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MULTIBAGGER SMALL / MID CAPS & LONG TERM INVESTING REPORT >>>  FREE DOWNLOAD

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Wednesday, July 17, 2019

Multibagger Small Cap Stock 2019 Report - Free Download!

Dear Reader,

potential multibagger small cap stock 2019We released Techno-Funda Stock Pick 2019  (Potential Multibagger StockReport on 12th Dec 2018. The stock selected under this report is a small cap company having multi-bagger potential with market capital of less than 500 crores and is available below our recommended price. We are glad to inform you that the company (our Techno-Funda Stock of 2019) has declared its March quarter results reporting stellar growth in top line as well as bottom line. At current valuations, we find limited downside risk with significant upside. Stock has the potential to deliver multi-bagger return over next couple of years.

With continuous fall in stock prices during this year,  valuations of many small caps and mid caps become attractive to reasonable. In fact, many good companies are available at valuations which look very attractive considering the earning growth these companies are expected to deliver over next 2 years and as the tide will turn we will see same set of companies will turn out to be multibaggers. This is not the time to sell in panic, but to accumulate good companies available at discounted valuations. Moreover, we believe broader market has already bottomed out in Feb 2019 post Pulwama attack and is now forming a base, hence we can see renewed buying interest in small & mid caps once sentiments improves. Bad sentiments will not last for ever, its time for long term investors (2-5 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.

“The first rule of investment is ‘buy low and sell high’, but many people fear to buy low because of the fear of the stock dropping even lower. Then you may ask: ‘When is the time to buy low?’ The answer is: When there is maximum pessimism.” 
Sir John Templeton

To encourage investment in equities during current scenario when overall market sentiments are subdued for broader markets - small & mid caps, we decided to share our Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) Report for free. This is a complimentary report for our readers. We are confident that you will find our research work useful in making informed investment decision.

multibagger stock pickPotential multibagger stock report covers both technical as well as fundamental analysis about the company along with positive developments in the company as well as sector. The stock offers significant upside potential and could be a multibagger stock delivering 2x to 5x returns from current levels over next 1 to 3 years.

Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report is a detailed report which covers company's background, Industry outlook, positive developments, financial performance of the company along with peer group comparison, key concerns & risks, technical analysis, fundamental analysis and Saral Gyan recommendation.

To receive our Techno-Funda Stock Pick 2019 (Potential Multibagger Stock) report, simply fill up the form below. Once submitted, you will receive the report directly in your inbox.



If you are unable to view the form, click here to fill it online to receive our Techno-Funda stock report directly in your inbox.

Making Money by Investing in Fast Growth Multibagger Stocks

“The investor of today does not profit from yesterday’s growth.” Warren Buffett

multibagger stocks 2019
Most of us have relatives who like to fashion themselves as ‘stock-gurus’, with their stories revolving around how they ‘could have been’ millionaires now, if only they had held their nerves. The stock that comes up frequently in these conversations is Infosys. If you had invested Rs. 9,500 to buy 100 shares of Infosys in the IPO (that went undersubscribed in 1993), 1,02,400 shares (adjusted for bonus issues) worth sum of Rs. 6,72,56,320 would be in your kitty.

Infy has given CAGR returns of whopping 42.6% to investors during last 25 years (that too after keeping dividend payouts aside). Infosys got listed in June 1993 at price of Rs. 145 per share and investment of Rs. 9,500 in June 1993 is valued at ~7 crores today. But, is Infosys still the key to riches? As often repeated, past performance is no guarantee of future results. So, how does one find out the next ‘Infy’?

A Fast Grower is a small yet aggressive & nimble firm, which grows roughly at 20-25% a year. This is an investment category which can give investors a return of 10 to as much as 200 times the investment made by them. No doubt, it remains a favourite of Peter Lynch!

In 1950s, the Utility & Power Sector were the fast growers with twice the growth rates to that of the US GDP. As people got more power-hungry gadgets for themselves, the power bills ran through the roof & the power sector surged with booming demand. Post the Oil Shock in 70’s, cost of power generation became high with power tariffs going up; people learnt to conserve electricity. Demand, thus, fell and power sector witnessed a slowdown. Prior to it, similar decline was observed in the Steel Sector & Railroads. First, it was the Automobile Sector, and then the Steel, followed by Chemicals & Power Utility & now the IT Sector is showing signs of slowing down. Every time, people thought, rally in the fast growers of the age would never end, but it did end, with people losing money as well as their jobs. Those who thought differently like Walter Chrysler (founder of Chrysler Corporation), who took a pay cut and left the railroads to build new cars in the turn of the last century, became the next millionaires.

Three phases involved in their life cycles, are:

1. The Start-Up Phase: Majority of the companies either burn up all the cash or run out of ideas by the end of this phase. Maximum casualties have been observed here, making it one of the riskiest phases. However, maximum returns can be made from them, if one enters near the end of this phase.

2. Rapid Expansion Phase: The Company’s core proposition has worked now, with the strategy being replicated by expansion of product/service portfolio or consumer touch points.

