Mgmt started discussing with 900 + hospitals for B2B deals thru their subsidiary
Mgmt planning announce lab results with in 24 hrs that too online
Mgmt have plan to add additional regional labs to decrease the time line for reports and to add more tests at local level instead of central labs
With pharmeasy on board, they started booking lab test in pharmaeasy counters … As a pilot they have done for 200+ pharmaeasy associated drug stores. as of now
I felt no pricing power due to B2B nature… lot of other players also in same business…they are also equally good like lalpath labs, metropolis, vijaya, krsanaa etc…
Hii Hitesh sir,
My question is related to Navin fluorine, it is related to technicals. The stock seems to be in Stage-3 but at the same time it has shown great relative strength in the current market. What should be the approach here?
Also fundamentally lots of capex goes live in next few quarters and revenue can potentially double in 2 years
There are times in the market when narratives rule and other times when numbers rule. And at some point of time, narratives have to lead to numbers. If I look at thyrocare numbers for last two quarters, they both have shown y on y de growth both on topline and bottomline numbers. With the kind of mood the market is in, these kind of lacklustre numbers will not go unpunished. And that’s the problem with Thyrocare stock price. With two consecutive quarters of poor numbers, and a weak overall market, the structure of the stock price has gone very weak.
And regarding the Pharmeasy and other similar kind of businesses, I am not too comfortable with the kind of business models these companies have. As long as there was venture capital money to burn, it was all okay for these names, but once they come in listed space, it is the numbers that matter and on that aspect, I would like to see how profits pan out.
I was bullish on the diagnostic space and still continue to monitor dr lal path labs, metropolis etc, but these names have remained in the watchlist only.
Navin fluorine chart shows an interesting repetetion of patterns currently. Similar pattern was seen from Nov 2020 to April 2021 when stock price faced stiff resistance from 2700 levels. Ultimately this level was crossed and stock price went up to around 4200.
Now since Sep 2021 till date, stock price has been facing resistance at 4000-4200 kind of levels. As you said, stock price is showing good resilience in the current market turmoil. I think one should watch out for support between 3500-3600 and resistance between 400-4200 and position accordingly.
Compare the similar price patterns even on the chart you posted, and you will notice the similarities. Very interesting chart.
Given the confirmed nature of contracts and much bigger capex plans vs the past. Can we say that visibility is leading to this holding up.
They’re getting aggressive in new age verticals and setting up an R&D plant. In agchem alone 2 customers can contribute to $100m of business each. Given high Valuations but extremely strong visibility. How will you think about this using both techno and a funda perspective?
Disc:- Invested. Seen these cycles of resistance and funda triggers play out over and over again in this one.
Navin fluorine has been a well recognised company by market participants and these kind of companies with good managements are given a long rope by the markets. If we look at the balance sheet (screener at a first glance) it has fixed assets of 556 crores and capital work in progress of 742. That gives some idea about the kind of assets they are putting up. And once these come into commercialisation, there can be another leg of growth.
The current range bound moves in the Navin fluoro stock is a sort of time correction where stock price is waiting for earnings to catch up. Once the results of capex start coming in, stock price could start moving up again. But this could take a few weeks/months till results are visible. High valuations will sustain till the earnings deliver or till markets are convinced about the promise of higher earnings. (perception of higher earnings. ) If inspite of a couple of quarters of waiting and bullish comments from management, earnings do not materialise, even these kind of stocks will correct.
Markets in the past have granted similar sort of latitude to PI Inds where price remained range bound, waiting for earnings to catch up. And the company rarely disappointed.
Hello @hitesh2710@Worldlywiseinvestors what is your views on privi speciality chemical? Stock price have fallen more than 45%. Is anything going wrong in company or is it due to war going on which is affecting it.
Market mood is well described by Peter Lynch in his book One Up on wall street. Giving the example of a fund manager and dentist at a party. Usually we see a lot of similar things in markets with slight changes here and there according to the times.
These days its pretty easy to spot froth on the kind of TV ads we see. The proliferation of ads like Groww etc for stock broking and plenty more for crypto like coin dcx (ones i remember) were a tell tale sign of traps being laid out for retail folks to get into the quagmire, without adequate knowledge.
A lot of retail guys who wanted to take short cuts in trading were queuing up to enlist for online courses for swing trading and breakout tradings and option and future trading etc. One example I heard was a doctor who took online classes on selling options and getting fixed income. Maybe that could have been covered call selling, but the retail guys who once get a taste of blood forget ground rules and start playing fast and loose.
