a slightly higher multiple and chances of it getting re-rated on the back of expected strength in earnings cannot be ruled out altogether. Hi Abhishek, Somehow i was not able to send off a mail and hence I am writing my opinion on grindwell norton over here. I liked the financials but sales are petering out. My dad used to hold few tickets of carborundum Universal, which I believe is also in the same space. However, I go for stagnating turnover companies when I see: A. Very strong Book-Value. B. very strong Cash Balance C. Reasonable Dividend. D. And a strong possibility of Buy-back should things so wrong from distressed levels as well. Now, Grindwell Norton is otherwise a fantastic company. They did a bonus in 2006. March quarter was very flat. Therefore, you are getting it almost at its 52 week lows. Lovely cash balance, very negligible(if at all) external liabilities, wonderful dividend( although there is a special component of 4 rupees a ticket in last year's dividend). So, it passes most of our filters. I believe we shall be intiaiting a discussion on this company. by the way, I am fond of your 1 page write-ups which make the case quite lucid to understand. Thanks and regards, Vivek

Hi deep, Opto is not a stagnating turnover case. I place Opto in the league of Infosys, HDFC, L&T in terms of management credibility, with far more growth orientation and dynamism as well as extreme focus. May be, 5 years down the line we might see opto in the Sensex or Nifty.

We should look for income. Expansion is a distraction... and often a big waste of money. Businesses that can't expand have the most focused management teams and pay the safest dividends. We want a company that pumps cash into its dividend, not its capital-expense budget.
I guess, current dividend is not as important as is the future flow of dividends. A company like a Pidilite or an ITC will be increasing their dividends every year. So, you have got to work out that dividend as well. When i bought pidilite, it used to pay 1 rupee( split-adjusted) as dividend. At my purchase price of about 52, that was less than 2 p.c., a pathetic yield by all counts. But, now this company is paying 1.75 as dividend, and the yield is comparable more or less to my bench-mark yield of 3.5 p.c. So, when i am looking at a Glaxo, i am expecting a dividend of 20 rupees in next 3 years time. That will give me my comfort level yield of 3.5 p.c. at my average acquisition price. Dividend is one of the reasons why i have given a go-slow call to my friends.....and have even gone on to add, that at an opportune time be prepared to make a move to castrol. Infact, I think it will be a shame if we can implement the incremental yield based churning in such a market. I think we have got to just focus on how to get more and more cream out of our investments. Anything else shall be safely ignored, for the time being. Your views are 100% right for those investors who are not dependable on their investments in stock market & ready to wait for long time & see the stocks price moving no where in that period. But a person without dedicated fund for stock market who come to stock market to double his capital in no time will attract to all type of growth story only. He can't wait for so long when he see the people around him making (or loosing) money in 2-3 months time which he may make in 23 years by entering stocks like Castrol, Glaxo, P&G OR ITC etc. Though the best approach is to balance portfolio as per personal risk taking capacity. I also own stocks which are great Dividend Yield at my purchase price but not appreciate in line with market but still like to hold as far as working & Dividend Policy of the company. Hi Parag, I am dependent upon stock markets, at least my personal ego is. Though as a family, we dont depend upon stock markets at all, yet, more than 70 p.c. of our assets is totally into equities....so in way, we have some stake over there. Parag, my investment style is very simple. My funds carry a tag of 3.5p.c. p.a. minimum, and any company i buy into should get me that 3.5 p.c. p.a . max by max, in 3 years' time. I dont get into business model, future growth stuff at all, for I am not that intelligent to figure out such things. Also, I am pretty much convinced, no one and I say NO ONE. has the magic formula for capital gains. I have seen many gyanis and gurus in my life, but I have seen their performance fall apart when the going goes from good to normal. So, I dont consider anyone superior/inferior to myself. I may be sounding arrogant but this arrogance is the breed of fearless independent thinking.........and anyone who knows me, can vouch for this. Hi Vivek, I appreciate your views but 3.5% return P.A. from Dividend + at least 10 to 15% return P.A. on capital which I believe fair return compare to Bank Deposit rate of 8.5% to 9.5% for 3-5 years. What my experience is capital appreciation is not more than 5-10% or some time -ve due to wrong entry level in those stocks. This are the difficult times where our patient is tested. Parag

Originally posted by paragdesai Hi Vivek, I appreciate your views but 3.5% return P.A. from Dividend + at least 10 to 15% return P.A. on capital which I believe fair return compare to Bank Deposit rate of 8.5% to 9.5% for 3-5 years.