3. Mature Phase: Growth slows down, either due to high debt or low cash, owing to the massive expansion witnessed in early stage. Fall in demand or legal restrictions might also contribute to faltering growth.

The trick is to track, which phase the organization is in, at the moment. If the firm is in late start-up phase with possibility of moving to rapid expansion phase, buy the stock when it is still cheap. Once firm’s earnings start falling with its products witnessing poor demand, it’s time to bid goodbye to the stock.

Peter Lynch 2 Minutes Drill to Shortlist Potential Multibaggers

The key parameters involved in Peter Lynch’s ‘two minute drill’ are:

1. P/E Ratio: avoid stocks with excessively high P/E
2. Debt/Equity Ratio: should be low
3. Net Cash per Share: should be high
4. Dividend & Payout Ratio: should be adequate
5. Inventory levels: lower the better

Stay away from companies which are being actively tracked, followed & invested in by large institutional investors. News about buy back of shares or internal stakeholders increasing their stakes should be construed as positive.

Checks specific to Fast Growers:

1. The star product forms a majority of the company’s business.
2. Company’s success in more than one places to prove that expansion will work.
3. Still opportunity for penetration.
4. Stock is selling at its P/E ratio or near the growth rate.
5. Expansion is speeding up Or stable

One must judiciously walk the tightrope between the unquestioning belief that made the stock to be held for so long and the fear of the end from nose-diving prices due to a one-off bad year. The key is to always keep revisiting the story & ask some pertinent questions like ‘What would really keep them growing?’, ‘What is their next offering? or ‘Are their products & services still in vogue?’ It is here, that one must track the point of time when the phase 2 of the firm’s expansion comes to an end. This is usually the dead-end for organizations as success is difficult to be replicated. Unless, innovation happens, downfall is imminent & thus, an exit is necessary. P/E of these stocks is drummed up to unrealistically high levels by the madness of crowd towards the end. One must keep one’s eyes & ears open to signs, which mark the end of the road for these fast growers. A great case in point is Polaroid which had its P/E bid up to 50, only to be rendered obsolete later by new technologies.

A sure shot sign of a decline is a company which is everywhere! Such a company would simply find no place to expand any further. Sooner, rather than later, such a company would see its ‘Manhattans’ of earnings reduced to ‘plateaus’ of little or no growth, simply because no space is left to expand further.

1.The quarterly sales decline for existing stores.
2. New stores opening, though results are disappointing: weakening demand, over supply.
3. High level of attrition at the top level.
4. Company pitching heavily to institutional investors talking about what Peter Lynch calls ‘diversification’.
5. Stock trading at a P/E of 30 or more, when most optimistic estimates of earning growth are lower than 15-20%, thus, unable to justify the high price.

Fast Growers, which pay, are ephemeral & one misses them more often than not. It is a High Risk & High Gain Category of Stocks. One must remember along the classic risk & return principle, that when one loses, one loses big! So, if you are in the quest for magnificent returns, a Fast Grower can be your bet provided you know when to bid Goodbye!

Owning Multibagger Stocks which can multiply Investments in Future

multibagger small cap mid cap stocks
The number of small-cap stocks is large and finding a quality stock that can give high returns over a long period is tough even for equity analysts. One reason is that such stocks usually have a short history and are not tracked by many analysts and brokerage houses. Then there are risks such as low liquidity, governance concerns and competition from larger players.

Scores of once small companies have over the years grown big, giving investors a 30-50 percent annual return over 10-15 years and creating fortunes for investors. However, more often than not, we find ourselves at the wrong side of the fence and regret our inability to spot such stocks on time.

Buying Strategy for Small Caps

1. Go for companies with low debt ratio (preferably less than one)

2. A high interest coverage ratio (above 3x) and a high return on equity are big advantages

3. Avoid companies with huge liabilities in the form of foreign currency convertible bonds / external commercial borrowings

4. Look at the quality of the management, its governance standards and how investor-friendly the company is.

5. Mid-cap and small-cap companies can be future market leaders, so be patient with your investments

Those who wish to invest in small-cap stocks should do so only if they have a long investment horizon and tolerance for volatility. Small-cap stocks suffer the steepest falls in a bear market and rise the most in a bull market. An investor should stay invested for at least three-five years to allow their portfolio to gain from at least one bull run. If you are looking for multibaggers, stock must have high growth rates along with expanding PE ratios. The price we pay for the stock is important as it will determine whether there is enough scope left for a PE expansion to take place. 

Benefits of Investing in Small Caps

1. Huge growth potential: The first and the most important advantage that a small cap stock gives you is their high growth potential. Since these are small companies they have great scope to rise as opposed to already large companies.

2. Low Valuations: Usually small cap stocks are available at lower valuations compared to mid & large caps. Hence, if you invest in good small cap companies at initial stage and wait for couple of years,  you will see price appreciation not only because of growth in top line and bottom line but also due to rerating which happens with increase in market capital of the company.

