Hithesh Sir,
Your take on recent quarterly result of Bhageria Inds :
https://www.moneycontrol.com/stocks/reports/bhageria-industries-announcement-under-regulation-30-lodrinvestor-presentation-28617121.html
They have also mentioned entering into Pharma segment :
"Board approved acquisition of 51% equity shares of Bhageria & Jajodia Pharmaceuticals Pvt. Ltd. ('BJPPL’), leading the way for Company to enter pharma segment ".
Thank You.
Think about the scenario when price would come down to 6000. It would either be due to market specific reason like a big crash, or company specific problem like deteriorating fundamentals. In the former scenario, there is very little to be done. In the latter case, usually some tell tale signs will be visible to indicate any problems with the company. So since this one is largely a fundamental pick with breakout from all time high being a good entry point, a hypothetical stop loss has been kept in mind at around 6000. Otherwise even a cursory look at the chart indicates that stock price had earlier been stuck in a range of 7100-7600, and then tried breaking out above 8100 but did not suceed and had come down to fill the large cap between 7200-7600 and now seems to be around 7500. So one can work with a broad range of 7100-7200 on downside and a possible resistance of 8000-8100 on upside. A move on either side can give a good move. Since results have been good and concall has been decent and company has been doing reasonable capex of 1000 crores, the hope is breakout will be on upside. That’s how atleast I like to connect the dots.
KRBL broke down from false breakout from flag pattern and in such a case a stop loss of 300 should have been exercised. I had a position from 255-260 and once the stock price started showing breakout from flag I added more around 315. The latter position got stopped out at around 300 and rest I continued to hold. Now once it starts showing strength I will add more even if I have to add higher than 300. As of now it seems to be in a range of 280-290. Fundamentally if you listen to concall of LT foods, there are strong signals that prices of basmati rices have moved northwards to the tune of around 20-25%. (even on youtube, management of KRBL is on record mentioning the fact. ) Now KRBL is sitting on inventory of close to 2500 crores. This kind of price rise leads to an inventory gain of close to 500 crores for KRBL. For a company with quarterly net profit run rate of 140-150 crores this is a big amount and should offer some fundamental comfort. For the stock price to show strength again, it needs to move above 300-310. Results are slated on 8th Nov which should provide some kind of direction to stock prices.
@naquib_alam I dont follow pix.
Bhageria results are a mixed bag. While topline growth of nearly 30-35% is very encouraging, margin pressure is a negative. Management has given a reason of higher input cost, higher power and freight cost. They do not do concalls so we do not know the scenario as of now. But over a period of time most businesses achieve some kind of equilibrium with relation to input costs and such things and hence we need to watch out for q2 results and see if there is improvement in margins. Management could have some pass through mechanism but usually these things work with a lag and hence the wait for q2.
Entry into pharma segment as of now seems only an optionality. If it plays out it can be good news. But the main bet here should be on the capex into import substitute products and backward integration.
Hello hitesh sir,
Happy diwali
Trent has shown good 2nd qtr earnings,valuations also seems interesting…
What are your views on it?
thanks
Hitesh Sir, What is your view on packaging film company Uflex Ltd for long term. It’s foray in Aseptic Liquid Packaging looks attractive because it will help the company to survive in highly competitive regulated market . Stock is undervalued right now. It has already completed some capex and looking to setup more capacity in UAE. The company also uses 20% Post-Consumer Recycled (PCR) PET Resin in packaging films and has customized water-resistance courier bags made of
high-fibre brown kraft paper with special water-repellent coatings especially for e-commerce Industry. These are the latest innovative developments in Uflex Ltd . How do we look at this type of company which looks good on screener and what are your thoughts on low valuation?
The packaging business consisting of PET and BOPP films companies have undergone major re rating during past 2-3 years. Major wealth creators among the sector have been companies like Cosmo Films, Polyplex Ester Inds etc. Uflex is a major player in the sector too, but its promoters have had a checkered past. You can google Uflex promoter Mr Ashok Chaturvedi, and get information regarding him and the company.
All said and done, the sector remains a cyclical sector and has to be viewed in that context. One cannot consider this sector to be a structural growth story.
It has crossed its previous all time high 510 recently and now is around 570. It seems okay to play momentum but for long term it does not have the typical characteristics of a long term investment candidate.
@hitusohi1 I dont track trent.
Hitesh sir,
In Usha Martin given the cyclicality of the main raw material isn’t the company in someways cyclical too. How do we know if the company has pricing power or not?
edit:
What are your thoughts on the Contingent liability of almost 400cr that is dating back to 2006-2010? Isn’t this a big risk
The raw material volatility related to Usha Martin products is a part and parcel of the business, but with a dominant position in its business, pass through albeit with a lag should not be a problem. With the sale of its steel business, it now remains a steel processor and not a steel producer. That reduces cyclicality to some extent.
Regarding contingent liability, you can refer to financial notes point no. 39 in the annual report of the company for FY 21. Details are given there. For most of these kind of financial queries, it only takes a detailed look at annual report to get the answers.
