Edelweiss Securities has a buy call on Welspun,
43% fall in 3 days may be a buying opportunity, may not go up to its all time high of 120 , but we can expect a small rally once the circuit limit is freed.
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The rally will depend on the outcome of Walmart and JC Pennyās inspection.
Planning to buy @25, even junk has some value yeah tau fir bhi Welspun haiā¦
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Hi @ishandutta2007 I know it is difficult time for you. It is really painful to loose money like this. Something with no indication, no sign. But I know you will keep you composure and not let your fear and other emotions come in the way of logic.
Booking loss is also a hallmark of great investor and you will come out just fine in the end.
Best regards.
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Booking loss is not even an option here. The scrip is in LC daily. The fall will be steady and slow now, with downward revision of circuit from 20% to 10% today (and then, perhaps to 5% and 2%). There is some buying volume but it is a pittance, against the crores that are offered for sale. I tried to sell but nothing happens and I had been a victim in the past with the Geetanjai Gems (sic) saga. So, there is nothing else to do but just watch this slide. One can keep trying their luck but at some point, even that is not worth since the loss will be so much.
Isnāt it Bernad Baruch, who said āThe main purpose of the stock market is to make fools of as many men as possibleā. I donāt know whether that was true in all times but at these times for Welspun investors, it is as clean as a whistle. The only thing I thank is my ānot so concentrated PFā strategy!!
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IKEA to continue doing business with Welspun India, awaits sales probe
https://in.finance.yahoo.com/news/ikea-continue-doing-business-welspun-114001370.html
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Aug 24, 2016, 04.26 PM | Source: CNBC-TV18 Welspun issue spillover not a concern for Indo Count, says ED
Egyptian cotton is considered luxury fiber and products made with true (Extra Long Staple or ELS) Egyptian Cotton are at least twice as costly compared to products made with regular cotton. Actually there is a difference between Egyptian Cotton and Egyptian ELS cotton. Not all cotton grown in Egypt is ELS. Such premium products are sold in premium retailers and names likes Target and Wal-Mart are discounters. Even JC Penny is a mid-price store. I have shopped in these stores for years and would never expect a luxury product to be available there.
I donāt think Target was under the impression that they are buying and reselling a luxury product at discount prices. There is only so much cotton grown in Egypt and it is 7th in the list of cotton growers. There is no way on earth all the products sold as Egyptian cotton is actually made out of Egyptian cotton. Just like not all Darjeeling Tea is grown in Darjeeling.
If welspun was in fact importing cotton from Egypt, they could have easily seen that in their forex transactions. After all, sourcing raw materials from abroad is vastly more tedious than buying locally. Even if they were buying it from import agents, they should have seen the forex risk. Only a naive will buy the argument that they didnāt know about it.
It looks to me like both Target and Welspun knew all along that they are selling a regular quality product at regular prices and putting a luxury tag on it. Manufacturers and retailers do that all the time. Just this time they messed it up and now Target is making Welspun as a scapegoat.
Unfortunately though for the shareholders of Welspun their shares are going to 0. (well, practically zero).
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Canāt be ruled out and at least I suspect that to be the case upto an extent. Itās just Indian mentality IMO to always find faults with fellow Indians and not trying to look at the things as it is and to see it as it is made out to be as if all things American is god sent and they donāt do mistakes or commit frauds/crimes.
Though I donāt think those who bought at higher levels will see full recovery, let alone in short while, This market reaction seems to be an overkill to say the least and as @KS16 put it nicely market has started seeing ghost in every shadow and media, to an extent, is to be blamed for the same for sensationalizing such events and I find it really appalling that they just indulge in kind of cheap gossip and rumour-mongering in the name of news.
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I will be happy if the shares recover or not go down a lot from here but unfortunately I donāt think so. Terry towels is their main strength and they are not made out of Egyptian cotton. However, American businesses use the concept of universal default, once they find one fault, they will automatically consider entire business to be faulty unless proven innocent. The problem is cotton products is such a commodity and countries like Bangladesh and Vietnam are as good as India in making them. On top of that there is Trans -Pacific treaty that is an overhang over the industry. Couple this with the debt and you are looking at worthless equity value.