3. Early Entrance Advantage: Most of the fund house and institutions do not own small caps with low market cap due to less liquidity which make it difficult for them to own sufficient no. of shares. This gives retail investors an opportunity to be an early entrant to accumulate such companies shares. When company grows in market cap by delivering consistent growth and becomes more liquid, entry of fund houses and institutions push the share prices up giving maximum gains to early entrants.  

4. Under–Researched: Small cap stocks are often given the least attention by the analysts who are more interested in the large companies. Hence, they are often under - recognized and could be under-priced thus giving the investor the opportunity to benefit from these low prices.

5. Emerging Sectors: In a developing economy where there are several new business models and sectors emerging, the opportunity to pick new leaders can be hugely beneficial. Also the disruptive models in the new age is leading to more churn and faster growth amongst the nimble footed smaller companies.

Concerns while Investing in Small Caps

1. Risk: The first and the most important disadvantage a small cap stock is the high level of risk it exposes an investor to. If a small cap company has the potential to rise quickly, it even has the potential to fall. Owing to its small size, it may not be able to sustain itself thereby leading the investor into great loses. After all, the bigger the company, the harder it is for it to fall.

2. Volatility: Small cap stocks are also more volatile as compared to large cap stocks. This is mainly because they have limited reserves against hard times. Also, it in the event of an economic crisis or any change in the company administration could lead to investors dis-investing thereby leading to a fall in prices.

3. Liquidity: Since investing in small cap stocks is mainly a decision depending upon one’s ability to undertake risk, a small cap stock can often become illiquid. Hence, one should not depend upon them for an important life goal.

4. Lack of information: As opposed to a large cap company, the analysts do not spend enough time studying the small cap companies. Hence, there isn’t enough information available to the investor so that he can study the company and decide about it future prospects.


Hidden Gems Value Picks Wealth Builder
If these factors scare you but you still want to gain from the upside potential of such stocks, Saral Gyan Hidden Gems & Value Picks is an ideal choice for you. At Saral Gyan, team of equity analysts keep on evaluating small and mid cap stocks to explore the best Hidden Gems and Value Picks of stock market. Saral Gyan - Hidden Gems and Value Picks are the small and mid cap stocks with high probability to become multi-bagger stocks in future and a path for our investors to create wealth through equity investments in a long run. Multibaggers evolve over time. Many successful investors follow plenty of processes to identify these stocks early and continue to ride them till they evolve as multibaggers.

Grow your Wealth by Investing in Potential Multibagger Small Caps

Its a fact that 49 small and micro cap stocks out of 87 recommended by our team under Hidden Gems service during last 9 years turned multi-baggers giving more than 100% returns. Stocks like Cera SanitarywareCamlin Fine SciencesKovai MedicalWim PlastMayur UniquoterRoto Pumps etc are our multibagger stocks have given whopping returns in the range of 400% to 2000%.

We do update our members in terms of profit booking / exits depending upon various factors like overall Industry / Sector outlook, fundamentals of the company, management action plan and annual performance in terms of top line, bottom line, operating margins and other important parameters.

Below are some of the Hidden Gems stocks released by us which became multibaggers during last 9 years. Even after severe correction in small caps over last 1.5 years, as on date returns is in the range of 150% to 1800%.  In fact, we already advised partial / full profit booking in many of these stocks at higher levels. The update of the same was published in our Hidden Gems Flash Back report.

 HIDDEN GEMS STOCKS 
 RELEASE DATE 
 MULTIBAGGER 
OLD REPORT
1. Camlin Fine Sciences
27 Mar 2011 
8-BAGGER 
2. Wim Plast
30 Aug 2011 
5-BAGGER 
3. Kovai Medical
27 Oct 2011 
7-BAGGER 
4. Cera Sanitaryware
24 Dec 2011 
19-BAGGER
5. Mayur Uniquoter
31 Mar 2012 
5-BAGGER 
6. Roto Pumps
05 Aug 2012 
7-BAGGER 
7. Acrysil
25 Nov 2012 
5-BAGGER 
8. TCPL Packaging
31 Mar 2013 
5-BAGGER 
9. Rane Brake Lining
31 May 2014 
3-BAGGER 
10. Dynemic Products
29 Jul 2014 
2.5-BAGGER
11. Mold-Tek Packaging
22 Mar 2015 
2.5-BAGGER 
12. Visaka Industries
05 Jul 2015 
3-BAGGER 
13. Chemfab Alkalies
06 Sep 2015 
2.5-BAGGER 
14. Ultramarine Pi
11 Oct 2015 
2.5-BAGGER 
15. Stylam Industries
08 May 2016 
3-BAGGER 

Post election outcome, Sensex & Nifty made all time high and delivered positive returns of ~15% since Jan 2018 where as broader markets i.e. Small Cap and Mid Cap indices delivered negative returns of 32% and 21% respectively during the same period. Most of the liquidity in small & mid caps has dried up and found its way to large caps over last 1.5 years. At this juncture, large caps looks fairly valued or expensive in terms of valuations, however small & mid cap companies look attractive and can reward long term investors in big way. In fact, some of the worst times to get into the market turned out to be the best times for long term investors and same seems to be applicable now for small & mid caps.

