Sentiments – Market Correction and More

The market correction is real. For a layman who doesn’t track the stock market, nothing has changed. The Nifty and Sensex are down just 5% to 7% which is normal for a volatile asset class like equities. But most of the portfolios in the market (Funds, PMS, retail accounts, etc) are down in double digit percentage. Market Correction Market Correction Impact As evident from the table above, the smaller companies are bleeding. Most of the retail portfolios are heavily invested in small & mid caps. Most of the stocks below Rs 10,000 Crores market cap are down by more than 30%. How many are down? More than 81% stocks are down by 20% or more. Infact, more than 50% stocks are down by 40% or more. This gives a true image of the market breadth. While the broader indices look fine, the sto... Read Full Article

Timex Group – Turnaround Story?

Timex Group What are the chances of a Timex Group Multibagger? It is a multi-national microcap company with an established brand image. Timex Group India Ltd. is a part of the Timex Group which is a leading global watch company. The group has been in existence since 1854. Timex was the first sports wrist watch maker. Timex Group Luxury Watches B.V. owns a 74.93% stake in Timex Group India Ltd. The company’s plant is located in Baddi – Himachal Pradesh. Products The company is into wrist watches for men, women and kids. The watches are across many segments such as fashion, fitness, luxury, etc. The company has a presence in both the online and offline market. In the offline market, the sales channel covers distributors, counters at large stores, Timex stores and the CSD (Canteen... Read Full Article

Can NTPC be a multibagger?

NTPC Multibagger Story NTPC has characterstics that make it look like a long term value investment. The stock seems to have the potential to double or triple. However, not many will believe the NTPC Multibagger story because the stock never seems to move at all. Would we advice our clients to invest at current price in our core long term portfolio? NTPC, Sipat I first came across NTPC as a 19 year old while on an audit during my articleship days. The gigantic power plants are a sight to behold (especially at night) but does it become a good long term investment? About NTPC National Thermal Power Corporation (NTPC India) is a Maharatna company. The company started in 1975 to spearhead the power development in India. NTPC has a 17.73% share of the country’s installed capacity, and it c... Read Full Article
Cochin Shipyard Stock Analysis

Cochin Shipyard Stock Analysis

Cochin Shipyard Stock Analysis In our previous article ( Read: Cash to Market Cap Ratio ) we mentioned Cochin Shipyard and we received a lot of queries from our readers on the future prospects of Cochin Shipyard. In this blog, we will do a Cochin Shipyard stock analysis to see if the stock is worth investing for the long term. What makes Cochin Shipyard interesting is that it has an order book of 10x it’s FY18 revenues. Background Cochin Shipyard was incorporated in 1972 and operates in the ship building and ship repair industry. The Government of India owns a 75% stake in the company and the company has been a cash cow for the Government with it’s liberal dividends. The company operates in two segments – Ship building & ship repairs. Further more, the company’s... Read Full Article
Cash to Market cap ratio can help spot bargains

Cash to Market Cap – Companies with lots of cash

Cash to Market cap Cash to Market cap will basically tell us, what % of the current market cap of the company is currently in cash. For example, let’s say company ABC Ltd. trades at a market cap of Rs 5,500 Crores. It has a total debt of Rs 500 Crores and cash & bank balance of Rs 2,000 Crores. This means that the entire business of ABC Ltd. is virtually available at Rs 4,000 Crores! Many times, the cash to market cap ratio can help investors shortlist stocks that offer a decent Margin of Safety but at the same time, investors have to be skeptical of companies which are over-stating (faking) their cash & bank balances. In this article, we look at a list of companies that have low long term debt, high cash & bank balance therefore translating to a high cash to market cap r... Read Full Article

Nifty50 Investment Strategy – Low Valuation Stocks

A solid investment strategy can make you a lot of money. One popular investment strategy is investing in low valuation stocks as they offer a higher margin of safety and can give higher risk-adjusted returns. We have back-tested an investment strategy that invests in select Nifty 50 stocks ranked on the basis of lowest valuations. The strategy has been back tested for September 2010 to September 2018. The strategy is simple: i) Take the EV/Ebitda of every Nifty 50 company as on 1st September of every year ii) Rank the companies in terms of lowest to highest consolidated EV/EBITDA ratio (Lowest ratio gets rank 1 and so on) iii) Remove companies with negative ratios iv) Invest an equal amount in every stock v) Hold for 1 year and then shuffle the portfolio If 1st of September is a market hol... Read Full Article

Market Valuations – August 2018

The Nifty index is at 11,600. We are at all time highs but most of the investors are seeing their portfolio down from highs due to a considerable erosion in the mid & small cap segments. It is safe to say that we are now in that phase of a bull market when most stocks have stopped performing and a few names are pulling the index up. We see a correction in individual stocks as a healthy event which restores some sanity in the valuations. Nifty 50 – the largecap index still trades at expensive valuations [PE of 28+] with earnings growth at just 4%.  Earnings growth is at a bottom and there are signs of margins expanding for companies across sectors. A big reason for the seemingly low earnings growth is the write-off’s in banking companies for the NPA’s. Once the NPA is... Read Full Article