At least it is good that Welspun is not in denial. That would have been suicidal. May be they will control the damage and we will have a turnaround candidate in a year from now. They get someone to play white knight, things will turn around.
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Interesting article from moneylife (specially for those who are eagerly waiting for bottom fishing )
From price manipulation to substandard supplies, Welspun Group has a chequered past
As mentioned above by @ishandutta2007 hereās the buy call by Edelweiss, on Welspun:
http://m.moneycontrol.com/news/recommendations/buy-welspun-india-targetrs-101-edelweiss_7336281.html
What I wonder is, itās not even three to four days since Target cancelled their order with Welspun and events unfolded. Welspun MD has also accepted the issue and have started an audit of same. The water has not fully settled; the management has not come out yet with any explanation on this issue with clarity; questions remain unanswered and above all, other clients like Walmart and others have also started looking into this. So it will take a while for things to settle. Without any clarity yet on this issue, the ābuyā call by Edelweiss smells fishy And such a lightning quick buy call without waiting and understanding the situation definitely does not speak of a good research.
I was going through mutual funds invested in Welspun India and hereās the list from Moneyconteol:
http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=WI03&classic=true
We can see the Edelweiss holds a considerable number of shares in Welspun India in its various different funds. Interpretation on this will vary from individual to individual. But I would definitely not invest in this till I hear with clarity, from promoters, about this issue.
Disclosure: not invested.
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sweats-out-wal-mart-review-investors-brace-for-worst
Canāt agree more than that!! The way all business channels showing news, business papers writing articles - they are surely trying to sensationalize this story than working on behalf of the country and the sector like how to address such issues by putting right process in place.
I tried searching in US domain, I hardly found a very few articles on Welspun-Target saga, but see it in Indian side ocean of gossips, judgement on managements credibility and what not!! No one saw any issue with management when stock price got multiplied 20x in last 3 years, even FIIs who are more armed with rating agencies, analysis tools & more brain have 13% stake in Welspun. Are they dumb? only time will answer!! Letās not forget that Christy, Kingsley, Crowning Touch are the world class brands & itās impossible to be a supplier of towels to all worlds leading sports events like Wimbolden, Rugby, FIFA with a bad quality & management ethics.
Coming back to Welspun story - From Indo Count CEOās interview it is quite possible that supply chain, quality check lapses could have triggered this issue but in long run Indian textile industry is to boom they will have to improve on quality, robustness in the process like US FDA.
Letās wait for the dust to settle.
PS: invested.
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Even Fortune gets into the actā¦
Circuit opensā¦ Huuuge volumesā¦ more than 5 Cr. shares traded on both exchange in the morning session itself. Big block deals. Looks like the smart money is coming in!!
DISC: Nibbled a bit. Initiated investment today.
Maybe the MFs who hold the shares currently are buying to protect their NAVs.
Donāt know why you say that stores like Walmart and JC Penny would not sell Egyptian Cotton Bedsheets. They may not sell premium lines or top brands but both these stores do sell Egyptian cotton bedsheets. In fact if you go to Walmart website you can verify that they do sell these bedsheets from 300 count upto 1000 count and they are more expensive than other sheets.
While I would like to think that Welspun would not have knowingly substituted Egyption ELS cotton with something else, it still would be a grave mistake on its part if their QC failed to identify this issue for such a long time. Having said that, it also raises questions about Target and the āconnoisseursā of Egyptian cotton. If nobody could identify that this isnāt Egyptian cotton and it took a DNA test to say so, then is Egyptian cotton really worth all the hype? A cotton bedsheet or a towel priced higher because it is supposed to feel much better but nobody realises it for years! More than anything, this raises questions on Egyptian cotton itself IMO.
Disc: Not invested in Welspun; invested in IndoCount.
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http://www.bseindia.com/corporates/ann.aspx?scrip=514162&dur=A&expandable=0
Clarification and transcript of the call