BSE Small Cap Index has not delivered negative returns for 2 consecutive years in past 16 years

We believe this is a blessing in disguise because for the first time in many years, several small companies having robust business fundamentals are available at attractive valuations. Do you know in last 16 years, small cap index have not given negative returns for 2 consecutive years. In 2018, BSE Small Cap Index has given negative returns of -23.4% and since beginning of this year, index is down by another -5.7%. Below is the table which indicates BSE Small Cap Index returns YoY since 1st April 2003 (the data is available from April 2003 onwards only in BSE).
BSE Small Cap Index Yearly Returns 2003 - 2019
Whenever, BSE Small Cap Index delivered significantly high negative returns in a particular year during last 16 years, it has delivered double digit positive returns the very next year. The divergence between Sensex / Nifty and BSE Small Cap & Mid Cap Index will not last for long going forward considering valuations gap emerging between large caps in comparison to mid & small cap stocks.

Tide to turn favourable for Small Cap Stocks

If you analyse the bear phase of stock markets cycle since 1990, you will find that such bear phase has not lasted for more than 18 months. Small cap index which made all time high of 20,184 in Jan 2018 with end of its bull run corrected by -35% from its peak in Feb 2019 and we believe bottom in broader markets is already in place with lows made in Feb 2019 post Pulwama attack.

Greed which was seen in broader market (small & mid caps) in the year 2016 and 2017 has turned to fear these days. Are you also fearful? This is the time to do opposite of the herd, its time to be greedy when others are fearful. If you are not investing in equities during these opportune times and taking the back seat, you are making a bigger mistake.

Remember, in the long run, you do not make decent returns on your investments by following the herd i.e. when everyone is buying stocks; instead you get handsome returns on our investments by investing in stocks at significantly low prices as no one else is buying, and by selling to them when they come back in herd due to greed in future.

Be a disciplined investor who keep on investing in systematic way irrespective of market conditions and not an emotional investor who usually buy stocks during bull phase when stock prices are moving higher because of greed and sell them in panic during bear phase due to severe fall in stock prices, making mistake of buying high and selling low.


We are pleased to inform you that we are celebrating Saral Gyan 9th Anniversary this July by offering maximum benefits on our subscription services. Discounts & valuable freebies which make our 9th Anniversary special for all our readers are as under:

1. Maximum discount up to 30% on combo pack subscriptions
2. Hidden Gems Flash Back Report - Released on 30th April 19
3. Value Picks Flash Back Report - To be released in Aug'19
4. 5 Stocks - Potential 5-Baggers in 5 Years Report Update - To be released in Jul'19
5. Existing Portfolio Health Check Up under Wealth-Builder subscription 
6. Saral Gyan eBook - "How to Grow your Savings?" worth Rs. 599 for Free.

Below table indicates subscription services and discounted prices valid up to 31st July'19.
Saral Gyan 9th Anniversary Offer 
SARAL GYAN
SUBSCRIPTION SERVICE
9TH ANNIVERSARY OFFER
DISCOUNTED PRICE
PAY ONLINE 
CARD / NET BANKING 
Hidden GemsRs. 10,000 9,000
Value PicksRs. 6,000 5,400
Wealth-BuilderRs. 20,000 18,000
Combo 1: HG + VP + WB + 15%Rs. 40,000 28,000
Combo 2: HG + VP + 15%Rs. 20,000 15,000
Combo 3: HG + VPRs. 16,000 13,000
Combo 4: HG + 15%Rs. 14,000 11,500
Combo 5: VP + 15%Rs. 10,000 8,500

Simply choose the subscription service / combo pack you would like to opt and click on SUBSCRIBE! link in above table to make online payment using your debit / credit card or net banking facility. In case if you are not comfortable in making online payment, click here to know about our other payment options and bank details.

Click here to know more about Saral Gyan 9th Anniversary Offer.

Wish you happy & safe Investing. 

Regards, 
Team - Saral Gyan

Tuesday, July 16, 2019

Free Report - Small / Mid Caps & Long Term Investing!

Dear Reader,

We are experiencing lot of hopelessness along with fear towards equities in 2019.  The reason is the carnage in stock prices of many well-known established companies over last 18 months. Retail investors have taken the back foot and lost their faith and conviction towards investing in small and mid caps. We understand that it is really frustrating to see the Sensex and Nifty at all time highs while the BSE Small Cap and Mid Cap indices hovering at much lower levels compared to last year.

Since Jan 2018, Nifty and Sensex delivered positive returns of 10% and 8% respectively, BSE small cap index slumped 31%, while BSE mid cap index dropped 20%. Though these numbers tell us what the overall index lost, individual small and mid cap stocks were touching 52-week lows every other day and individual damage to most of the stocks in this category was to the tune of 50-60%, some even more than that.

