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Showing posts with label Value Picks. Show all posts
Showing posts with label Value Picks. Show all posts

Saturday, February 11, 2023

Kabra Extrusion Technik - Our 9-Bagger Stock in 4 Years

Dear Reader,

We are pleased to inform you that our Hidden Gem stock of Oct'18 - Kabra Extrusion Ltd (BSE Code: 524109, NSE Code: KABRAEXTRU) is a 9-Bagger stock for our Hidden Gems members in period of 4 years. 

Our team suggested Buy on Kabra Extrusion Technik Ltd as Hidden Gem stock at price of Rs. 72.15 on 30 Dec 2018. Kabra Extrusion Technik stock price made all time high of Rs. 645 recently and closed at Rs. 620 on Friday giving absolute returns of 760% i.e. almost 9 times returns in a period of 4 years against double digit returns of Sensex & Nifty in the same period.

We picked Kabra Extrusion Technik as Hidden Gem stock when the company's market capital was 230 crores, today its almost a 2,000 crore market cap company.

Below is the summary of Kabra Extrusion Technik Ltd shared by our team under Hidden Gem stock - Oct'18 report released on 30 Dec 2018.

1. Company  Background (As on 30 Dec 2018)

Kabra Extrusion Technik Ltd
Kabra Extrustion technik Ltd. is the flagship company of Kolsite group and one of the largest players in the plastic extrusion machinery known for its innovative offerings. The company specializes in providing plastic extrusion machinery for manufacturing pipes and films. It has two manufacturing locations in Daman. The plastic extrusion machinery industry’s prospects appear positive in the long term. 

The Kolsite group is known for being the pioneer of various technologically advanced plastic extrusion solutions. Kolsite group under its roof has 4 flagship companies dealing in different avenues like extrusion machinery, master batches, secondary packaging.

Kolsite group of companies: 

▪ Kabra Extrusion technik Limited (KET) 
▪ Plastiblends India Limited (PBI) 
▪ Maharashtra Plastic & Industries Limited (MPI) 
▪ Kolsite Corporation LLP – Agency Division (KCLLP) 

Kolsite Group commenced its operations in the year 1962 at a small factory in Tardeo that had a total area of 800 square feet. Mr. SV Kabra left his traditional business and ventured into the plastics Industry. In 1962, the industry was at a very nascent stage, and he decided venture into processing and while processing he faced various issues with the machinery which eventually encouraged him to manufacture machinery for plastic extrusion. 

The group entered into joint ventures with the Global players of this field to soon become a leader in Plastic Extrusion Machinery in India. Since then, the company is known for being the pioneers of various technologically advanced plastic extrusion plants. The group has completed 55 years of its existence.

The company has global presence in ~90 countries. Kabra Extrusion technik has one of the largest sales & services network in India and equally efficient agencies in South Africa, Turkey, Middle East, South East Asia & Latin America. This helps the company to cater broader spectrum of clients and enhance its capabilities as a manufacturing company. 

Kabra Extrusion technik has 2 state-of-the manufacturing facilities with a combined area of about 83820 sq. m. These facilities consist of Administration Buildings, Govt. recognised in-house R & D Unit, Quality Testing Units, Machine Tool Equipment & Paint Shop. The company has one of the largest R & D team in the Plastics Machinery Industry with more than 45 dedicated engineers working in different areas of processing, manufacturing, application development, design, controls and automation.

Mr. SV Kabra is the Chairman and founder of the Kolsite Group of companies and has been the main driving force behind its growth over the last 54 years. In 2013, he was awarded with the Outstanding Achievement Award at Vinyl India 2013 conference for his pioneer work in the domestic plastic industry. He has been on the management & executive councils of many reputed plastics organizations in India. SV Kabra has done BA in Economics (Honours) from Mumbai University. 

Mr. SN Kabra is the co-founder of the Kolsite Group and Vice-Chairman and Managing Director of the company. He holds a degree in Mechanical Engineering and has strong techno-commercial experience. Since 1960s, he has been instrumental in defining company's strategies, business goals and overall development initiatives.