What my experience is capital appreciation is not more than 5-10% or some time -ve due to wrong entry level in those stocks. This are the difficult times where our patient is tested. Parag And somehow, i have always had a bigger share of capital gains compared to dividend yield. What i do, is to go for aggresive set-up yields. It works out like this: I buy 100 Chambal at 36 meaning an investment of 3600.Chambal pays 1.8 p.s as dividend meaning an yield of 5 p.c. Now i sell that piece at 72 meaning an inflow of 7200. With this flow, i get into gillanders at 72 translating into a outflow of 7200 rupees. Gillanders pays 2.5 as dividend. So, net-net on a total cash investment of 3600, i stand to make 225 rupees as dividend. this translates into an yield of 6.25 p.c. This is what i try to do. In 3 years time, i intend making my dividend yield go up to 15 p.c. in this manner. Got rid of Nagarjuna fertilizers and bought few tickets of Berger paints and Balmer lawrie.

Originally posted by KACHAM Vivek: If I can ask you, can you please give your opinion on the financials of Bartronis India Limited... Thanks I will place an e-mail for obtaining the annual report of the company. Without Annual reports, its difficult to make an opinion. I need the same to comparison of the previous year's figures and to get into the schedules. Will come back to you as soon as possible. Got rid of a few tickets of Grasim and made it go into Castrol and Balmer Lawrie. I am accumulating Balmer in very small lots. I would like to attend the meeting and form an opinion. Also, if people like Your Royal Highness are behind this this company, I will be only too eager to join you in the chase. The thing is, i am damn confused at the moment. I am scouting for companies which are relatively shock-proof types and have a brand backing them. Thats why I am going for a Castrol. Also, Castrol will be sending me another cheque in about two and a half months, so thats another attraction. Balmer is also into the same business ...somehow i think with fuel getting costlier, people will go more for fuel-efficiency, and hence increased consumption of lubes. Similarly, I will go for bearing, and SKF is there in my list. Tyres, batteries are also there although I am thinking off dropping exide and moving it into a safer Castrol. Then, there is Berger, quite a decent brand...then Hindustan sanitary ware, another attractive brand. Problem is that these companies have extremely high price to Book ratios. So, am unable to make out how much juice i am getting. Also, some stocks like larsen whose price I expected will be getting into mid three-thousands, so that i can get rid of my balance tickets, is not behaving as per the plans. So, plenty of stocks to accumulate and not in a position to dispose many....thats the biggest problem.

Vivek,
Just curious to know why you think P/B is a good measure to evaluate value? Different value investors use different measures and I have heard arguments every whcih way. I personally like a low P/B as an additonal incentive. A P/B < 1 is often a definite green sign. But I prefer a low P/FCF as my primary measure. One trouble I have found with P/B is that for companies that have a very high ROE or ROA, the fair value would typically be several times the BV. My own benchmark has been that for asset intensive business models, P/B is a very good measure (eg: utilities, shipping, heavy manufacturing). For asset light models P/FCF is probably a better measure (software, consulting, light manufacturing). I don't have very strong feelings one way or the other and buy both low P/B and low P/FCF stocks. Just curious to know your opinion. kannan Book value is a very big comfort for me. P/B to me is the reflection of the juice in a stock. Somehow, i am extremely uncomfortable to pay significantly more than the worth exhibited by the balance sheet. However, certain companies are simply unavailable cheap. Thats where the dilemma lie. Your logic is neat and perfect. Actually FCF is the path to achieve higher returns in the future by way of dividends or increments in book-value. Actually, my faith in book-value is more from the kind of investors who get into such stocks. Bookvalue mongers are the toughest of the breed. They simply kill the supply at a price. Most of them are very aggressive in their stance. On the other hand, yield mongers are very passive. Most of them try dividend stripping, and move in as well as out very fast. So, high yielders are more volatile compared to high book value stocks. The kind of conviction you get when you get into a high book value stock is much superior when you get in a high yielder with a low book-value. Perhaps thats why; I do get worried with a Foseco india but never with a porritts and Spencer Asia.