Despite that we are quite excited about opportunities emerging in small and mid cap space. You may argue that most of small caps and mid caps have wiped out your hard earned gains over last 2 years. In fact those who invested in small and mid caps in past 2 years are sitting on significantly higher losses and may be thinking to stay away from them.

However, we beg to differ. We firmly believe that these are the opportune times to invest in broader markets and not in large caps. The negative sentiments around small and mid caps have brought excellent businesses down to historically low valuations. The fall in stock prices of many small caps and mid caps by more than 50% from their peaks has not happened for the first time. This has happened in past and companies with good business fundamentals have always bounced back strongly.

Staying invested may be easier said than done when the markets are in bear grip, but it is a necessity for long-term wealth creation. Patience will pay rich dividends to those investors who learn to weather the storm. In fact, investments made in right set of companies during bad market conditions rewards long term investors in much bigger way.

Multibagger Small & Mid Caps - Long Term Investing ReportTo make our readers understand the benefits of investing in small caps and mid caps during bad times like we are experiencing now, we have released - Multibagger Small / Mid Caps and Long Term Investing Report recently on 10th July 2019. 

The objective of this report is to make our members understand why its utmost important to invest in equities keeping a real long term view and becoming a discipline investor by investing in equities during good as well as bad times. We are confident that this report will reinforce your believe to stay invested during these turbulent times in broader markets and build your conviction further encouraging you to invest in small and mid caps with good business fundamentals.

Broadly, Multibagger Small / Mid Caps & Long Term Investing report covers:

1. 6 Major Reasons for Decline in Small & Mid Caps
2. Budget 2019 - Steps towards easing Liquidity Crisis
3. Benefits on Investing in Small & Mid Caps during Bear Phase
4. The Bulls, The Bears & The Farm
5. Long Term Charts of Small & Mid Caps (Hidden Gems & Value Picks stocks)
6. Release of Special Report - Potential 5-Bagger in 5 Years in July 2019

To receive our Multibagger Small / Mid Caps and Long Term Investing report, simply fill up the form below. Once submitted, you will receive the report directly in your inbox. 



If you are unable to view the form, click here to fill it online to receive our Multibagger Small / Mid Caps & Long Term Investing report directly in your inbox.

When overall market sentiments are negative like we are witnessing now, quality businesses also face the heat. As bad stocks go down, good stocks go down with them too. But good companies make a stronger come back once economy cycle starts its upturn. Though it was a combination of issues that affected the broader markets, we can largely peg this mayhem to 6 major reasons:
Reasons for Decline in Small Mid Caps


1. SEBI Mutual Fund Re-Categorisation: Nearly everyone can agree that mid and small caps were rallying uncharacteristically and the prices were being built up without actual fundamental backing for most of FY18. However, SEBI’s new rules for mutual funds acted like the trigger point for the bubble to burst. In October 2017, SEBI mandated mutual funds to group their equity schemes under large, mid and small caps based on market cap of the stocks the scheme has invested in. For instance, a large cap scheme should have minimum 80% investment in large caps and a mid cap fund should have at least 65% of its assets in mid caps. This also required managers of large and mid cap funds to stick mainly to the top 250 stocks in the market. This forced active funds to trim their portfolio weights in such stocks.

2. Long Term Capital Gain: In Union Budget 2018-19, Finance Minister Arun Jaitley's announcement to tax LTCG stunned both markets and investors. The Finance Minister proposed to tax LTCG exceeding Rs 1 Lakh at the rate of 10% without allowing the benefit of any indexation. Imposition of Long term capital gains tax while keeping STT intact has resulted in double taxation, this has impacted the overall participation in Indian capital markets, by domestic as well as foreign investors.

3. Corporate Governance Concerns: Adding to the woes of mid and small cap stocks were corporate governance issues coming up in individual stocks. These problems were contained not only to stocks like PC Jewellers, Infibeam and Vakrangee but also to darlings of stock markets like Infosys, ICICI Bank, Yes Bank, DHFL among others. However, mid cap and small cap category of stocks were the worst hit, with investors pulling no stops while selling off their holdings in these stocks. Bad governance in a few stocks definitely destroyed the value of majority of stocks in this category.

4. Additional Surveillance Measures (ASM): SEBI introduced ASM in a bid to safeguard investors from excessive volatility in individual stocks. Under ASM, stock exchanges released a list of 109 stocks on 31st May’18 on which additional trading curbs were imposed. Liquidity in stocks which were put under ASM plunged drastically along with the decline in share prices. Stocks under ASM are subject to 100% upfront margins and 5% circuit limits, these curbs prompted traders to sell their holdings in these stocks due to immediate margin requirement triggering crash in stock prices.
  
5. ILFS Default & Liquidity Crisis: NBFCs raise short-term loans of between three and six months duration, using Commercial Papers (CPs). On the other hand, the businesses they lend to (home loans, commercial purpose loans, vehicle loans etc.) are long-term ones. This is referred to as asset-liability mismatch. To maintain their funding, NBFCs must keep issuing CPs at regular intervals and roll over earlier loans. However since the IL&FS crisis erupted, banks have been averse to lending to the NBFC sector, which has put them in a tight spot. Amidst all this, there were series of downgrades of NBFCs by credit rating agencies which further dented market sentiments.