Global Plastic Industry Growth Outlook 

The global plastics industry is witnessing continuous shift of manufacturing bases to lowcost countries specifically India. This coupled with rise in the number of new manufacturing establishments are building India’s image as a prime driver of growth in the plastics industry.

The plastic pipe industry has registered a 15% growth and is likely to maintain the same growth rate in coming years. Within the industry, the organized plastic pipe segment is estimated at around 60%, and is likely to register even higher growth driven by shift from unorganized to organized segment and government focus on agriculture, micro-irrigation, low cost housing projects and pick up in infrastructure growth.

Moreover, packaging sector is one of the major consumers of plastics followed by agriculture and infrastructure. Flexible packaging has been the fastest growing sectors in the packaging industry over the past 10 years driven by changing lifestyle patterns of growing middle class and focus on convenience and sustainability. Further, this segment is expected to grow exponentially going ahead. 

Flexible packaging is the most economical format of packaging, preserving and distributing goods, beverages, pharmaceuticals and products demanding extended shelf life. Management highlighted that the global market for flexible packaging is expected to grow at an annual average rate of 3.4% during the 2015-2020 (over 20% in case of India) period reaching USD 248 million. Food packaging occupies over 70% of the world consumer flexible packaging market and is growing by 4.0% on average in volume terms.

Currently, while North America dominates the global flexible packaging market, however Asia Pacific is expected to catch up owing to increasing disposable incomes and rising demand and changing packaging trends in the end user segment. Significant increase in demand for beverages, packaged foods, pharmaceuticals and personal care products are the growth drivers in India and neighbouring countries.

2. Recent Developments (As on 30 Dec 2018)

i) Promoters increased stake in the company through open market purchase – Dec 2018

During Sept’18 quarter, promoters have increased their stake in the company by 0.4%. Promoters continue to increase their stake in Dec’18 quarter also through open market purchase. Refer to pdf file for  the details of transactions made by promoters since Aug’18.

ii) Kabra Extrusion technik & Battenfeld Cincinnati extend cooperation – Nov 2018

Kabra Extrusion technik Limited & Battenfeld Cincinnati, Germany (world’s leading extrusion machinery manufacturer) have announced further extension of their cooperation beyond 2026.

The two companies have been in partnership since 1983 and the existing technology agreement, valid until the year 2026 has been extended further by enlarging the scope and making it more comprehensive and inclusive. Gerold Schley – CEO and Dr. Henning Stieglitz – CTO of Battenfeld Cincinnati along with S V Kabra - Chairman and Anand Kabra Managing Director of Kabra Extrusion technik Ltd were in discussion for the last few months, on the ways to create a platform and understanding between the two companies, so that the cooperation extends beyond 2026 and is mutually beneficial to both the companies.

iii) Kabra Extrusiontechnik enters a strategic partnership with Unicor GmbH – Oct 2016

Kabra Extrusion technik Limited & Unicor GmbH entered into a strategic partnership to provide a fully integrated extrusion solutions for the Indian & global plastics corrugated pipe industry.

The collaboration plans to make corrugated pipe machines in India using Unicor expertise with Kabra Extrusion technik manufacturing capabilities to offer value for money solutions in India as well as other strategic markets. 

Unicor has unique expertise in providing customized solutions for customers. The company has been in business for over 30 years and enjoys Global leadership status with strong customer base in more than 50 countries. Unicor’s range of products include various types of machines for all applications – electrical, medical, automotive, water, sewer pipes etc. with pipe diameters from 3 mm until 2400 mm. Unicor’s products are extremely versatile, aimed at providing higher productivity and better energy efficiency. 

iv) Kabra Extrusion technik enters a joint venture with Extron Mecanor – Oct 2016

Kabra Extrusion technik Limited & Extron Mecanor inked a joint venture to provide a One Stop Shop approach to extrusion solutions for the global plastics processing industry.