Sectoral fancies usually follow almost similar trajectories. In early phase of the sectoral fancy, inspite of all the positives being listed, very few investors are interested. And people have their doubts. Once stock prices go up 2 X, 3 X, we as investors start getting queries about the sectors and stocks . Usually those who have bought close to bottom are getting jittery because they have seen their money go up multiple times and when they start getting asked questions on whether to buy those stocks or not, its a difficult choice for them because they themselves are thinking about selling while other retail folks are asking about the merits of buying. Even post that, stocks usually tend to go up.
Once the fat is properly in the fire, research reports come out galore and there is a whole media circus around that sector. The retail folks who have gotten in last start giving gyaan about the invincibility of the business, often quoting the valuations. In reality the super normal profits happen in cyclicals at the fag end of the cycle. Peak margins and peak sales. That usually is the time to exit even if PE optically appears cheap. And once the stocks correct, the questions regarding the sector keep coming as for so called “value investors” since the stock has corrected for example from 200 to 150, its an opportunity to buy the dip. And then again the stock goes to 125, then 100 and even lower.
That’s the kind of story being repeated again and again in cyclicals and sectors in fancy. Even smart investors are often cauight up in the frenzy and often get trapped.
A recent example to study is the chemical sector. We see folks trying to find value in the stocks even after they have gone down 50-70%. There will be the odd winner from the previously fancied sector too, but the base rate of finding winners from a sector which has lost market fancy is pretty low.
Very well articulated Hitesh sir. This seems obvious to a lot of people in hindsight, but how does one understand whether this narrative of “secular” or “decadal” themes are indeed true or not, especially when the fundamentals seem aligned to the non-expert eye.
For example, real estate at the moment. Would you call it a sector in fancy or out of fancy? There is a lot of talk on all platforms of a sustained multi-year upcycle in real estate. this has almost become consensus, but is very difficult to accurately foresee or verify. Plus it is impossible to know the impact factors like rising interest rates will have on demand. In this backdrop stocks have corrected 30-40%. Now how does one know whether this is a pause in the upswing or if the upswing is already over.
And I am asking from the point of view of both someone who is invested from earlier in the piece and doesn’t know whether to add, hold or sell, as well as from the point of view of someone who missed the initial upmove and is now “finding value” after the pullback.
Yeah I have listened half of the concall and will listen another half tonight… Thanks for sharing tweet… Even I am looking to take position in this co… But i dont know when to enter as I am newbie in stock market… my majority of the learning comes from @Worldlywiseinvestors ishmohit sir thats why I got to know about this company that seems to be intresting.
This is my first post in this thread though I have been reading it since last 2 years. I am absolutely grateful to you for all the learnings that I have received from reading your thoughts. At times I have tried to emulate your investing style but then have realized everyone has got unique mindset and so have eventually settled on something I am comfortable with. The thing I wish to develop over time through practice is the clarity of thought you have and the conviction which then comes with thought clarity.
Anyway: here is my question: Even before the war broke out, brent was hovering around 90 USD and was staying strong. And one of the major reason has been the lack of investment in new drilling between 2015-2020. And war just increased the concern about energy security. So this might increase the drilling (both onshore and offshore) budgets. Hence would like to ask your view about Jindal drilling and united drilling tools.
For Jindal drilling, rig rates have been firming up (learnt this from Transocean concall summary) and their contracts with ONGC are up for renewal in FY23 for 3 rigs.
And for United drilling tools, since they supply equipment and tools to this sector, should have good revenue visibility for next couple of years.
I have invested in both and looking to add up. If you have something to share, it would be most welcome.
The fortunes of Jindal Drilling depends on the movements of crude prices. That makes it a cyclical company. The rig rates can fluctuate depending upon the crude prices and demand for drilling rigs. In recent times the stock price of Jindal drilling has had a good run up, after breaking out above its crucial resistance of 168 which was a 4-5 year high. Above 168, it quickly went up to 260-270 and has cooled off to 190 kind of levels in the carnage of past few weeks. On the upside, 235 and 305 remain crucial multiyear resistances. In the most recent upmove stock price posted highs in range of 260-270, but could not hold on and broke down.
Personally I would avoid these kind of companies where my investment thesis lies in crude prices which these days are influenced by a lot of global factors.
I feel the current correction has thrown up some wonderful opportunities in many sectors and stocks, which I feel offer much better risk reward equations.
