Brexit- opportunity to pick some gems cheap

We dont know if Brexit will really affect britain or europe as significantly as britain already holds on to a seperate visa ,currency, judicial system etc.

India is a relatively robust domestically driven economy and domestic plays like increased consumption themes need not be affected by brexit.

So what are the stock opportunities everyone is looking at to invest now?

I am currently looking at Relaxo and Tastyites(which does have exposure to UK) to accumulate during if i get attractive valuations during this panic.

PS:this post does not have requisite rigourous analysis as I am hastily opening a topic while to start a discussion right away on what might be a fleeting oppurtunity.

I dont know if this discussion is allowed on VP but if it is, here’s my 2 cents:

The stocks that don’t have EU/ UK exposure have fallen 3-6% at best which is not a lot. I think there’s more uncertainty about how this referendum will be taken up in the UK parliament and the terms that UK-EU agree to. I’ll hold my purchases but whenever I take the plunge, I’ll look out for:

  1. Force motors: Has shown strong support around 2800 + rural monsoon play + expansion in German automobile engine business.
  2. Manappuram/ Muthoot/ Ujjivan: Sound management guidance and business model. Though both have moved up quite a bit but still have a long way to go.

There are more but I’m trying to time these right.

aashis,

Yes Ujjivan does have a robust model , but their execution at a small bank remains to be seen.
As such solid management and no geographical dependence on a particular region is a plus.

I have a query on force motors though do they assemble engines for local consumption or for export of vehicles(for BMW,Benz).
Indian luxury vehicle market is something i am very bullish on.

disclosure:hold ujjivan from much lower levels

Explain the rationale behind starting this thread. Does it add any value? Does the volatility in stock market make any difference to investment rationale? Think twice before creating any new thread. I have seen a haste in starting new threads. Keep calm and think again before taking any action.

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Manish,

You are right that this is not in the spirit of valuepickr,
but isn’t valuations also a large part of what makes an investment rationale for a value investor.
i had intended this thread to start a discussion in the vein of pf readjustment thread opened during the last major correction a couple of months back.

but you are right this is a hasty thread and i will try to delete it if i can.

FTSE down ~10%. Pound down ~10% wrt USD.

So for a US guy, FTSE is ~19% cheaper in a single day!! amazing.

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@manish962 Sir. It clearly does for someone who holds companies like Bharat Forge, Motherson and as a matter of fact anything which is related to Europe. If you are following news Netherlands is also asking for a referendum. The investment logic for companies will change simply because there profitability and business will become uncertain. For example Tata motors is set to lose around 1B pounds in profits. Motherson group which supplies 44% of its stuff to VW will lose because Germany exports 20% (read this in some article) of their car produce to England. Anyway you are an Admin and it is your call.

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Manish,

Even though I did not start the thread, here’s the rationale I can offer as a reader of this thread, and perhaps the originator may color it appropriately.

It is in fact volatility that is the friend of a true value Investor. Despite the name of the forum “ValuePickr”, this forum has more been a Growth forum than a true value forum. If one goes by true “Value” model, then even an average company at a throwaway price can be an investment. Did not Graham himself say that one can have a great investment experience with a bad company and a bad investment experience with a great company? The determining factor was the price one paid for the investment. In that spirit, when there is volatility such as now, opportunities present themselves to the value investor and in the spirit of this forum, I find nothing wrong in discussing opportunities such as now. A contra view also could be that this is not a short term volatility and could have far reaching consequences within Britain, and Europe, not just in terms of stock markets and economy, but also politics, geography ! Why stop discussion…let it flow !

Thanks,
Arun

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I personally feel Tyre stocks can be picked in.MRF having 14K cr of annual turnover is trading at PE of 8.Today oil dropped another 6% on Brexit panic,which is icing on cake.Today it’s available at 52 wk low.It has a very strong presence in Non truck,agri,2 -wheeler n truck segment.The distribution network n policy ensures 10% growth annually.

Apollo trading at PE of 7.7 has significant exposure to EÛ & debt levels are not comfortable.Has strong presence in Truck,radial n OTR (off the road )

On negative side the cheap Chinese imports puts lot of pressure on volume growth but this is been a norm since 2005.Great companies face the storm and emerge out stronger.
When all auto companies are reporting good numbers I don’t see reason why tyre cos will be left out.
Anti dumping duty on Chinese tyres might be around the corner.

Disc: Invested in MRF today.

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I think you need another week for markets to stabilise before picking any stock

Yes, I second that. I think it might be better to wait to see how this is playing out next week. And if the valuations come down to your preferred buy levels, certainly jump in. In my case, it has not and I am waiting…

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The actual long term impact of on UK and Europe’s economy is very difficult to predict. It’s downstream impact on currency is practically difficult to predict. So I think it’s important to wait and watch before concluding anything with regards to it.

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