Extron Mecanor from Finland is a pioneer in pipe socketing & belling solutions. Extron-Mecanor has unique expertise in providing customized solutions for customers. It has been in business for over 35 years and making sales in nearly 50 countries. Besides high quality machinery, they provide guaranteed after sales service and have expertise in working out the best solutions. Extron-Mecanor’s product range includes solutions for pipe belling and socketing, Pipe, rain gutter, profile packaging, and seal ring inserting.

3. Financial Performance (As on 30 Dec 2018)

Kabra Extrusion technik standalone net profit rose 663.87% in the Sept 2018 quarter 

Net profit of Kabra Extrusion technik rose 663.87% to Rs 9.09 crore in the quarter ended September 2018 as against Rs 1.19 crore during the previous quarter ended September 2017. Sales declined 9.94% to Rs 46.56 crore in the quarter ended September 2018 as against Rs 51.73 crore during the previous quarter ended September 2017. 

Kabra Extrusion technik reports standalone net loss of Rs 2.36 crore in the June 2018 quarter

Net Loss of Kabra Extrusion technik reported to Rs 2.36 crore in the quarter ended June 2018 as against net loss of Rs 2.33 crore during the previous quarter ended June 2017. Sales declined 8.05% to Rs 43.73 crore in the quarter ended June 2018 as against Rs 47.56 crore during the previous quarter ended June 2017.

Kabra Extrusion Technik Financial Performance

As per our estimates, the company will perform better over next 2 years with increase in Government spending with higher focus towards agriculture and infrastructure sector to boost rural growth

4. Peer Group Comparison (As on 30 Dec 2018)

Kabra Extrusion Technik Competitors

5. Key Concerns / Risks (As on 30 Dec 2018)

i) Domestic extrusion machinery segment is highly fragmented, characterized by presence of various small and micro players which limits pricing power. Therefore, the company is exposed to competition from domestic players and imported extrusion machinery. Also, the segment is technology-intensive and is susceptible to the risk of technological obsolescence. However, the same is mitigated partly through company’s technological tie-ups and collaboration with international players such as Battenfeld-cincinnati (Germany), Unicore Gmbh, Extron Mecanor, Penta Srl Italy. 

ii) The demand for extrusion machinery is linked to the capital expenditure (capex) programme of plastic products manufacturers. The performance of the company depends on the growth and demand in the end user industries i.e. plastic pipes, irrigation and agriculture pipes and flexible packaging and their capex cycle. Any slowdown or delay in the capex of these industries can have negative implications on the company’s business.

6. Saral Gyan Recommendation (As on 30 Dec 2018)

i) The plastic pipe industry has registered growth of ~15 percent and is likely to maintain the same growth rate in coming years. Within the industry, the organized plastic pipe segment is likely to register even higher growth driven by shift from unorganized to organized segment. Moreover, government focus on agriculture, micro-irrigation, low cost housing projects and pick up in infrastructure growth will augur well for overall demand of plastic pipes. Moreover, packaging film industry is also expected to grow at a healthy rate, driven by food industry, personal care and pharma products. Kabra Extrusion technik being the largest player in the plastic extrusion machinery with diversified product portfolio backed by strong management team is expected to be the direct beneficiary. 

ii) The company continued its focus on marketing activities and strengthening its agent network by participating in various trade fairs and exhibitions. It has made significant inroads in many new markets. During FY17-18, the company participated in exhibitions like PlastIndia, Plast Eurasia, Plastic & Rubber – Indonesia, Plast Alger, etc. to showcase its product portfolio to strengthen its geographical base as well as clientele. The company demonstrated live and launched Smart Faktory – A digital extrusion platform at PlastIndia show - 2018. Smart Faktory is a value adding part of production process, generates real customer benefits by exploring new opportunities from smart data to ensure real time control & decision for optimisation of product as well as operations.

