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New investors who invested in the year 2020 - 2021 thinking that making money from stock market is very easy might have experienced the harsh reality looking at their losses in the year 2022, which further widened in the year 2023 with recent crash in stock prices of Adani group stocks. Since the equity market is volatile, it is advisable to invest for the medium to long term. Over last 18 months, many small and mid caps are down by 30% to 80% from their peak of 2021. Hence, its advisable to invest in equities keeping a real long term view and not just 1 to 2 years.
In a time frame of 5 years and beyond, even despite the volatility, markets tend to give an above average return. For example, Sensex has given a CAGR of 17% over the past 5 years which means investing for the long term is a gainful strategy.
It is often said that a consistent patient investor always wins in the long term. Warren Buffet rightly said that “The stock market is a device for transferring money from the impatient to the patient.”
We released our first issue of Nano Champs [Deeply Undervalued & Undiscovered Micro Caps] report on 09 Oct 2022. The objective of Nano Champs is to achieve 10X returns in a period of 6 years (6Y-10X). Under this service, we have researched on micro-sized companies with market capital of less 120 crores and put our efforts to identify the companies which are not only deeply undervalued but also have the potential to grow at faster pace.
In this report, for each Nano Champs stock, we have covered information related to:
i) Company's Business at a Glance (Important data points)
ii) Company's Background
iii) Financial Performance
iv) Investment Rationale
v) Recommendation & Buying Strategy
Below is the performance update (as on date) of 10 Nano Champs stocks released on 09 Oct 2022.
As Dec'22 quarter results are declared by most of these companies, we will release update on these 10 Nano Champs soon.
NANO CHAMPS - STOCK SELECTION PARAMETERS:
i) QUALITATIVE PARAMETERS:
- Quality of Management - able & honest with good integrity
- Promoter holding - should not be less than 45%
- Pledging of shares by Promoters - should be nil
- Demand & supply gap in the Industry - sustainability of business
- Growth drivers - scalable business / catalyst in business
ii) QUANTITATIVE PARAMETERS:
- Cash Flows - Positive operating cash flows
- Leverage - Debt to equity ratio should be less than 1.5
- Capacity expansion - Capex and financing through equity / debt
- Visibility of future growth - Expected revenue and profitability
- Management of Accounts - Any change in accounting policy
iii) VALUATION PARAMETERS:
- Business valuations should be below its intrinsic value
- Market capital to Revenue / Sales - should be less than 1
- Relatively cheap business - compared to peers and overall market
PAST PERFORMANCE (MARKET CAP < 200 CR):
S.NO | COMPANY | RELEASE DATE | MARKET CAP | X-BAGGER (IN 6 YRS) | % CAGR | OLD REPORT |
1 | CAMLIN FINE | 27 MAR11 | 56 CR | 21-BAGGER | 66% | |
2 | WIM PLAST | 30 AUG11 | 123 CR | 17-BAGGER | 60% | |
3 | KOVAI MEDI | 27 OCT11 | 126 CR | 13-BAGGER | 53% | |
4 | ROTO PUMPS | 05 AUG12 | 32 CR | 9-BAGGER | 44% | |
5 | ACRYSIL INDIA | 25 NOV12 | 51 CR | 8-BAGGER | 41% | |
6 | TCPL PACK | 31 JAN13 | 65 CR | 11-BAGGER | 49% | |
7 | DYNEMIC PRO | 29 JUL14 | 52 CR | 6-BAGGER | 35% | |
8 | INDO BORAX | 10 APR16 | 100 CR | 7-BAGGER | 38% | |
9 | STYLAM IND. | 08 MAY16 | 159 CR | 13-BAGGER | 53% | |
10 | SAHYADRI IND | 30 AUG17 | 166 CR | 5-BAGGER | 36% |
These companies were covered under Hidden Gems service over last 10 years, all above companies market capital was less than 200 crores at the time of recommendation. Over last 7 to 11 years, companies like Acrysil (51 Cr), Camlin Fine Sciences (56 Cr), Kovai Medical (126 Cr), TCPL Packaging (65 Cr), Roto Pumps (32 Cr) etc. have multiplied investment by 20X to 50X. You can click on the download link to access these reports.
Ongoing market correction is giving good opportunity to long term investors to start accumulating good quality companies at lower levels. Do not get panic if you recently started investing, riding through difficult times in equities is most important step towards long term wealth creation. In fact, we need to be greedy when others are fearful. If you wish to receive our first issue of Nano Champs you can subscribe to the service.
Click here to know more about Nano Champs service.
Regards,
Team - Saral Gyan