Originally posted by smartcat

i think with fuel getting costlier, people will go more for fuel-efficiency, and hence increased consumption of lubes What's the relation between fuel efficiency and lube consumption? Anyway, fuel has been getting expensive every few years. I don't think it will affect long term consumption patterns. We've always opted for fuel efficient models anyway. Lubricating oils enhance the life of the engine and also improve fuel economy. Let us see where Castrols performance goes from here..... I am a believer that companies should expand because a business is like a cycle if you stop pedalling you will fall down (be run down by the competitor). Dividend yield stocks are best suited in an environment where inflation is really low or even negative. In which case a company paying huge dividends would score over bank/post office interest rates. On the other hand, India has become a fast growing economy with high inflation and pressure on the central bank to moderate interest rates in order to keep the growth story going. So if dividend yield is not well above inflation then the quantum of risk gets magnified since stocks per se are risky. At the end of the day, investing in stocks - whether for dividend or growth - aims for reward by balancing the risk-reward equation. Regarding growth and expansion my view and points are as follow: What would have happened if Pantaloon had opened just one store? Would Basant still smile so much?

What would have happened if Lever, Reliance and Marico had not expanded? How was value created in progressive companies? I feel only expansion-growth provided it. Without expansion, inflation would be very high over a period of time as demand would far exceed supply. Without growth and expansion, countries and corporates cannot remain competitive. Growth is a way of life. Focus should be on that growth which creates value. Growth and expansion provide economies of scale which helps companies to market their products to many instead to few. For me, investing in stocks means investing in a growth company which is available at value or at least somewhere between growth and value. And yes, without expansion no company can go anywhere. But one has to see, whether the expansion leads to value or the expansion is being done just for the sake of it. I will reply to some of the questions, one at a time: First, I will take on tridev's questions: Individual Stock returns and GDP returns dont move perfectly in line. A stock may contribute more to the GDP whereas its capitalisation may not move entirely in line. Those who bought Infy at the peak of 2000 boom took 6 years to break-even whereas the company continued to go on delivering in terms of performance. The skill here is to avoid over-paying. Thats it. And you will do well in case you buy anything at less than its worth. More so, with a company which is growing its turnover and keeping its margins constant/increasing? But keep in mind; you have got to pay less than what it is worth. Similarly, sometimes you get stagnant companies at less than knock-down. Thats again a game to be played. I dont restrict myself to any one game like growth, value etc. I sit with all type of stocks. So, on the one hand I have very aggressive growers like a Great eastern Shipping, Opto, Pidilite...similarly, I have stagnant plays like a castrol and porritts and spencer Asia. Different stocks serve different purpose in a portfolio. Some are meant for wealth accretion, some for preservation of capital. The reason why you go for wealth conservers is because you dont know which expected wealth creators turn out to be wealth destructors......and some indeed turn out to be indeed wealth destructors. Now i will turn specifically on dividend. I have never said companies shall not grow but I want my pay-checks to increase in term of dividends. I am not a venture capitalist, I am a bloody dividend monger. Dividend is the biggest signal for me to invest. I believe I am quite entitled to hold and practise my belief. Now, I will reply to Shiv's question: Inflation is a delta-measure. It measures change of CPI, which is not a relative ratio but an absolute number, over time. Dividend yield is not an absolute number but a ratio. So, comparing a ratio with an absolute simply doesnt make any sense. I will give an illustration here to prove my point: Assume you are running a portfolio of 1000 rupees and which yields you 10p.c as dividend. Assume your expenditure to be 100 rupees. Assume inflation to be 10 p.c. p.a. Ignore Taxation. At the year end, your dividend is same as your expenditure and you are balanced. Now, in year 2, suppose your portfolio value shoots up to 2000 rupees and the yield moves down to 8 p.c. Your Expenditure =100*1.1=rs.110 Your dividend income is 2000*0.08=Rs.160. So, are you better off or worse off inspite of declining yield.

