p sharma @ thanks for the pharma updates.
biju john @ retracement levels of ajanta post the spectacular rise – 38% retracement was at around 570 and 50% retracement is around 540.
In stocks in strong uptrend, the 50% level should offer support and thats where ajanta was today. Now it remains to be seen how much support it gets from these 540 levels.
Personally I am expecting fantastic results for march 13 qtr and for fy 13 full year. I think at around 10 times fy 13 earnings, it is attractively priced and is likely to get rerated to around 12-15 times earnings if it keeps the pace up.
As expected the 540 odd level which was 50% retracement of entire earlier explosive rise offered good support and stock has today bounced around 7-8% from these levels.
Now I think around 605 and 620 levels need to be watched for offering resistance.
Overall I think stock might post a new all time high slightly higher than the earlier high of 675 in times to come-- this might be a labored upmove, which might be followed by a slightly prolonged time wise correction.
Lets see how things go from here.
hitesh.
subash
I think a lot of it has to do with expansion continuing in ajanta. Plus with recent run up in price this ratio is bound to be skewed.
I think a better option would be to look at free cash flow to sales ratio. With price incorporated into the equation, it will tend to vary a lot.
hitesh.
Yeah, Ajanta looks pretty good and the best thing is with the improving profitability and ratios, it has high chances of re-rating and getting valuations like other mid size pharma cos.
Ayush
The stock has made a new all time high today. Up more than 10%. Any specific reason for the up move?
The new shareholding pattern shows an increase from 72.70 % in Dec.2012 to 73.00 % in March 2013 in the Promoter category. That is the reason why the price may be shooting up. Expected results may be good for this quarter too. Hence promoters are buying more.
assuming EPS of 50 for FY13, Ajanta is already at ~15 PE. Time to book some profits?
The market will now start looking at FY’14 given FY’13 is almost there with just one quarter left to report. If you beleive the company will deliver growth in FY’14 then even if the multiple doesnt re rate any further from here you will still get growth in line with earnings. Having said that the stock has had a decent run… but i personally would wait untill full year results.
Technically i believe one should start booking profits in the stock. All the big moves have been on terribly low delivery volumes which indicates speculative activity increasing.
Regards,
Nooresh
The following clarification was issued by the company and is available on the BSE site.
With reference to Increase in Volume, Ajanta Pharma Ltd has clarified to BSE that the Company is also not aware of the reason for this increased in the volumes.
**
Further the Company has stated that, there is no such information at the Company’s end that has a bearing on the operation/performance of the Company, including any price sensitive information, which is not disclosed to the stock exchanges.**
I think I agree with nooresh about profit booking.
Ajanta has had a dream run till now due to sales/profit/margin growth coupled with PE expansion – This usually is the holy grail of multibaggers.
With the recent run up, ajanta seems to be discounting fy 13 eps of around 50-55 by 14-15 times which though not too expensive is neither cheap.
I sold out @775 today as it seems there is lot of speculation. The delivery volumes are very low. Will buy again if prices start slipping towards south of 650/-
raj, you seemed to have mastered the skill of selling at right time. titan @ 310 now ajanta @ 775
i have been waiting to enter from 550 levels.
I too have sold my qty bought at 540 recently. Good part about Ajanta is that it’s a fundamentally solid stock, but also in hands of operators. So once you get a hang of its volatility and if you are not too greedy to get absolute top-bottoms, the volatility aids in cost-reducing/FOCing our original qty. I too sold my additional lot purchased at 540 in last dip. These additional 20-30% trading profits give confidence to buy good qty when it invariably cracks down sharply on one of those odd days.
Thanks to constant guidance from excellent Hitesh bhai and one’s own gut feel, some basic technicals (DMAs, RSI)- I’ve been lucky to get Ajanta in-out a good 3-4 times now.
And well said Raja. We don’t share our mistimings/outright losses more often. Here’s one from me.
I traded Sun Pharma (purely on technical, DMA) from 700 to 820 thinking it has to retrace back to 50dma just like prevs two times I bet on it. But this time it just kept on running away - 860 now. Good/bad luck is a such a huge factor in such trades and we don’t give it as much credit/blame as it deserves.
I would like to play contrarian here.
I have been investing in Ajanta from 240 level, and have sold ajanta from 300 level in last 1.5 yr of my investment career. If I wouldn’t have bothered about short term price fluctuation and rather concentrated on long term fundamental, I would have a solid 3 bagger from here. But the fact is that I missed it, I have lost my 200% gain by remaining invested in it, I am unsure if I have made 100% gain (considering my SIP type investing).
A big lesson learned. No more mental gyration by stock price gyration and technical indicator change. No more selling of core holding like Ajanta (it is my top holding) even at the face of single digit delivery %. (This is the 3rd time Ajanta is having super sudden upmove with very low delivery %, each time falling a little, and than hitting new high slowly and steadily).
To me Ajanta is a classic case of super-growth stock, a solid management who knows how to do their business, solid ROE, nice growth, almost nil debt, secular non-cyclical company, slowly moving up to higher market capitalization level (a high chance of big guy latching in with it in future), available at a decent valuation. I don’t see any reason why Ajanta can’t reach the level of big pharma guy like Cipla, Sun pharma, Dr Reddy’s and so on.
One think we guys at valuepickr is missing is the long term investment mentality. Without long term mentality there is no solid wealth creation.
Excellent thoughts,Subash. Trading in and out sounds very smart thing to do but never made money for me. Staying long on great stocks has.
Most of us share when a trade goes well but don’t when it goes wrong.