6. Companies with Pledged Shares: The fear around companies with high pledged holding began after promoter of Essel Group failed to bring fresh shares as collateral to make up for the slump in prices of the group stocks. Later, the shares of ADAG companies, Suzlon, Jain Irrigation, Cox & Kings witnessed heavy selling as some lenders dumped their stock in open market due to unbearable debt and default on payments. Institutions wish to stay away from companies where the promoter has huge borrowings against the shares as there is fear that these companies are in a vulnerable position. Banking & financial stocks like Yes Bank and DHFL continue to hit new lows on fears of default and contagion risks.

Coming back to the current situation, the BSE small cap index is down by 31from its peak made in January 2018. The liquidity crisis in NBFCs, the DHFL and IL&FS defaults, series of rating downgrades by rating agencies, lenders dumping stocks of debt laden companies have taken the steam out of small caps. Fear and misinformation has shattered investor’s confidence and hence quality businesses are back to cheap valuations.


Budget 2019
To ease NFBC liquidity crisis and get economy growth back on track, Government is in process of taking all possible corrective measures. In Budget 2019, Finance Minister Nirmala Sitharaman announced that the government will provide a one-time six months partial credit guarantee to public sector banks to buy high-rated pooled assets worth Rs 1 lakh crore from NBFCs. This will provide the much-needed liquidity to NBFCs, they can thus liquidate their portfolio and meet their liabilities in a timely manner.

Moreover, below are the few announcements made in the budget which certainly qualify as steps in the right direction.
  • Recapitalisation of banks to the tune of INR 70,000 crores
  • The Credit Guarantee Enhancement Corporation to be set up in FY20
  • The action plan put in place to deepen the market for long-term bonds 
  • 2% interest subvention for all GST registered MSMEs
The focused impetus for sustainable job creation via targeted investment in infrastructure will have a ripple effect on secondary and tertiary employment. Overall, it was an uneventful but visionary budget marked with a long-term 10-year plan while retaining focus on immediate priorities.

The Bulls, The Bears & The Farm

Bull and Bear of Stock Market
A bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook”

A bear market is when the economy is bad, recession is looming and stock prices are falling. Bear markets make it tough for investors to pick profitable stocks. One solution to this is to make money when stocks are falling using a technique called short selling. Another strategy is to wait on the sidelines until you feel that the bear market is nearing its end, only starting to buy in anticipation of a bull market. If a person is pessimistic, believing that stocks are going to drop, he or she is called a "bear" and said to have a "bearish outlook".

The Other Animals on the Farm - Chickens and Pigs

Chickens are afraid to lose anything. Their fear overrides their need to make profits and so they turn only to money-market securities or get out of the markets entirely. While it's true that you should never invest in something over which you lose sleep, you are also guaranteed never to see any return if you avoid the market completely and never take any risk.

Pigs are high-risk investors looking for the one big score in a short period of time. Pigs buy on hot tips and invest in companies without doing their due diligence. They get impatient, greedy, and emotional about their investments, and they are drawn to high-risk securities without putting in the proper time or money to learn about these investment vehicles. Professional traders love the pigs, as it's often from their losses that the bulls and bears reap their profits.

What Type of Investor Will You Be?

There are plenty of different investment styles and strategies out there. Even though the bulls and bears are constantly at odds, they can both make money with the changing cycles in the market. Even the chickens see some returns, though not a lot. The one loser in this picture is the pig. Make sure you don't get into the market before you are ready. Be a long term discipline investor and continue to invest systematically during bull as well as bear phase of market cycle and never invest in anything you do not understand.

Many retail investors started investing in small and mid cap stocks during bull phase of broader market (2014 – 2017) and getting worried now about their investments looking at losses they are bearing due to carnage in stock prices during ongoing bear phase (2018 – 2019). Those who believe they made a mistake by investing in small and mid caps and think to exit booking losses due to fear of further loosing hard earned money, do think about this old stock market saying: "Bulls make money, bears make money, but pigs just get slaughtered!"

We strongly believe that ongoing bear phase in broader market is a great time to buy good quality small and mid size companies that have been beaten down. No one is talking about small caps these days and that’s the strong reason why we should invest in this segment. It’s wise to be greedy when there is fear surrounding small and mid caps. This is not the first time small caps have fallen out of favour and then gone on to recover smartly.

BSE Small Cap Index went up by 69% in 2014 and during this year numerous small and mid cap stocks turned multibagger delivering mind boggling returns. Scenario was similar in 2017 when BSE Small Cap Index rallied by 58%, later broader market went into bear grip with significant sell off in many small and mid caps due to expensive valuations and series of negatives developments as pointed out earlier.