Hitesh bhai, what are your views on Crompton Greaves consumer electrics ? FII and DII have around 85% holding in the company. They are very much focussed on new product innovation where 10% sales come from product developed in last 1 year and 55% sales come from products developed in the last 3 years.
Management mentioned in the concall maintaining steady OPM is their top priority as it helps them to innovate in newer projects in coming years as well.
how do you decide your stop losses for your swing trades?
@hitesh2710 HIteshbhai even I would be curious to know your stoploss or Exit strategy. Would be great to hear from you
Stop loss in swing trades at the beginning of the trade is usually the recent swing low. Or if its a specific pattern, say flag pattern, then break down from the flag. One can also follow a specific time frame moving average if comfortable, though I dont follow it. This is specifically for swing trading positions purely based on technicals.
I usually take slightly longer term calls on companies where I find good fundamentals with imminent triggers and that is based on swing trading breakouts. I have posted numerous such examples in the 52 week high thread. Essentially investment is in fundamentally sound companies but it is in those which are in strong uptrend and are breaking out. This reduces the waiting time for getting returns. Often works in some situations and sometimes fails. Wherever it works idea should be to increase allocation and wherever it fails idea should be to lighten positions or totally exit if situation warrants.
Regarding exits in successful positions, I usually book partial or sometimes full profits in stocks where the technical targets are achieved and stock price shows a lot of froth or signs of exhaustion.
One of the problems faced while practicing momentum investment in a roaring bull market is dearth of capital. So many ideas and finite capital. And for someone like me who uses no leverage, that problem is often magnified. So as a compromise I often resort to partial/full profit booking or loss booking as the situation warrants to keep capital ready for some more attractive trade.
I am working on strategies to take positions for a few quarters or months or years based on multi month/multi year breakouts in companies where I feel a lot of triggers are playing out or are lined up. But its a work in progress as it needs a new type of mindset. I have built up some positions based on above assumption and am monitoring how things pan out over next few weeks/months and would like to take it forward. I would put a write up once I feel confident about such strategy.
@Akashdeep I dont track CG consumer.
Sir
What will be your exist strategy for indiabulls real estate . Stock is showing good momentum , promotors almost sold their holding. All time high is around 600
Ibreal estate is in a strong uptrend with lot of momentum. Idea should be to keep riding till it starts showing any major signs of exhaustion. Next major resistance should be in the range of 250-270 which were the major tops previously.
Hello Sir,
What are your views on KRBL results?
Disclosure - invested from lower levels.
Now KRBL is sitting on inventory of close to 2500 crores. This kind of price rise leads to an inventory gain of close to 500 crores for KRBL.
Results are slated on 8th Nov which should provide some kind of direction to stock prices.
Hello Hitesh sir,
Q2 results are out and it is kind of lower levels. I was expecting to see the inventory gains starting from this quarter itself. Would it take some time to show the results?
Based on the reported numbers, how do you see the KRBL picture going forward?
Thank you!!
Hitesh Bhai,
In situations where we know that the management is very competent but the business is facing temporary headwinds, how advisable it is to exit the stock. By jumping in and out, will it not result in unnecessarily disturbing the compounding? I find that even the best known multibaggers had few consecutive bad quarters, then slowly it started doing well during the which times the stock was down by good 30%-35%. At the same time by exiting and looking for opportunities elsewhere, which leads to acting more, isn’t the chance of going wrong more?
Hi Hitesh bhai
Within auto ancillary stocks, would you have a view on GNA Axles? They make axles shafte for commercial vehicles with a strong export market focus. They have also been trying to enter the SUV segment to derisk from CV. Stock trades at a TTM PE of ~15x with minimal debt. It went through a correction after a strong rally.
Would be great to hear your thoughts.
KRBL q2 fy 22 results have been lacklustre. Main factor I think is due to lower exports which results in lower realisation. (margins remain similar for both exports and domestic sales because procurement costs for both product baskets also varies) Plus realisation in unbranded sales of 100 crores also was lower (which was mentioned as a one off). So overall topline and bottomline was affected. Concall has most answers.
There is mention of a possible acquisition which might provide growth visiblility. Company is now cash rich with around 900 crores cash.
A roadmap has been promised for revenue target of 8000 crores in next 4-5 years. (nearly doubling the revenues) Next quarter they promise to provide the details.
Management hinted that yearly revenues would be robust. That leaves some hope for next couple of quarters.
There was mention of a 140 crore export order being executed by a delay of 3-4 weeks which would be accounted for in q3 fy 22. This was because of the ship which was supposed to transport the export order getting into an accident and hence was delayed and payment has been received as on date.
There are constraints in exporting to Iran and Saudi Arabia.
Overall I think near term triggers remain muted and second half seems to be holding more promise.
disc: holding.
@ravi_ambati I dont track gna axles.
Even in situations where management is competent, its difficult to decipher whether the headwinds the company faces is temporary or not. So in situations where we are confident that headwinds are temporary in nature, it makes sense to hold tight and sit through corrections.
But at the end of the day, its an investor’s own call how to play these situations. There are no right or wrong answers to these hyothetical situations. It also depends upon market situation, valuations at the time of taking the call, any other alternative opportunity etc. So one cannot consider these situations in isolation.