I have been looking at the quarterly results of a lot of small private banks and I think many of them have posted superb numbers and this has been the case since past 3-4 quarters now. And whatever has been promised in past quarters has been delivered. So fundamentally speaking a lot of them seem to offer good opportunities. On the charts though, very few charts offer clear cut bottoming/breakout patterns. This can happen during early phase of accumulation, or may be my view is wrong.
Very interesting question, how to differentiate multiyear themes from hit and run themes (themes lasting a few quarters at most. ) One aspect is the business model of the sector. What kind of variables are affecting the business. And how long the effect of those factors could affect the sector.
We have a clear cut bull run in real estate setor wherein stocks were breaking out of multi year tops and in some stocks, all time highs. There has been very bullish commentary from most real estate firms relating to demand environment. I think the recent weakness has been due to hike in interest rates (bolt in the blue with the RBI governer announcing it in an unexpected surprise announcement). The other factor has been huge surge in all raw material prices be it cement, sand, bricks, pipes, tiles, you name it. But the latter factors are a sort of pass through for the companies albeit with a lag period. So with time these things tend to attain a sort of equilibrium with the business model.
Personally I feel real estate is in a strong bull run marred by a temporary correction. One key point to notice is to see if stocks break down effortlessly below major breakout levels.
To give an example, DLF had a crucial 10-11 year breakout above 287. Post this breakout in Jan 21 and retest in April 21, it went up to post high of 449 and now has corrected in line with general market meltdown and posted lows in the region of 310-315 which is close to 61.8% retracement level of last major rally in DLF from a low of 232 in April 21 to a high of 449 in Oct 21. Also note that the region of 310-315 is in range of previous major top posted in Jan 21 immeidately post the first breakout post 287. (stock price subsequently corrected to below breakout zone to 232 and staged a strong rally to 449 as mentioned before. )
This kind of retracement near to 61.8% retracement (often called golden ratio) is a sign of removal of froth from the stock in an ongoing bull rally. And the one strong bullish argument in case of DLF in following chart is the nice rounded saucer shaped consolidation below 287 which lasted nearly 10-11 years before a successful breakout. Post breakout, stock price has not even doubled from breakout zone. So that may indicate lack of too much froth.
These are purely my views based on looking at charts and may/may not be right, Its purely put up for academic purpose and should not be considered an investment advice.
Indeed, private sector banks, microfinance companies have been posting good numbers and overall the books of banking sector are getting clean at a good pace. Can we say the period of low hanging fruit is done… and now the credit growth will take precedence… The banks which will be able to grow the loan book now will start getting rewarded. So more than NPAs, we will have to look at credit growth?
Also, mostly commodity companies are capital intensive and take up large amount of credit. With many of them having reduced debts significantly, they are ready probably for next round of capital expansion (as many have shared expansion plans till FY24-25). So do you think banks with greater corporate exposure as compared to retail exposure will find relatively easy to growth their loan books?
In regards to financials I agree the low hanging fruits have been plucked with profits booming with write back of excess provisions and lesser provisions etc.
Going ahead, it will be the companies that promise loan book growth with improvement in profitability that will find some favour with the markets. And different banks talk about different strategies to garner growth. Some like DCB bank are talking about doubling balance sheet size in 3-4 years, which is roughly 15-20% cagr growth, for a company quoting at below book value. Similarly RBL Bank talks about 20% CAGR growth for next 3 years again at a discount to book value. Credit cards can be an important growth driver going ahead for RBL, with the bank getting over its problems it had in the past with credit card issuances.
Growth for these financials would come both from retail and corporate. Many of the smaller banks and some NBFCs like MAS fin etc are focussing on growing SME and MSME loan book. Others will be more reliant on growing retail loan book. And some as you say would be dependent upon corporate loan book growth. But in corporate loan book, there would be internse competition to offer competitive rates and hence banks with lower cost of funds will score.
For all this thesis of growth in loan book, the capex revival and uptick in economy has to continue otherwise all assumptions go for a toss.
@hitesh2710 , you’ve mentioned Capital Goods sectors having tail winds… cursory look and the sector seems so diverse… could you please detail on the sector… or any pointers would be helpful too… thanks
Companies like TD Power, Elgi equipment, Elecon, Shanti Gears etc have given good results and some of them in their concalls also sound very bullish. You can look at these kind of companies.
@hitusohi1 You can search this thread for books on investment. Written multiple times about those. Or there is a special dedicated thread on investment books where you can look up for books that interest you.
thats why I got to know about this company that seems to be intresting.