Problem is, you are comparing current yield with current inflation. What shall be of consequence is how the yield on your invested amount, moving up with respect to inflation. Note, invested amount is a constant but market cap, on which yield is measured is not constant. Ask anyone, who is seriously watching dividend flows, whether he is beating inflation over last 5 years or not. Just ask him the jump in dividend receipts over time and compare it with inflation over time. I know what question you will ask me. You will ask about what shall an investor do who is about to begin fresh. he will be making just 2 p.c. on his investment whereas inflation is 10 p.c.p.a My answer will be work out how do he expects his company to deliver 5 years from now as dividend and what does he perceive his expenditure at that point of time. In short, what matters is growth in dividend. Thats why, I take dividend to be an important indicator. For me dividends are nothing but a signal. I dont need dividends to run my bills. Now, I will take some general questions: This debate about growth/value carries us nowhere. At the end of the day, we want profits not just expansion/diversification for the sake of it. I think experteye's comments were aimed at directionless expansion/diversification, just for the sake of it. Nobody will say, I dont want my companies to grow/expand. But surely, i will like my companies to grow turnover, grow profits and grow dividends. If I am asked to compromise and drop one parameter out of these 3, i will drop sales growth. If i am asked to drop 2 parameters, I will drop sales growth and dividend growth. At no point of time, I will sacrifice profits growth, until and unless i can see the asset value to be much more than market capitalisation.

Common yardsticks such as dividend yield, the ratio of price to earnings or to book value, and even growth rates have nothing to do with valuation except to the extent they provide clues to the amount and timing of cash flows into and from the business. Indeed, growth can destroy value if it requires cash inputs in the early years of a project or enterprise that exceed the discounted value of the cash that those assets will generate in later years. Market commentators and investment managers who glibly refer to growth and value styles as contrasting approaches to investment are displaying their ignorance, not their sophistication. Growth is simply a component --usually a plus, sometimes a minus --in the value equation---Warren Buffett
Originally posted by kulman

One general observation....just looking at Book Value in isolation could be illusory because the underlying assets might be unable to earn returns commensurate with the 'accounting' book value.

Book-value is of no value in case the management doesnt realise the sanctity of this figure. Its a shame on the management who keeps idle when the price of the stock drops below book value. Conscious management shall immediately decide to reduce assets, pay liabilities and go straight for a buy-back. Originally posted by basant There are several companies which keep trading at below book for years. The biggest gains have been in stocks where the price moved and was significantly higher than book value. Classic case being Tv18, blue star,etc. Well, different stocks behave differently in different period of time. Book-value stocks are meant for bad times only.

Stocks move up on the basis and quality of earnings. However, when they move down, people start talking about asset values; dividend etc. book-value stocks keep your portfolio steady during that period. They are more of an insurance against rude shocks of the system per se. So yes, they must never be solely relied upon. But one shall keep an exposure to such stocks as well to minimise the systemic risk. Thats why when we get into book-values; we also look at cash per share or net current assets per share. All my money has been made in companies with high roe and high growth and it is mathematically improbable to have high roe with a price to book of 1 or thereabouts all low price to book companies have low roe and that is never a good point from the market cap point of view.

