Transpek remains one of the companies with better promoters. At some point of time, they definitely will get their act together and then the stock can provide good returns. Already it is at close to all time highs inspite of lacklustre results. But such is the nature of the markets currently. Anything to do with speciality chemicals and in that too some specific niche attracts a lot of market attention.
And to add to this, management also has started doing presentations and appointed investors relations guys and will do concalls it seems. So maybe things are falling in place from investor information point of view. How and when the company starts reporting good numbers needs to be seen.
@vibhor_vaish Chambal debt is high but half of that is outstanding subsidy from govt which has taken the form of SBA (special banking arrangement) with govt as a third party player along with chambal and the bank. This debt carries nominal interest rate for the company of around 1-2%. And from concall what I could gather is that these arrangements are short term in nature, only till subsidy payment happens.
Rest of nearly 4500 crores debt remains on the books and that partly is due to capex into Gadepan 3 plant which management claims is one of the most advanced plants in terms of technology and machinery used.
As of now I have considered chambal as a techno funda bet and would reconsider my thesis if things play out better than expected.
ITC has many arguments in favour and against it on the company thread on VP. I dont want to add more to the arguments as I believe truth is somewhere in between.
I went through the letter addressed to the management by a disgruntled investor and he has spared no words in blasting the mangement. I think he has brought forward all the misdemeanours of the management over the past many years.
Thankfully for the guys using technicals, the stock pattern does not show any indications to buy. Its recent high of around 207 was exactly at its 200 dema resistance and stock has fallen from there. And the 200 dema line is now turning down which does not inspire too much confidence for techno or techno funda investors. For me it does not matter which sideâs argument is right. As long as the stock trend does not indicate any strength, I would prefer to stay away rather than indulge in pointless arguments on either side. For someone who had bought even at around 150, and is sitting on it as a long term investor, there is a big opportunity cost involved and hence I prefer to stay away from such situations. If there are plenty of other opportunities which have a much more clear investment logic, I would not like ot waste my time on positions on ITC which as of now has all the hallmarks of being a laggard. At some point of time, things will turn for the company and stock price and that would be the time to have a look at it.
Thanks for the debt division. From above facts, it does not look like a major issue though I would still take some caution . Would try to dig into the high pledging percentage of 25% as well.
Hitesh Bhai. Do you track Larsen and Toubro Infotech. Stock is hitting all time highs/52 week highs. Fundamentally clean balance sheet and decent 15% growth sales growth. Technically anything on the charts? Secondly, do you think IT stocks are ready for some kind of rally, specially with results due or its too early to say. Thanks in advance
Gold loan companies have a lot going for them in the current backdrop of the pandemic. These companies do not need to worry too much about NPAs as the collateral is gold.
Clients find it easy to get loans from these companies. The time taken for loan disbursement against gold from a branch is around half an hour. Thatâs the time it takes for one to reach an officer in a PSU bank which are run so inefficiently.
The big advantage these companies have is the ease of getting loans and hence they continue to prosper and grow.
The IT pack is currently on a tear with most frontline and good midcap stocks hitting life time and all time highs. I think this tend can continue going forward too. Today Infosys also reported better than expected results and I think this should provide fuel to the fire in the IT pack rally.
Manappuram has 80% of their loan book as gold loans while rest is others which includes MFI for which it has been making provisions. From my interaction with a guy tracking the company, these provisions are likely to be completed with final provision in q2 fy 21. If that holds true, it can add a decent amount to profits going forward.
Muthoot is considered as a gold standard in gold loan business and hence the premium valuations. Last I saw the company they had provided in excess of what was required by accounting standards. Besides 90% of their loan book is gold loans.
About which one to select, I think one needs to study both companies in details and calculate the risk reward trade off. Or else buy a combination of both.
Hitesh Sir, wanted your thoughts on how to deal with situations like we saw in GMM PFaudler recently, where the management action led to a steep fall in the market. Is there a way to protect ourselves from price corrections like this?
Hello Hitesh Sir, Wanted your long term view on Meghmani organics & Caplin Point Labs if possible ⌠Both have good cashflow and future/ongoing capex plans ⌠currently not doing that great but in next few years can give good returns in my point of view
The ideal way to deal with situations like GMM is to understand the business as much as possible and figure out what maximum valuations we are willing to pay. Somewhere in August 2020 at prices above 6000, the stock was quoting at more than 100 PE. Now one can argue that looking at the opportunity size and run way for the growth that the company has, one can keep paying for these kind of valuations. But my observation over the years with these kind of companies is that valuations in excess of 70 PE are often difficult to sustain unless company continues to deliver.
One has to remember that trees cannot grow to the sky. As investors we often get carried away by price momentum and fail to understand the inherent risks in the business or valuations. At some point of time once a bubble has extended for sufficient period of time, it always bursts due to one or the other reason. And if one keeps this thing at the back of the mind then it can help in atleast booking partial if not full profits.
The other way to deal with these situations is to be stoic. Keep track of the business and as long as growth visibility (profitable high quality growth ideally) is there, not to bother about prices and stay invested. That usually is the mindset of the big hitters who go for big 50X or 100X or even 1000 X multibaggers.
We have to figure out which kind of investor we are and act accordingly.
@subrat_sahoo I donât track either meghmani or caplin point but both companies had their fair share of discussions with respect to promoter/management integrity and corporate governance. At present things are going well and everything might be hunky dory but when the tide turns in terms of either the company specific event or market specific event, these stocks can bring a lot of grief. You can go through the full threads on both companies to get an idea about the things I mentioned. I donât track them and have no views on either side.
@hitesh2710, even after stellar results from Granules it cannot hold todayâs small gain.
1 Does that mean short to medium term pharma rally is over
2. Sectoral rotation happening first IT and now may be financials?
3.very specific to Granules even after such good results and lower PE compared to others its not showing price momentum. Again its comparatively from pharma peers
Hi Hitesh bhai,
Whatâs your view on dr reddy lab which although up isnt overvalued considering the profit growth ?
Also whatâs your view on Alembic pharma which still has to participate significantly in bull run ? Do you think the pharma rally would be there for a long time since its just few months it has started or is it time to be cautious ? Arent these two companies still fairly valued? Many thanks
I would like to add couple of books on momentum investing which I found easy to apply
(1) Trade like a stock market wizard
(2) Think & trade like a champion
(3) Momentum masters
All of them are by Mark Minervini
Granules results have been expectedly good. There had been sharp run up prior to the results and hence I think there is muted reaction post reasonably good results.
Post the results, although the stock price has not gone up too much, it has not given up too much either. So I would consider the current movement as a sideways movement post a sharp run up. Need to see if and when follow through buying comes around to push the stock price higher.
Many a times due to sharp run up prior to results, the stock price tends to bake in some basic assumptions related to results. From those elevated levels, stock prices would tend to move up only if there is a significant positive surprise.
These are interesting times where some companies which have declared early results have given very good numbers but stock prices have been by and large sideways. If we can figure out if this trend of good results is sustainable, there can be a case of buying into these names.