iii) The company has also initiated effective steps to widen its products portfolio by entering into joint venture with M/s. Penta SRL, Italy. Joint venture company, Penta Auto Feeding India Ltd. has already started manufacturing and supply of auto feeding systems. The company has also undertaken manufacturing of belling machines through its subsidiary, Kabra Mecanor Belling Technik Pvt. Ltd., and manufacture corrugators with technology from Unicor GmbH, Germany. The company has also imported technology to manufacture flat-drip laterals extrusion lines from Metzerplas Industries Ltd., Israel. 

iv) The company has registered sales CAGR of 8.3%, profit CAGR of 18.9% with ROE of 11.3% over last 5 years. We expect company performance to improve going forward with increase in capex in micro-irrigation, low cost housing sector and pick up in infrastructure growth.
Kabra Extrusion Technik Return Ratios
v) Kabra Extrusion technik has ventured into corrugated pipes with its collaboration with Unicor. Corrugated pipe is one of the fastest growing segments in the pipe industry considering its higher acceptance over cement pipes in sewage and drainage applications. The company has also introduced other new products like pipe extrusion lines for foam core pipes, co-rotating twin screw extruders and compounding machines and lines for lead free compounds and processing applications. Expansion of the product range across the value chain is expected to augur well for the company in medium to long term. 

vi) Kabra Extrusion technik through constant R&D and Innovation has introduced several products and solutions for the first time in the plastic extrusion industry since 1970. Moreover, the company is having global collaborations and technical tie ups with the leading companies in plastic industry, as Battenfeld-Cincinnati (GermanyAustria-USA), Penta SRL (Italy), Greiner (Austria), Unicor (Germany), Extron Mecanor (Finland). Long term partnerships with global suppliers for access to latest technology and to increase product offerings will support company to stay ahead of the competition. This is critical as technological obsolescence could be a key risk in the industry. 

vii) The company is serving business requirement of many reputed players in the plastic pipe and flexible packaging industry. Companies like Supreme Industries, Finolex Industries, Astral Poly Technik, Uflex, Ashirwad Pipes, Prince Pipes Systems etc are clients of Kabra Extrusion technik. As end industry grows with rise in demand and shift of business from unorganized to organized players, Kabra Extrusion technik with its diversified client base and strong execution track record is expected to grow as well. 

viii) As on Sept’18, promoter’s shareholding in the company is 57.09% without pledging of any shares. Promoters have increased their shareholding by 0.4% over last 6 months, increase in shareholding by promoters is positive indicating their confidence in future growth prospects of the company. Institutional shareholding in the company is low at 1.19%.
Kabra Extrusion Technik Promoter Shareholding
ix) The company is paying regular dividend to its shareholders. It paid dividend of Rs. 2 per share for FY2017-18. At current price, dividend yield is 2.78 percent. Moreover, the company has rewarded shareholders by issuing bonus share in the ratio of 1:1 in the year 2010. 

x) As per our estimates, Kabra Extrusion technik Ltd can deliver net profit of Rs. 23.45 crores in FY 2019-20 with annualized EPS of Rs. 7.35. At current price of 72.15, stock is available at forward P/E multiple of 9.8X based on FY19-20 earnings. Company’s valuation looks attractive considering expected increase in its profitability with rise in Govt spending towards improvement in rural infrastructure with focus on low cost housing and sanitary facilities. 

xi) On equity of Rs. 15.95 crore, the estimated annualized EPS for FY 19-20 works out to Rs. 7.35 and the Book Value per share is Rs. 73.19. At current market price of Rs. 72.15, stock price to book value is 0.99.

Considering secular growth opportunity in the agriculture and infrastructure industry with government focus on micro-irrigation, low cost housing projects and infrastructure development, double digit growth expected in flexible packaging industry driven by rising demand of packaged food products, personal care products and pharmaceuticals, company’s strong track record in installation and after sales service of plastic extrusion machinery, rich product portfolio, experienced management team with back up of global collaborations with the leading companies in plastic industry and and a debt free balance sheet, Saral Gyan team recommends “Buy” on Kabra Extrusion technik Ltd at current market price of Rs. 72.15 for target of Rs. 145 over a period of 12 to 24 months. 