Originally posted by basant All my money has been made in companies with high roe and high growth and it is mathematically improbable to have high roe with a price to book of 1 or thereabouts all low price to book companies have low roe and that is never a good point from the market cap point of view. Basant, There have been several great investors who followed a discount-to-BV approach. Walter Schloss, an all-time great (Buffet himself dubbed him 'Super Investor') followed a very very strict discount-to-BV approach. I think each person should find his own comfort zone. Someone who is risk averse should follow one of the classis value investing methods. Someone who likes the adrenaline of growth should follow a growth approach. Speculators should use their technical methods. I am not sure if anyone is really superior to the other. My own take is that investing is like Hinduism - one can follow the God/path of his liking and attain peace and prosperity. Similarly, for each investor there will be an ideal method that God has assigned him. It is just a matter of finding it....my 2 cents kannan Walter Schloss is a very hard core Graham disciple. Somehow most of the value invest tend to gravitate towards Graham's philosophy. My friend talks about how to invest in hardcore value stocks. He gives 3 levels of accumulation. Stage 1: He calls the dip-stick level. This entry is done to make out to 'feel' how the company as an investment is. Investment in this stage is of small amount. Stage 2: Thats the position building level. If the investor 'feels' comfortable about a stock, he starts accumulating in a particular band. This band must be below the dip-stick level. Stage 3: Supply-killing level. A price sometimes drifts so low, that the investor along with his team decides to kill the supply at that level. This step is generally taken by professional value fund managers. At a particular level, value becomes so starkly visible that it almost becomes a nobrainer. This step produces the maximum amplification of the opposite price direction. Thats because short-sellers get hunted down and are squeezed, thereby producing a short-covering rally. And in case the investor is a very powerful one, they go on accumulating even if the stock is rescaling its previous levels, thereby even increasing the competition for short-sellers. One of the examples can be that of the way Ranbaxy accumulated orchid pharma. Following step 3 requires great deal of character as well as financial might. Most of us cant get beyond step 2, but its the step 3 that differentiates from great value investors and mediocre value investors. A single value stocks dont generally give you very wonderful returns over a very long period of time. Most of the returns are generally made in a few months to 2 years' time and then the investor decides to book out and decide to go for a different hunt. And this doubling tripling process is repeated over and over again. So Basant Sir is right.....most of the value stocks are not

Coca- Cola types but most of them are industrial and secondary companies, not a very typical buyand-forget annuity type of stocks. However, by churning from one game to another they produce very significant returns, some even superior to that provided by holding on to high RoE type of companies. I think Kannan's previous post is one of the best I have come across. It all depends upon a particular individual what he goes for. Nothing sacrosanct about it......

Originally posted by basant Everyone manages his own money so is at complete liberty to do whatever he thinks with his portfolio. My argument was about low price to book stocks being low in roe and low roe stocks have low pe and suffer from the problems of not participating in a pe expansion as well. You can argue that they do not get into a pe contraction and the debate becomes endless depending on whether you bought the stock in 2003 or 2008. There is no single definition of risk, the one which I follow is 'risk comes from not knowing what you are doing'. Good definition of risk. However, the biggest risk a person faces in this market is the permanent erosion of confidence. Thats my definition of risk. Lovely cash balance, lovely cross-holdings, lovely brand. Basically its the financials that i am bullish upon. If the management decides they can make it debt free anytime. Its a bonus candidate in 2 year's time. I was thinking of moving a part of my position in Glaxo Consumer, which incidentally has scaled another 52-week high today, into Tata tea but decided to get rid of a few tickets of Tata Power, which was moving all over the place. At this moment my hunger for dividends is at its lifetime high, so that was also reason why I decided to go for Tata tea. Vivek, I like the way you have described the value investing process. You are right that the doubling and tripling over and over of value companies (better called 'cigarette-butt' companies) can often produce superior returns. Case in point is Himalaya Granites. Two months back, due to a labor problem, the stock tanked and was available at more than 50% discount to the Net current assets (net current assets - long term liabilities). You would have essentially got the company for half the liquid assets it holds and would get all its granite mines for free!! I was nail biting on it for a while and never made it in. I regret this already since from the point I looked at it, the stock is back up already 50% in two months!! This should have been an absolute no-brainer for me. kannan

Originally posted by romanov

Originally posted by Vivek Sukhani It will never sink. The captains are way too powerful to allow the ship to sink. Although tanker TCY's are getting milder day-by-day, yet the dry bulk are quite quite firming up. I took atleast 30 seconds to determine whether you are talking about Ship or Company.. led me to blv ki aapke shipping stocks ke idea solid honge..Any investment. ....this

Great Eastern Shipping, Shipping Corporation and Varun Shipping. I love shipping companies, they throw so much cash to me as dividends. Yadi kuch hua to hua, nahi to paanch saal mein dividend se hi share free kar lenge, at my acquisition cost.

