Saturday, June 1, 2013

ONLY FOR HIGH RISK INVESTORS.........




Traditionally ,Investing in stocks considered as a high risk high return game compared with other opportunities like Real Estate ,Gold..etc.Even in stocks itself the degree of risk -return is different in the case of Blue Chips,Large Caps,small caps..etc.Investing in turnaround companies is a favourite option of high risk takers to generate maximum return at the cost of highest risk.This strategy  not at all suitable for average or below average risk takers .Investment in such stocks may make millionaire's as well as bankrupts based on the accuracy of one’s calculations.What I mean is , below two stocks are from such a category and suitable only for investors who are even willing to forget their entire capital invested and also having enough patience.



2     Ashapura Minechem







This company along with its subsidiaries are the largest exporters of bentonite from India and one among the biggest five in the world.In addition to bentonite, company is in the production of many other minerals including sizable operations in Bauxite , Kaolin, Attapulgite, Barites..etc.Its major product –Benonite- is widely used in metal casting, iron ore pelletizing, civil engineering, drilling,   paper, detergents, cosmetics..etc. Bauxite is the basic ore for producing Aluminium.Company was a darling of investors till 2008 and its share price (post FV split) was around Rs.400-500 level.A big blow came in the form of the  ban on export /sale of bauxite by the government of Gujarat in 2008-09.Only because of this unexpected ban many issues followed in the form of forex losses and claims by few shipping companies.Kaolin plant in Kerala went into trouble on account of some local issues.All these incidents derailed company’s operations and ends in big losses.New mineral policy announced by Gujarat Government in  2009 -10 bring clarity in mining policy and permitted bauxite mining again.But by that time company’s financial health eroded a lot and it declared as a Sick company in 2012.After many month’s sincere attempt by the management, now the company is in a recovery mode.Debt of the company restructured and promoters brought  more funds into the company by way of subscribing 40,00,000 Equity Shares of Rs. 2 each at a price of Rs. 36.83 per share and 40,00,000 Convertible Warrants to be converted into equity shares.Claims by shipping companies are challenged by the company in court and case with one company  already settled out of court.Management of Ashapura expecting a favorable verdict in other cases too.On the financial front company showing sharp improvement in past few quarters.In latest full year company reported a Sales of Rs.771 Cr and its bottom line also showing remarkable improvement even excluding other income component.

                                                         Due to environment related issues ,entry of new players in this segment is not very easy now and probably in future.This situation giving special advantage for existing miners .I believe ,the testing time of this company is over and it is the time for a new beginning in the history of this company .Currently stock is trading around Rs.42

NITCO LTD







This stock once recommended around Rs.60 ( old posting HERE) which is currently trading around Rs.15.Recently company received permission to restructure its debt .As in the above case ,now promoters are making additional investment of Rs.57 Cr  by subscribing 22099206 shares at a price of Rs.25.20 each.Company is still a reputed brand in its category and  reported a turnover of Rs.800 Cr in latest FY 2012-13.





Conclusion

There is lot of companies moving between life or death situation.Reasons may vary from fraud promoters,sluggish economic growth,adverse rupee movement..etc etc.Even after restructuring or debt reduction only a few will survive and regain their past glory .Promoters interest to bring back business and their hard working is the moot  point deciding the success or failure.Among many of these companies ,the above mentioned two cases deserves special attention not only due to the fund infusion by promoters but because of the fact that even they are going through tough times still they are reporting respectable top line in the range of Rs.700-800 Cr each.I think ,their business are still viable and they can recover from the trouble if properly managed .Promoters may be in a better position to understand their SWOT by now.Hence I recommending both these stocks for extreme risk takers .



Price History :

Company Name                All time High            Low( UA)       High         Low             CMP

                                       ( Un Adjusted)                                      (Adj*)         (Adj)

      

Ashapura Minechem*           Rs.1212                 Rs.9              Rs.567        Rs.9        Rs.42



Nitco Ltd                                 Rs.336                   Rs.12            Rs.336        Rs.12      Rs.15




·         * stock Split in 2006

Link to Ashapura Minechem Website HERE 

Link to Nitco Ltd Website HERE



58 comments :

  1. Sirji, Eastern Gas EPS increased from 1.72 to 2.39.. and considering the cash credit policy of govt which u had already anticipated in past I think this stock will shoot up now? what your view?

