Saturday, September 7, 2013
Sharp crashes in market always creates panick situations ,especially in retail investors . Main reason for such a fear is – investment using leveraged funds and lack of conviction and confidence in the company where we invested.Only a small minority loving such crashes and taking it as an opportunity to buy quality companies at cheap rates.We must realise that the share price of any company depends mainly on two factors – one is the business growth of that particular company which in many case depends on the over all growth of economy and the other is the over all mood of investors in stock market.In a market/economy situation like the current one many prophets are appearing in business channels and predicting the index targets as 5000,4000.3000 and so on.Hearing such targets we are not ready to think whether the stock price of a specific company already reflecting a major portion of negatives or not and take action accordingly.On the other side ,while buying stocks in such dooms day we should not expect return from next day onwards but take it as an opportunity to grab quality names at throw away prices for creating wealth in long term.Buying in small lots at various levels will help to get stocks at a reasonable average in such volatile times.The main point to remember in a situation like this is – never invest using leveraged and time bounded funds and never expect return from the very next day onwards.
Many good auto ancillary companies are now trading around their life time low prices which offer good opportunity for long term investors. Lumax Auto Technologies ( LAT) is one such company which supplying two wheeler chassis, Adjustor Motors ,Exhaust systems & Mufflers, Fork & Handle Bar Assemblies, Petrol tanks, , Auto lightings ..etc to two and three wheelers.Company is a major supplier to Honda Motors,Bajaj Auto,Piaggio,Tata Group ..etc from its 6 plants located across India. Even if there is slowing demand in auto industry in general,two wheeler companies are not much affected and Honda Motors – major customer of LAT – reporting good growth.Company’s financial performance is stable even in this tough times which reported a consolidated top line of Rs.766 Cr , net profit of Rs.41 Cr and an EPS of Rs.30. in FY 2012-13.Stock is currently available at Rs.92 with a P/E multiple of just 3 .Company is consistently paying decent dividend ,paid 60 % each in last three years. It is a good opportunity for those having enough patience .Stock is listed both in NSE and BSE and trading @ Rs.92.
Link to Company website HERE
Posted by VALUEPICK at 9:12 AM