I think if the warrants had not been pending, by this time Great eastern would have declared a bonus. Just because warrants are pending, they will get them converted first and then should go for a bonus issue. This is another bonus candidate in 2-3 years' time.

Originally posted by basant

I received a ticket to attend the AGM of Kesoram. Vivek are you attending it also?
Kesoram is dad's cup of tea. Shri BK Birla is a tough man to ask questions to. I will try to get to Kesoram if I get a proxy. AGMs can be a wonderful learning experience provided someone learns from it. if the aim is to collect so many packets of sweets rather than care to earn through learning, the entire purpose of the AGM gets defeated. I have never asked questions during the meeting, but after the gift-taking crowd pushes, i talk to the relevant person, be it CFO (for my finance related queries) or to the ED (for business related questions). If possible, do try to attend kanoria chemicals' AGM. Trust you me, if you ask RoE type of questions, you will be getting your replies. Some management are quite open-minded...... ITCs of the world will never give you any satisfaction. if you get the Chairman's speech, you will get all the answers to your questions. Kesoram shall be good, but the towering personality of BK Birla becomes a hindrance. You dont feel like questioning a 87 year old gentleman. The only reason i am delaying my entry into SKF is the fear of a buy-back. Dad has just 2 tickets for Annual report purpose, but the company/Registrar/Lead Manager sent a person to persuade him to offer the shares in buy-back. God knows, if he would have a reasonably decent quantity, they might have sent some type of body-builder type of recovery agent... (Just kidding). I fear body-builders, seriously do. If someone is bullish on engineering, SKF shall be a no-brainer. Another problem which i face is that if I will sit down to buy a Castrol and the umpteenth moment, i will type CASTROL rather than SKF on ODIN screen. As a matter of disclosure, I have always had a positive call on SKF and some of my friends may indeed be holding SKF (I dont have any idea on that) although my personal holding is just limited to those 2 tickets of family holdings.

Maybe. But these buy-back stories are really fascinating. There is a company by the name Ondeo Nalco (another Calcutta MNC) which has got itself delisted, and this company doesnt pay any dividend and is so eager to get the shares for a buyback. Organon India, (its a company of Schering Plough, I believe) Avery India, Phillips India are another case in point. Cadburys has been paying just 2 Rs. as dividend for so many years now, and is jacking up the buy-back price every year. Reckitt got the shares almost perforce.
Such games are really interesting. I think with Larsen's shares, there were rumours of a scam by CSE brokers who got the certificates stolen or something like that.....I dont have any facts related to that issue but just used to hear it from experienced people. Fulford India is a subsidiary of Schering Plough. At this moment I am moving my funds to stocks which may be beneficiaries of higher interest rates, i.e. wonderfully cash rich companies basically multi-nationals and some House companies like Tata Tea and Balmer Lawrie. Voith had a terrible last qrt have things turned around so soon Not as terrible to warrant a discount to book value to the extent of more than 30 p.c. This company is borrowings free, sits on cash of Rs. 87 per share, and has a very strong parent. This is more a buyback candidate.

Just think about it, this company sits on cash of Rs. 40 crores and with just 13-14 crores it can swallow the entire non-promoter float from the market. Vivek sir, do u still think that psu banks like Allahabad bank have more downside. I dont know the exact dividend yield but the capital erosion is more than 60%. Then what is the difference between the growth and value investor. They dont tend to move fast in bull market but when everybody is down they also got hammered. I guess the idea is - even if that stock went down by 60%, you will still get around 3 - 7% of the invested amount back at the end of the year as dividends. It's a bit like a hybrid fixed deposit - aap nahi samjhoge prashant bhai. Now lets quickly go back to Educomp thread before somebody notices us. Smartcat ~ With a 60% hammering and a 4% yield it takes 15 years to break even with zero inflation. Prashantji ~ Had you been investing like this since 2003 you would still be spending 12 hours at your Cassipore factory. Don't get too involved with all this. It isn't going to do your networth any good! I would always be interested in such companies. IGL shall do well....and somehow I like this space as well, just that I go for ONGC whenever I feel like getting into oil and gas. Somehow, i want to concentrate my portfolio, hence i am getting into those companies where I already hold some tickets. Most people I know are scouting hard for ideas whereas I am consolidating rather than diversifying now. When people had to diversify they were concentrating and when they should concentrate they are doing all nonsensical purchases. Therefore, i will not be getting into IGL for the time being, but there's no doubt its an investor's delight...... One of my friends asked me to make a choice between IGL and Powergrid (dont know what he found similar in both of them) and my choice was for IGL. Petronet and IGL are 2 companies which I like in midcap oil and Gas Company.

