I had mentioned earlier in a post that deepak nitrite is a company undergoing major re rating. Earlier it was getting valutaions accorded to commodity type companies and now it seems to be on a journey towards being valued as a speciality chem company. Part of this has been due to the superb execution capabilities demonstrated by the management and part of it is due to the numbers it has kept on reporting.
You have made an apt comparision about the Lollapalooza effect that some companies enjoy during their journey. (though segments are different but the thing common to all these companies is strong and often accelerated earnings growth and major re rating from single or low double digit PE to much higher valuations. )
The major beneficiary of anti dumping duty on caustic soda will be dcm shriram and guj alkali. Grasim has multiple other businesses so not much idea about how much it contributes. Andhra sugar and DCM Shriram both have sugar divisions, besides some other divisions.
In my view guj alkali stands to benefit the most as it has little revenues from other segments as far as I know. But you will have to study the segmental break up if it is given in results or AR or some other resource.
But in these kind of companies I have seen that much before the announcement, the stocks concerned undergo major run ups and on the day of announcement or a few days post that, there is major profit booking.
The other factor to consider is how much is the benefit and how long it is going to last. Otherwise these are commodity businesses and better avoided unless one has a real understanging of the concerned commodity.
Hitesh Bhai,
As a growth investor how do you act when the growth is mostly coming from within the sector. Except for the present leg of the bull run, where the price of every stock is going up irrespective of its QoQ performance, the good growth has come from pharma/API and from some select specialty chem.
In your style of investing, are you fine with allocating funds completely within the same sector or you have an upper limit, which you dont cross within the same sector.
What are your views on power sector as whole and do you track PTC India ? Its surprising companies like Mrs Bector having MC in excess of 3000 Cr whereas Cos like PTC India trade half its MC.
First of all many thanks for the all the mentorship that you have provided to budding investors like me.
My question is regarding Transpek. The stock has been consolidating in a tight range of 1500-1600 and is testing the 200DMA. Fundamentally the company has been very good barring the last 2 quarters. It was apparent that the street didn’t welcome it.
Rest all seems positive about it. Balance sheet remains healthy, reputation of Shroffs remains sound, industry tail winds are there & its 3 & 5 year PAT growth is impressive.
How to tackle such situations and specifically how to take a call regarding Transpek looking at these facts ?
Hi sir,
What’s your opinion sector on textile sector. I think one can see serious upside for these stocks in this year. Do you have any good textile stock suggestions considering the current price ?
Averaging up is something at which a lot of very good investors are good at. Idea should be to keep adding more as the story improves in terms of fundamentals or as the stock price keeps showing strength if one is a technical analysis practitioner.
The only thing to keep in mind while doing this adding on the way up stuff is to be sure about the quality of the company and be sure that the story will be getting better. Many a times, its difficult to make out if and when a stock has topped out for good.
In cyclical companies, more often than not, the story will reverse sooner than later. So in these cases one has to be sure about the story and numbers.
Kaveri seeds seems to be doing all the right things in terms of capital allocation. They do regular buybacks with the cash that they generate. Plus business wise they are reducing their dependence on cotton progressively and that is a good sign. I think the stock price was under pressure of late due to selling by Pabrai funds. I am not too sure whether that is over or not.
First of all congratulations on the stock picks and allocations to top picks. Few people have the maturity to have such picks and such allocations at the age of 25. So great going.
Well begun is half done. The journey as an investor is like that of an academic student. We always feel we have to learn more… My observation is that the key to learning is to observe what works in the markets and in what phases. There are some time tested methods in both fundamental and technical analysis which have worked for decades and will continue to do so.
But if one is a fundamental investor, it helps to observe the big winners and try to figure out what worked in that company and why. And develop appropriate models in our minds to spot the same kind of situation next time we encounter it.
The most important element in investing after reading a lot of books is to develop a suitable investment style that suits your temperament. For that one has to learn from one’s own mistakes and preferably from other’s mistakes. Going through the portfolio threads of some guys at VP has helped me a lot. Plus reading books/articles by the real investors (who actually practice investment, rather than the theoreticians) helps a lot.
Learning investing is a constant process and you have the advantage of having begun quite young. So try to be patient and give yourself time and keep learning from books/articles/resources like AR, concalls/personal interactions with other investors etc.
Transpek was undergoing major price compression and today seems to have been the day when the stock came out of compression. But fundamentally things need to fall in place before the stock price shows a sustainable upmove. I had a lot of faith in the company and management and promoters and had a decent position earlier, but during the correction used the bounces in Transpek to move into other opportunities which I felt offered better risk reward potential.
@sreeragvn I dont follow textile sector too closely so not much idea about the companies.
Thank you for your kind reply
We are yet to see the infra/properties/realty sector bull run like it did for construction/cement/paints. Do you know why is that ? Are you bullish on any similar sector/stocks ?
This budget is rumoured to be infra friendly (no proofs)
Sir,
Can we know the names of all indian companies who have been given AAA rating by crisil or other rating agencies…
I searched for them but I could not find any list mentioning all names.
If list not available any site where we could find them.
Thanks in advance
We have a colloborators thread on Natco which was started as recently as Dec 2019. If you go through it, you will find all the details you need and more.
Current bull run is one in which almost every sector has partcipated one by one or some of them simultaneously. Even real estate/infra sector stocks have had their fair share of run ups from the bottoms they posted.
Its too difficult to keep track of all the sectors running hard. Everyone is throwing around ideas left right and centre. I dont know if its a good thing or bad.
I tend to focus on two types of situations… First is the obvious one where there are breakout stocks with good visibility of earnings. This is dealt with by looking at swing breakouts, all time highs, 1,2,3 year highs etc. And try to find fundamental merits in the list so achieved. The second is that stocks that seem to have some catch up left to do. These are forming bottoming formations and avaiilable at reasonable valuations as compared to most of other segments of markets where its difficult to justify valuations . Maybe if we get next couple of quarters to be blowout quarters then there can be some justification.
@Anshan A lot fo cement companies have broken out of multi year highs or all time highs. I track a few of them but one can go for a basket approach if one wants to ride the sector. Maybe something like 30-35% each in top couple of names and rest of 30-40% allocated to the laggards which may show some fast moves in an effort to play catch up.
This is all about import of API from China and road ahead. How can we know the list of 53 API / KSM products and list of manufacturers in India. In simple, am trying to understand the companies that will be benefited from this ?
Hello Hitesh,
How does one look at commodities and cyclicals?
1.Are commodities and cyclicals way different from normal stocks? I was going through a cement thread (detailed write up by Mr. Ashwini Damani @ashwinidamani) and by the time I read, re-read, re-re-re read and understood the train had long left !! Are commodities best left to subject matter experts like him who know it inside out or is there hope for us mortals?
2.How does one know when the commodities are shooting up ( does the 52 week high give any clue?/ what are the indicators/is this global?)
3.How does one build knowledge here? For e.g say copper… I have no clue on the details like the one I saw in cement. Do we have to know how copper is produced, where, how , wastage, which port, consumption , consuming industries, projections etc etc
4.How do we know when the cycle is ending? What are the indicators?
If this is a complex area best left to the experts please do mention so that I can go to the cement thread once in a while , remind myself about how normal mortal stocks are not this complex and proceed with knowledge building
Though the question is not to me - i did some google and it takes you to department of Pharmaceuticals ( one of the top results) and there is pdf which covers details … but not the current manufacturers … its a quick skim through and i did not go over the details
Are commodities best left to subject matter experts like him who know it inside out or is there hope for us mortals?
