This is my latest investment and I find it quite bewildering when trying to understand the rationale of the last few posts here.
I really wonder what is the new information in the last few days about the company / sector based on which we can rationally make an entry / exit decision?
If just a stock going down 15-20% in a few days is considered new information to be acted upon, then what’s the point of all this business analysis on the forum?
- Have similar plant shutdowns happened before? Yes
- Have there been similar length or longer shutdowns before? Yes even longer as of date (2 months in Aug-Sep 2017)
- Has the management been able to deliver good business performance in the past despite these shutdowns? Yes
Now unless there’s any new government policy announcement wrt pollution control / discharge / waste management, what has really changed about the business now? Nothing in my view.
Are we expecting Tata group levels of corporate governance from a 50 crore turnover company where management has already demonstrated superb execution capability through strong business growth, clear future road map, maintaining debt free balance sheet, very good profitability metrics and return ratios?
If we can’t live with some uncertainties of micro cap investing which should improve as the company gains size and scale, then don’t think we can live to reap the really big gains.
The biggest risk I see on this one is actually succession planning. Both the promoters are almost 65 years old, and the average life expectancy for Indian men is 69 years. You might laugh or think of it as a mere statistic, well reality came to bite on one of my other investments (MAS Financial) where one out of the 2 promoters suddenly passed away this month.
But even the promoter age is not new information. So really, what has changed! 