Originally posted by paragdesai Thanks Vivek for your input. I hold both Petronet LNG & IGL in small qty. & planning to add more IGL. They may not be multibagger but can provide some stability to portfolio due to steady Growth & more important Dividend. Dont ever try to locate multi-baggers arbitrarily and invest on false premises. Multi-baggers are not slave to individual opinions. I think no one, and I mean no one, has any formula to locate multi-baggers. So, whether Petronet /IGL will be multi-baggers or not, leave that to the market. Neither look back nor look too much in front while you are driving. If dividend is your criteria, go for multi-nationals, rather than Indian companies. My personal opinion......

Originally posted by bassein

Originally posted by Vivek Sukhani If dividend is your criteria, go for multi-nationals, rather than Indian companies. My personal opinion......

Is this because you feel buy-back followed by delisting is more likely for MNCs?

Its because of faith, more than anything else. I have no faith in Indian companies, except for the PSUs. Most of them are stalwarts on paper more than anything else. Prices may be down by more than 50 p.c. but they dont have the guts to utter 'b' of buy-back. But then, Indian shareholders are also coward type TELUS. So, in a way its good they are b eing meted out this treatment. May god continue this selling for some more time and then I will see who stands where. Vivek, What is your take, if any, on Ambuja cements? It is promoted by the largest cement company in the world - Lafarge. Higher net profit margin than most other big cement companies. Good ROE. Current yield is at more than 4%. They have a long dividend history and has been steadily raising dividends ever since 2000. It looks quite undervalued at current prices. They also have very solid brand name (second only in brand name strength to ACC - but this is really subjective). Ambuja is a lovely company. It is not promoted by Lafarge, it is promoted by Holcim. It used to be one of my favourite companies a few years back but then booked out about 2 years ago. Prices are now lower than the price i booked out at. I wont be surprised at all, if Holcim comes up with a buy-back in Ambuja now. Holcim did enter into few block deals for ACC a day or 2 ago, if I am not wrong. They will very soon go for Ambuja as well. Personally, I like Prism more than anything else in cement group, although at current prices, Birla Corp, Kesoram and Orient Paper is also looking decent Thanks for the Holcim news...this definitely is interesting, they have their fingers in two of India's biggest cement companies....I am planning to play the Indian housing story through four plays - Ambuja cements, Tata Steel, Pidilite and Berger Paints....I would have looked at ACC too, but their debt is a little bit above my comfort zone.. Also, good to hear of your confidence in Allahabad bank...and lack thereof in Chidambaram:) I am also very bullish now on Container Corporation. Am slowly loading up on the same.

kannan Dont play a right theme at a wrong time. Of the four names you have mentioned, i have been bullish on all four either presently or at some point of my career. Perhaps after Great eastern, Pidilite was my most favorite company. Ambuja was the first company i purchased after I took over a part of the portfolio of my grandmother. Tata Steel was a company I became quite bullish on after visiting its plant. Berger I have been adding in recent times. So, from my experience I can tell you, its better to stay off any stock where there is any doubt with respect to slowdown. Concentrate on FMCG and cash-rich borrowing free companies and dont worry too much. If you buy a housing finance company like HDFC/Dewan Housing, then your portfolio will be complete. You will be able to participate the housing story without buying real estate stocks.

Originally posted by kannanravi1 Vivek, You are right..I think slowdown is potentially a problem now in real estate. I will bear your advice in mind and go slow on my purchases. But, at CMP isn't slowdown already priced in at least for Ambuja cements and Berger (not maybe in Tata Steel at CMP)? Do you expect both of these to come down even further? Dont get me wrong.....all are fantastic companies. Just that I feel its better to play consumer brands rather than industrial brands, for the time being.

