Saturday, May 19, 2012

TWO LOW PRICED SCRIPS TO KEEP IN YOUR RADAR




No doubt investment in stocks is a high risk high profit way to create wealth compared with investment in many other assets.Even in equity investment we have many choices like Blue chips,Mid caps,Penny stocks..etc depends on one’s risk profile.Many investors are willing to allocate a small part of their total equity corpus in micro caps and test their luck.Even we are willing to do so we must have at least some reasoning in selecting such stocks and not bet on any stock if even the promoter of the company selling it and only operators are playing with. This week , I am bringing  two such stocks to your attention .Remember ,both of these are not value stocks and not eligible for investment based on any conventional parameters.Since the fortune of these stocks are depends on many IF’s and But’s ,only high risk investors with a willingness to loose the entire capital invested in it  are requested to try it.


1) PCS TECHNOLOGY LTD


      PCS Technology  is now the only listed company owned by  the promoters of erstwhile Patni Computer Systems Ltd ,after the selling of their flagship company to I-Gate Solutions. PCS is one of the first listed companies from the hardware space, made its IPO in 1989.Even the company having operations in  IT and  IT enabled segment it is known as a hardware player.What is interesting now is some important  decisions regarding PCS taken by the management after deciding to sell their big company – Patni Computer. 

         A) Company decided to exit from its low margin hardware and system integration  business and planning to concentrate in IT and IT enabled segment.

        B) Decided to clean the balance sheet using the share premium account, realisation from  land sale..etc

 C) Sharp improvement of bottom line in latest quarter (Top line decreased due to the exit from hardware division on a phased manner) 

      D) Acquired new office premise at MIDC Area Mumbai 

It is important to note that this scheme of arrangement  to write off some dead assets and clean the balance sheet is entirely funded without any change in capital structure like reduction in share capital ,face value or such arrangements.Another important point is that the share holding of Patni family in this company is still  as high as 70% .
If Patni family sold their flagship company Patni Coputer  at price of $  1 Billion and they are now taking renowned interest in their  only other listed company ,in my opinion ,it is worth a bet at current market price of Rs.19/-

For the link to Company website Click HERE

2)      MILTON PLASTICS LTD


MILTON  is a well known brand in Vacuum Flasks,Casseroles, Water Jugs ..etc. I suspect even many other household items  are selling under this brand by some private limited companies of the same management . I am not sure who is the real owner of this brand whether it is the listed entity or the family who runs the company .Anyway, what is attracting now is the sharp increase of the share prices of some company’s like TTK Prestige and Butterfly Gandhimathi  and the efforts  of  the promoter of MILTON to settle company’s dues with banks on a one time settlement basis .If the wealth created in the mentioned companies  is an eye opener for this promoter too ,the brand MILTON is still strong for rewriting the future of this company . If they are ready to correct their past mistakes ,on settlement of dues with banks the entire business may be consolidated in the listed entity .Everything depends on promoters’ attitude and whether their efforts to settle dues is an indication for their changing mind ,only time will tell....  .More details about this company is available in their NEWLY launched website. CMP of Milton is Rs.11/-

Note : These scrips are only for investors with above average risk and willing to loose the entire capital invested in it.

Disc:I have vested interest in both scrips.

 

 

 

18 comments :

  1. In the case of Milton, the scene is pretty bad. As per the Annual Report of 2011, the Company has outstanding loan of around Rs. 285 Crore and accumulated Losses (P&L account) of Rs. 269 Crore. Thus, at an enterprise value of Rs. 300 odd crore with sales of less than Rs. 50 Crore, the stock looks heavily overvalued. It could at best be punters paradise to move the price up, trap the investors and then to book profits.

    ReplyDelete
    Replies
    1. Dear Friend

      In the beginning itself I have clearly mentioned that these stocks are not for people investing based on formulas and theories

      Delete
  2. sir h ru ....
    i m your regular reader of ur articles can i know your views on l&t finance holding

    ReplyDelete
    Replies
    1. Suitable for low risk investors with moderate expectations

      Delete
    2. Omega-ag seeds punjab could also be a risky bet but can provide unexpected returns either ways

      Delete
  3. Sir,

    I think "Milton" brand is owned by one of the promoter's private firm. Their old website had some indication about this.

    Though this may be a potential negative, I still feel that if the promoters are interested in creating value for minority shareholders, they will do so without this fact. If they don't want, then even if it was so, they won't.

    What you say about PCS is interesting!
    The reputation of Patni promoters wasn't that great.
    Any idea, if these guys are family members of Patni family or the same people who scaled up Patni computers?
    They do say, IT and IT enabled services. Any idea, which sub-domain their strength is and where they intend to focus?