Buying Strategy: 

▪ 80% at current market price of Rs. 72.15 
▪ 20% at price range of Rs. 55 – 60 (in case of correction in stock price) 

Portfolio Allocation: 3% of your equity portfolio 

To Read / Download Saral Gyan Hidden Gem - Oct'18 Research Report - Click Here

Kabra Extrusion Technik Ltd is 1 out of those 65 multibagger stocks which have given returns in the range of more 200% to 9900% returns to our subscribers in period of 3 to 10 years. Team of equity analysts at Saral Gyan put lot of efforts & smart work to identify Hidden Gems (Unexplored Multibagger Small Cap Stocks) and Value Picks (Mid Caps with Plenty of Upside Potential) which not only grow your capital at a healthy rate but also ensures to guide you to make lump sum investments during bear phase of the market so that you make maximum out of your investments during bull phase of the market.

Also Read : Hidden Gems SIP Returns of 395% Vs Small Cap Index returns of 181%

Through Nano Champs, Hidden Gems and Value Picks, we are providing you opportunities to invest in micro, small / mid cap stocks today. Infosys, Pantaloon, Dabur, Glenmark were the small cap stocks in past and today are the well known companies falling under mid and large cap space.

The stocks we reveal through Nano Champs, Hidden Gems & Value Picks are companies that are either under-researched or not covered by other brokers and research firms. We keep on updating our subscribers on our past recommendations suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future growth outlook.

Time has shown that smart investors have made their fortune by investing in equities in long term. None other asset class can match giving you such extra ordinary returns. Yes, its important for you to invest in right set of companies at right price with medium to long term perspective. If you think to invest in stocks for period of 6 to 12 months, we suggest you to stay out of stock market because you are not investing, you are betting on volatility of stock market which could be risky.

Start building your equity portfolio by making educated investment decisions, subscribe to our Hidden Gems, Value Picks, Wealth-Builder, Nano Champs annual subscription services. Click here to know more about our services and discounts applicable on combo packs.

Do write to us at info@saralgyan.in in case of any queries, we will be delighted to assist you.

Regards,
Team - Saral Gyan

Our Services: Hidden Gems | Value Picks | 15% @ 90 DAYS | WEALTH-BUILDER

Posted by Saral Gyan at 11:00:00 PM
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Saturday, February 4, 2023

Investors queries raised on Adani Group Companies

Dear Member,

Most of the investors are busy looking at stock prices of Adani group companies these days. The recent crash in Adani Group stocks like Adani Enterprises, Adani Ports (these two are the Nifty 50 companies), Adani Green, Adani Total Gas etc collapsed by 60% and more over the last couple of weeks.


We continue to receive emails from our subscribers regarding any investment opportunities arising in Adani group companies post recent fall in stock prices.


Over the last 15 years of our investment journey, we have seen that many retail investors who have missed buying a particular company stock which has delivered strong returns like 20X - 50X or more in the last couple of years, try to add the stock thinking it's a great bargain. Example: Unitech (post 2009 stock market crash), ADAG Group Companies (2009 market crash and also post 2018 crash in stock prices) etc.


Retail investors (mostly those who have not witnessed or experienced the same thing in the past or do not look at business valuations) are not aware of how brutal the market could be from time to time making the mistake of investing in such companies. The investor's capital can be turned to zero also if the company is unable to service its debt or unable to pay the interest on time on its borrowings. So it's very important to evaluate a company looking at its business fundamentals and not just the fall in share price.


Despite the fact that we have seen how Adani Green stock price moved from Rs 50 to Rs 3,000 over last 4 years and other Adani group companies turning out to be 5X to 30X during the same time, we never ever recommended any of these stocks because we never had the conviction in these companies looking at business fundamentals and most importantly the valuations these companies were commanding in the past.


Adani Group Stocks - No Means No!