    ReplyDelete
  2. Dear VP,

    One of your old picks, Techtran polylenses has declared dividend, after a gap of 4 years. perhaps this is an indication of promoter's confidence in future. However, the turnaround is not so obvious in Q4 results. How do you read the results and announcement of dividend?

    regards,

    Srinivas

    ReplyDelete
  3. Both stocks ( Techtran Poly and Eatern Gas) are currently included in PCA . If this trading mechanism is continuing in the present form - not recommending any stocks included in PCA.

    ReplyDelete
  4. Sir,

    Not only PCA, But OFS offer for sale and delisting news is making stocks vulnerable to wide swings,previously it was pledge ,just like IPL,SEBI is behaving.

    Regards
    ramesh

    ReplyDelete
  5. Hi Sir, Please let me know how much dividend will I get if I have 1000 shares from the information below:

    Ion Exchange India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 30, 2013, inter alia, has recommended a dividend of 20% (Rs. 2.00 per share) on equity shares for the financial year 2012-13.

    ReplyDelete
  6. Better to learn multiplication table before starting investment in stocks.

    ReplyDelete
  7. What is your views on suzlon now. Best opportunity to buy or sell at whatever price you get.

    ReplyDelete
    Replies
    1. May take more time for a turn aroud than our earlier expectation

      Delete
  8. Hello VP,

    Any idea on Uflex industries, which is into packaging space? The fundamentals and balance sheet look good, but the stock has hit low; any idea why? If you have any idea, would you recommend buying it?

    Thanks.

    ReplyDelete
    Replies
    1. Sceptical about the promoters of U-Flex.

      Delete
  9. Dear sir, your views on Omkar Speciality Chemicals, if you're tracking?

    ReplyDelete
  10. sir,
    Marksans pharma has agreed to settle 48 million USD FCCBs by end FY14. Can they generate suffcient cash flow to complete the settlement

    ReplyDelete
    Replies
    1. Cash flow fronm business is not the only source for re-payment .

      Delete
  11. Sir wht abt Sequent now..
    Avg or book loss..
    Regards Aman.

    ReplyDelete
    Replies
    1. It is still a hold for high risk long term investors

      Delete
  12. hi vp,
    you are talking about value and now you are concerned about trading? how does it matter for you if you are a long term value investor?
    is it because you have zero scope in trading pca after your recommendations? what we are noticing there is no recommendations from pca stocks. thanks kapil.

    ReplyDelete
    Replies
    1. I have never adviced anyone to trade ,but there should be minimum liquidity which is not there in PCA now.

      Delete
  13. Sir
    Heritage didn't declare the bonus as announced but postponed it till July.
    Do you see any issue in that and the stock is down to 450 levels.

    Do you see a buying opportunity for first time buyers who didn't buy earlier?

    ReplyDelete
    Replies
    1. I don't think there is any negative effect on company's business only because of this postponement.

      Delete
  14. Hi VP,
    have been following your blog for a few days. Thank you for all the valuable suggestions. Keep up the good work :)
    And whats your opinion about Dhanlaxmi Bank? Its hovering near to Rs.40 these days.

    ReplyDelete
    Replies
    1. Only tracking two private banks - ING Vysya and YES bank- and positive on both for long term.

      Delete
  15. dear value
    what ur view on BEML now/
    PATIDAR

    ReplyDelete
  16. Hello Sir,
    Pls suggest a Pharma script for long term. Your view on Divis Lab. Thanks.

    ReplyDelete
    Replies
    1. I am sceptical on Divis ,positive on Lupin

      Delete
  17. How would I fare if I buy a share of Bosch ; Asian paints ; nestle every month for a period of 5 years
    And 10 shares of godrej cipla and pidilte ..

    ReplyDelete
    Replies
    1. Stocks are not bad,prefer Lupin and Sun over Cipla.

      Delete
  18. What will happen if I invest in punter/operator driven stocks .. Are they also included in PCA ... Will I be able to sell them ??

    ReplyDelete
    Replies
    1. Normally punters/operators are creating lot of volume in their favourite stocks.As per SEBI formula these type stocks are excluded from PCA list and only genuinely traded stocks included in it .That's why I doubt whether the purpose of this saved or not.