    ReplyDelete
  4. Sir I have 1000 BHEL @Rs.290.. Now it is going to reach below 200.. What should I do sir??? Please suggest me..
    Will it cross Rs.300 again??any chance?

    ReplyDelete
  5. Dear VP sir

    Could you pls comment on the following report

    Is this the time to buy, hold or sell stocks?
    Back to basics

    Last 200 years' history of investment tells us that stocks out-perform all other asset classes in the long run. This out-performance of stocks is due to the fundamental forces that generate economic growth. Does it mean that stocks are a good buy at any time? The answer is no. Rather, the answer depends on what kind of stocks an investor wants to buy and what price he is prepared to pay.

    In every market, at all times, there are blue chips, good stocks, mid-caps, small- caps and penny stocks. Penny stocks should be avoided like the plague. Some mid and small caps can turn out to be multi-baggers but they are risky and therefore should be bought only after adequate research. Blue chips can be bought at any time, particularly when they are attractively priced. Blue chips are attractively priced now!

    Markets seldom trade at fair valuations. Abnormal events, fears or high expectations push market prices away from fair valuations. Therefore, more often than not, stocks are either over-priced or under-priced. When normalcy returns, they tend towards fair valuations. Therefore, it makes sense to buy when stocks are under-priced and sell when they are over-priced. Of course, this is easier said than done. But there are some thump rules to guide investors.
    Stocks are attractively valued
    During the last 16 years in India, the average PE multiple has been around 15. Presently, at around12.5 times FY 2013 earnings, PE is much lower than the historical average. By this yardstick, Indian stocks are attractively valued. These relatively low levels of valuations are due to the external and domestic macro economic headwinds. It is difficult for PE to fall below 12, except in abnormal panic situations like a Lehman collapse. Possibility of a disorderly exit of Greece from the Euro zone and the disruptions that it might cause in financial markets has unnerved investors and impacted risk appetite. But this can be a good time to buy. Stock market trends have always been and will be cyclical, not linear.
    Headwinds, not a perfect storm
    Externally, Europe continues to be a problem area. If the recent political changes in Europe lead to disorderly developments in financial markets, there can be another leg-down to our markets too. India's twin deficit problem- high fiscal and current account deficits - makes us vulnerable to capital flight. These are the two main factors, particularly the Indian government's inability to arrest the twin deficits, which are plaguing our markets. These are headwinds, not a perfect storm.
    India Growth Story in tact
    Investors should remember that the core of the India growth story is in tact even though it has been dented at the edges by messy politics and governance paralysis. We have to remember the fact that the India Growth Story is driven by demographic dividend, our entrepreneurial talent, high savings rate and robust domestic consumption. These are very much in tact. The macro headwinds and governance issues are temporary blips which can be fixed.
    Adopt a calibrated buying strategy
    It is important to note that India's problems are solvable; it would be reasonable to expect measures in that direction soon. Also, it would be reasonable to assume that the new leadership in France and the leadership likely to emerge in Greece would not precipitate matters leading to disruptive fall-outs from European markets. On the basis of these assumptions, investors can buy quality stocks with a medium to long-term perspective. Companies with a proven track record with an ability to scale up business with internal resources are sure to do well, whatever the environment. Remember the fact that some blue chips are at or near their all time highs even in this market. There will be winners even in a poor market. Investors may adopt a calibrated buying strategy: buying in installments.

    ReplyDelete
    Replies
    1. from where you get this report sir i also wanted to get.

      Delete
  6. sir I have 1000 BHEL @290... what should I do?? It is going below 200 now.. plz suggest me

    ReplyDelete
    Replies
    1. Dear Jyoti

      BHEL may be a market performer

      Delete
  7. sir your respected comment about the avanti feeds and swabhagya media

    ReplyDelete
  8. what is ur view on vulcan engineers since the share is on continous downtrend please reply and also ur view on fresnius kabi please reply

    ReplyDelete
    Replies
    1. Vulcan recommended for long term and no change in previous opinion

      Delete
  9. Sir How about buying Tv today network at CMP 65 now ?

    Thanks
    Sathish

    ReplyDelete
    Replies
    1. Dear Sathish

      News based move may not sustain

      Delete
  10. Is Tupperware listed in India. The company which manufactures tiffin boxes and other crockery items

    ReplyDelete
  11. Dear VP sir,

    Could you please through some lights on ORIENTAL CARBON & CHEMICALS, recently results for Jun 2012 looking good and stock is being trading around Rs:118/-

    ReplyDelete

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