Ambuja , in my opinion, shall start bottoming out. Pidilite and Berger are tricky bets. Tata Steel, I would wait before going ahead. Which consumer brands are you finding attractive at CMPs? Nestle, Colgate, Glaxo Smithkline Consumer, Castrol (not a typical consumer brand) , HUL, ITC...... ITC at 170 is a wonderful initiating price...... Colgate is now offering more than what you get to keep your funds idle in a savings bank account in India Glaxo Smithkline has a wonderful book-value compared to its peers and is doing quite well. Nestle has such a wonderful array of brands that its really mind-blowing....visit any good retail format and you can see it for yourself what nestle is.... HUL is an old wine.....getting tastier with every passing day (due to its fall from peak)....... Castrol is again a wonderful company....wonderful dividend yield...at 233, you are almost making 6 p.c. man...... Global demand for materials has started to ebb will have some -ve effect on GE ships bottomline. We need to see eps growth not just dividends. Whats your view? Great eastern is primarily a tanker and a product tanker company. Its not too much into dry bulk. BDI has gone below 9000, so thats a bit negative for dry bulk. But shipping companies have that seasonality. Nothing to be scared....can be safely ignored. A personal query if you don't mind, Vivek bhai. Do you consider Tax (STCG, LTCG) while doing these rejigs in portfolio? Yes.....taxes have got to be considered, at any moment of time. Most of them are in the long term basket, rather long term sales account for more than 90 p.c of my sell transactions.

Originally posted by nitin_jagtap Whats the reason for selling out Nuvo ? In one word, dividends. Just think about it, a gillanders Arbuthnot gives me 4 rupees on 70 rupees whereas an AB Nuvo gets me 5.75 rupees on 1130. I can get about 16 tickets of Gillander per ticket of AB Nuvo....which means 64 rupees instead of 5.75 rupees.

Originally posted by paragdesai Hi Vivek SKF result is out. SKF Surprisingly Timken's result is very good. Don't know what has happened? Few Timken sold in anticipation with in line nos. Even ABC Bearing also came out with good result. No sign of immediate slowdown in bearing industry.

Hi Parag, Timken has never appeared to be serious about its business. Its more like a Porrits and Spencer Asia kind of a stock which seem to exit just for the sake of it rather than anything else. However, porritts and Spencer Asia sits on a huge book-value , something which Timken doesnt boast of.....so, I believe you have got to wait for Timken to reach that level, where the 'discount to book-value' kind of investors get in. ill that time, Timken will be a laggard.

SKF is suffering from this Rs.7-Rs.8 a quarter jinx......another parallel I can locate is Foseco India. SKF is cash rich as demonstrated by its positive Interest number. Bearings is an evergreen industry, Sir. SKF is the type of stock you should accumulate in this period of slump. The thing which we have to protect at this moment is not capital, but confidence. With a stock like SKF, you will never feel worried. If the market tries to play fool with SKF, SKF's promoters will hit the markets with a buy-back offer. If it falls slightly more from here, yield investors will start pumping in here. So, you have the comfort of very hard-core investors waiting for it to come down....something which makes a good line of defence. Got rid of a few tickets of aditya birla nuvo and made it go into castrol india and ludlow specialities Hi Kacham, Ideally 233 shall be a good price....at that price it will translate in a tax free yield of 6 p.c. It may crack any level, thats not the issue for me. What matters to me is my cost of funds and the return on my funds......and Castrol is offering me an opportunity there. One of the most sacrosanct rules of stock investment: never rely on others opinions, set your own investment target as to what you expect on your ROI and decide on action. With scrip like Divis which ran up a bit, set small targets and play it by ear. Rule No 2: Decide what your risk appetite; are you prepared to lose about 5%, 10%, or 15% or more gains on the flip side, without considering the upside? Rule No 3: Dont depend upon my views too, it is all one for himself, no buddies in here please. Disclaimer: my personal opinion On Page 114