      Delete
  19. Dear VP, ur view on JP infra. making new lows everyday....

    ReplyDelete
    Replies
    1. Not a fan of Jaiprakash Group ,so no opinion about any of their cos.

      Delete
    2. Sir reason for you not being fan of jaypee group?

      Delete
    3. Business groups like Jaypee,Essar,RPG ..etc are running their cos only for themselves and trying their level best to not give anything to its minority share holders.This is my belief ..

      Delete
  20. dear value

    can v include opto circuit and sintex and jain irrigation in this category? (high risk-trun around-management effort)

    Patidar

    ReplyDelete
    Replies
    1. Opto Circuit,Jain Irrigation,Bilcare,,Sintex..etc are facing almost similar problem - Slow demand growth and high interest burden- .I think Jain is most preferable from this pack.

      Delete
  21. hello sir,
    I would like to know if BRITTANIA is a buy even at RS 665??
    I am a long term investor...
    THANKS

    ReplyDelete
    Replies
    1. Stock recently apprciated substantially ,buy after a consolidation

      Delete
  22. Sir, I'm seeking your opinion on Aarti Drugs since long time. Please advise on its future growth.

    ReplyDelete
    Replies
    1. Stock gained a lost in past few months , but some more steam left.

      Delete
  23. Dear sir,

    When next round of PCA shares will be announced, is there any chance mangalam cement, orient bell, va tech wabag to be included in that category..

    ReplyDelete
    Replies
    1. Only SEBI and exchanges knows the exact bench mark of PCA,and there is no transparency in it.Last time they excluded many companies even they are eligible for PCA as per announced benchmarks.

      Delete
  24. Value Pick Ji,

    Your View on the recent Eon Electric results.
    Can we still hold / accumulate the shares.

    Thanks
    Arun

    ReplyDelete
  25. Pl give your views on Swelect Energy. Stock avbl at 5.5% dividend yield and at 40% of book value. Recently made foray into Solar energy space. Promoters have good track record.

    Thanks.

    ReplyDelete
    Replies
    1. Yield and book value at attractive level due to its hiving off of part of its business few years back.Later company entered in solar space where many cos failed to perform financially.If you are not interested to take higher level of risk ,better to wait for a while ..

      Delete
  26. U r view about TATA COFFEE .please


    Heron

    ReplyDelete
  27. sir span diagnostic has come down from 52 levels to 23 levels what is your take on this?hold,add,sell

    ReplyDelete
    Replies
    1. I have the same question. Due to PCA, this scip seems to be dead and going down every day.

      Delete
    2. NOt only this scrip ,everything included in PCA is almost dead.I think this is the foolish and idiotic decision taken by SEBI ever.

      Delete
  28. Not recommending a BUY on any stock which included in PCA till it continue in the present form ,due to extreme low liquidity.

    ReplyDelete
  29. Sir, i would like to know your view about Accel Transmatic Ltd, if tracking. It was presented to investors with big ambitions on animation business. But nothing has worked out and today it is a company with sales of only 2 Lakhs.

    I hold some more shares with a higher price/ share. Kindly advise on how to handle these type of situations.

    ReplyDelete
  30. Dear sir,

    I am holding Mangalam cement inv. price:158, current cmp:122, granules inv.price:136, current cmp:133, orient bell inv. price:81, current cmp:63, vatech wabag, inv.price:532, current cmp:449.
    I need your serious views on the above stocks whether i should book loss or hold or accumulate.
    Sir please reply sir.

    ReplyDelete
    Replies
    1. None of these companies are bad.Construction related stocks like Mangalam and Orient affected due to slow growth in this sector .I hope all of these will improve performance once the macro economic situation show some improvement and stock price will be re-rated accordingly provided non inclusion in PCA.

      Delete
  31. Dear VP,
    Please suggest some Value picks which are biggest benefeciaries of current economic scenario in India like;
    1. depreciating rupee in near term to Rs60/$
    2. 5% Current Account Defecit
    3. High Import duty on Gold
    4. New economic reforms to be announced by PChidambaram in July and so on.

    Thanks
    Regards
    Sakharam

    ReplyDelete
  32. Dear sir.. took marksans @3.60..shall i hold or book profit..

    ReplyDelete
  33. Hi Sir,
    can i buy NITCO Tiles for a period of 6 months

    ReplyDelete

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