The  correction has given investors an opportunity to sieve through and find good quality stocks which are backed by strong balance-sheet and robust cash flow. The broad underperformance of the small and mid-caps seems to be overdone and interesting bottom-up opportunities are now available in this space across sectors. Earnings revival could also set the ball rolling in terms of re-rating these categories of stocks.

Under this report, while looking at long term charts of the companies with good businesses, you will realise that investors who entered in market by investing in small and mid caps during last 2 to 3 years have pain in their portfolio however those who invested in bad phase of market in 2011 - 2013 like that of today are still holding plenty of multibaggers in their portfolio. That is why its important to invest in equities keeping a real long term view. In fact, during turbulent times, we must increase investments / equity allocation in small / mid size companies which have good business fundamentals to get rewarded in big way in long run.

Stay Invested & Keep Investing for Real Long Term. Bcoz "If you want your Money to Grow, Equities is the only Way to Go"

We are pleased to inform you that you can grab discount upto 30% and valuable freebies on our subscription services under Saral Gyan 9th Anniversary Offer. We suggest our members to consider current situation (post severe correction in small & mid caps over last 18 months) as a buying opportunity and invest in high quality small and mid cap stocks.

Discounts & valuable freebies which make our 9th Anniversary special for all our readers are as under:

1. Maximum discount up to 30% on combo pack subscriptions
2. Hidden Gems Flash Back Report - Released on 30th April 19
3. Value Picks Flash Back Report - To be released in Aug'19
4. 5 Stocks - Potential 5-Baggers in 5 Years Report Update - To be released in Jul'19
5. Existing Portfolio Health Check Up under Wealth-Builder subscription 
6. Saral Gyan eBook - "How to Grow your Savings?" worth Rs. 599 for Free.

Below table indicates subscription services and discounted prices valid up to 31st July'19.
Saral Gyan 9th Anniversary Offer 
SARAL GYAN
SUBSCRIPTION SERVICE
9TH ANNIVERSARY OFFER
DISCOUNTED PRICE
PAY ONLINE 
CARD / NET BANKING 
Hidden GemsRs. 10,000 9,000
Value PicksRs. 6,000 5,400
Wealth-BuilderRs. 20,000 18,000
Combo 1: HG + VP + WB + 15%Rs. 40,000 28,000
Combo 2: HG + VP + 15%Rs. 20,000 15,000
Combo 3: HG + VPRs. 16,000 13,000
Combo 4: HG + 15%Rs. 14,000 11,500
Combo 5: VP + 15%Rs. 10,000 8,500

Simply choose the subscription service / combo pack you would like to opt and click on SUBSCRIBE! link in above table to make online payment using your debit / credit card or net banking facility. In case if you are not comfortable in making online payment, click here to know about our other payment options and bank details.

Click here to know more about Saral Gyan 9th Anniversary Offer.

Do write to us in case of any queries, we will be delighted to assist you!

Regards, 
Team - Saral Gyan

Monday, July 15, 2019

Wealth-Builder - CAGR of 21.1% Vs Sensex CAGR of 11.5%

Dear Reader,

We continue to remain invested in high quality small and mid cap companies with strong fundamentals and recently increased allocation in these companies considering significant fall in stock prices since Jan 2018. We believe severe correction in broader markets with significant fall in stock prices of small and mid caps in last 18 months is giving a wonderful opportunity to long term investors to build a diversified portfolio by investing in good small and mid size companies backed by strong fundamentals at much lower prices. We expect small and mid caps stocks with strong fundamentals will outperform going forward considering reasonable valuations, favourable macros, revival in growth in coming quarters and higher spending of middle class with rising disposable income.

Below are some of the major reasons of severe fall in stocks prices of small & mid cap stocks since beginning of 2018:

Reasons for fall in stock prices of Small & Mid Caps

With fall in stock prices in broader market during last 18 months, small and mid caps valuations turned attractive giving investment opportunity to long term investors. In fact, many good companies are available at dirt cheap valuations considering the earning growth these companies are expected to deliver over next 2 years. This is not the time to sell but to accumulate good companies available at discounted valuations. As mentioned earlier, bad sentiments do not last for ever, its time for long term investors (2-3 years) to start accumulating good quality stocks which after a long time are becoming available at attractive valuations.

High quality companies reporting 20-30% + annualized growth can deliver exceptional returns for the shareholders in long termIn case you have not yet started building a portfolio of high quality and high growth stocks for long term wealth creation, you can initiate your investments now. Below is the Wealth-Builder portfolio allocation and performance update for your reference.
Wealth-Builder Portfolio Performance Update
We believe, investing in Wealth-Builder portfolio with regular portfolio review from our end can help you achieve market beating and very good returns over a longer term and help you take care of yourself and your family needs, which ultimately lead to a healthy and wealthy life after retirement.
Since inception, our Wealth-Builder portfolio has outperformed Nifty and Sensex by wide margin delivering CAGR of 21.1% where as Sensex and Nifty have delivered CAGR of 11.5% and 11.3% respectively during the same period. Since 1st Jan 2013, Nifty has given returns of 100.2%, Sensex returns is 103.5% where as our Wealth-Builder portfolio has given returns of 241.4% to our members.

We continue to hold high growth companies with robust fundamentals as we believe these companies are available at reasonable valuations, registering good growth every quarter and doing all the right things to continue delivering robust top line and bottom line with strong operating margins.

There were few laggards also which have not performed up to our expectations and we exited these stocks and allocated the available funds to other good investment opportunities as a continuous process to ensure that Wealth-Builder portfolio continue to outperforms major indices by wide margin. 

Note: Wealth-Builder portfolio update - July 2019 will be released by this weekend and we will share the same with our Wealth-Builder members.


Wealth-Builder is our offline portfolio management service. Using Wealth-Builder, you can manage your portfolio like a professional.

1. You Plant – You will manage your money at your own. Using your own Dmat account, you will purchase and sell shares at right point of time.

2. We Nurture – We will guide you with detailed report suggesting which stock to buy, at what price to buy and of course how much to buy, when to sell and how much to sell. Based on our recommendations, you will create and modify your portfolio to maximize your returns on your investments over a period of time.

3. You Harvest – It’s a fact that equities can give you maximum returns compared to any other asset class if invested with a long term horizon (3 to 5 years and above). Investing in fundamentally strong small and mid cap companies ensures that you keep harvesting your money in form of regular and higher dividends year after year along with capital appreciation.

Below are the unique advantage and benefits of Wealth-Builder over conventional PMS and Mutual Fund:

1. You manage your money at your own without giving it to mutual fund or PMS with benefit of any time access to your portfolio.

2. You will not be charged any asset management fee, exit / entry load, administration charges. Only one time nominal annual subscription cost will be charged.

3. Wealth Builder ensures capital protection; your portfolio will not be over churned to earn higher brokerage like many brokerage houses.

4. Exposure to our well researched stocks - Hidden Gems and Value Picks.

5. Limited transactions – once or twice in a month, you can manage your portfolio giving only 30 – 60 minutes in a month without affecting your busy schedule.

Wealth-Builder ensures giving better returns compared to major indices like Sensex or Nifty in long run. We firmly believe that 2019 is offering one of the best opportunity to long term investors to invest in good quality small and mid caps at rock bottom valuations.

Wealth-Builder subscribers need to replicate our recommended portfolio in exact proportion. For ex: If we recommend to invest Rs 50,000 in “x” company with portfolio allocation of 5% in Rs. 10 lakh portfolio, subscriber starting his portfolio with Rs. 2 lakh need to invest Rs. 10,000 in “x” company with similar portfolio allocation i.e. 5%. On monthly basis, we review Wealth-Builder portfolio and update our members in terms of any changes in allocation or exit / entries in stocks based on fundamental analysis and recent developments in these companies.

Start managing your equity portfolio like a professional, subscribe to Wealth-Builder by paying nominal annual fee of Rs.20,000 18,000 for entire year availing 10% discount under ongoing 9th Anniversary offer. Click here to subscribe to Wealth-Builder online.

Grab discount upto 30% and valuable freebies on our subscription services under Saral Gyan 9th Anniversary Offer. We suggest our members to consider current situation (post severe correction in small & mid caps over last 18 months) as a buying opportunity and invest in high quality small and mid cap stocks.

Discounts & valuable freebies which make our 9th Anniversary special for all our readers are as under:

1. Maximum discount up to 30% on combo pack subscriptions
2. Hidden Gems Flash Back Report - Released on 30th April 19
3. Value Picks Flash Back Report - To be released in Aug'19
4. 5 Stocks - Potential 5-Baggers in 5 Years Report Update - To be released in Jul'19
5. Existing Portfolio Health Check Up under Wealth-Builder subscription 
6. Saral Gyan eBook - "How to Grow your Savings?" worth Rs. 599 for Free.

Below table indicates subscription services and discounted prices valid up to 31st July'19.
Saral Gyan 9th Anniversary Offer 
SARAL GYAN
SUBSCRIPTION SERVICE
9TH ANNIVERSARY OFFER
DISCOUNTED PRICE
PAY ONLINE 
CARD / NET BANKING 
Hidden GemsRs. 10,000 9,000
Value PicksRs. 6,000 5,400
Wealth-BuilderRs. 20,000 18,000
Combo 1: HG + VP + WB + 15%Rs. 40,000 28,000
Combo 2: HG + VP + 15%Rs. 20,000 15,000
Combo 3: HG + VPRs. 16,000 13,000
Combo 4: HG + 15%Rs. 14,000 11,500
Combo 5: VP + 15%Rs. 10,000 8,500

Click here to know more about Saral Gyan 9th Anniversary Offer.

Simply choose the subscription service / combo pack you would like to opt and click on SUBSCRIBE! link in above table to make online payment using your debit / credit card or net banking facility. In case if you are not comfortable in subscribing online, you can make the payment through cheque / cash deposit / NEFT transfer in any of our bank and writing back to us sharing transaction details. Click here for bank details.
Wish you happy & safe Investing.

Regards,
Team - Saral Gyan