Now coming to the queries we received since the last few days on Adani Group stocks, we do not advise to invest in any of these companies as valuations are still not justified and overall risk is high considering excessive debt on books. In fact, there is a survival risk on companies like Adani Green which is highly leveraged and its listed bond in  crash in its bond price over the last one week.


Remember, it's not like that if a stock price fell by 50% or say 80% from its peak, it becomes attractive. If a particular company has taken excessive debt and is unable to pay to lenders, there is a solvency risk with the company. We have seen how the investors' capital has been turned to zero by investing in other big groups in the past. We have seen this happening with ADAG group companies, Future Group companies, Kingfisher Airlines, Lanco Infratech, Sintex Industries and many others.


We do not state that Adani Group will collapse like others, we do not want to say that at all. The group has high value assets and can manage the things well in future, this can also happen. But post FPO reversal (returning 20k crores back to investors) and the company's bond prices collapsing (as the company has raised funds from international markets), and various allegations on the Adani group which may further create hurdles for the company to liquidate its assets or to get new investors to reduce borrowings, the situation is not good. Moreover, valuations of most of the Adani Group companies are still very expensive. Either you look at debt levels, the PE multiple these companies are commanding, the price to book value etc, all these valuation parameters indicate that the business is still expensive. That is one of the reasons that total mutual funds has investment of merely 1 percent in the biggest group company i.e Adani Enterprise. LIC has majorly invested in it and is currently holding more than 4% stake which might have its own reasons, we do not want to comment on it.


Most importantly, there are plenty of other investment opportunities available in the market which do not have excessive debt on books, have good cash flows from operations, do not seek lot of capital for business expansion, have good growth outlook, so when there are various options available, why should we need to invest in the companies which involve higher risk.


We have recently released our Special Report - 5 Hidden Gems to Buy / Accumulate on 29th Jan 2023 and shared it with all our active Hidden Gems members, the detailed report will be released during this weekend. 


We will also release a similar report for our Value Picks service in Feb 2023. Click here to know more.


Worth Reading - Why Share Price is not Important while Buying Stocks?



Wish you happy & safe Investing!

Regards,
Team - Saral Gyan

Our Services: Hidden Gems | Value Picks | 15% @ 90 DAYS | WEALTH-BUILDER

Posted by Saral Gyan at 1:31:00 PM
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Tuesday, January 31, 2023

Special Report - 5 Hidden Gems to Buy is Released

Dear Member,

We have seen significant correction in broader market over last one year. While major indices - Sensex and Nifty are merely down by around 7% from their all time high, most of the small and mid caps which turned expensive in 2021 - 2022 have seen significant price correction over last 12 to 18 months. At current juncture, where large caps are fairly priced, small and mid caps segment offers good investment opportunities with plenty of stocks available at attractive to reasonable valuations with significant upside potential from current levels.

BSE Small Cap Index made all time high of 31,304 in Jan 2022 and later witnessed correction of -25.7% making low of 23,304 in Jun 2022. Currently, BSE Small Cap Index is at 27,600 i.e. down by around 12% from its peak of Jan 2022, where as many small cap stocks are down by 20% to 70% from their peak prices.

“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

Special Report - 5 Hidden Gems to Buy / Accumulate - Released on 29 Jan 2023

Post significant correction in small caps, we reviewed our past recommendations released under Hidden Gems of last 3 years and short listed 5 Hidden Gems stocks which offer good long term investment opportunity and have potential to give excellent returns on your investment during next 2 – 3 years. These stocks are covered in our Special Report - 5 Hidden Gems to Buy / Accumulate which we released on 29 Jan 2023.

While short listing 5 stocks under Hidden Gems, we evaluated each company on the basis of I-B-M-V-E-D parameters (Industry, Business, Management, Valuations, Earnings Growth & Debt Management) and rated every parameter using a rating scale – E,V,G,F,P (E=Excellent, V=Very Good, G=Good, F=Fair, P=Poor)

One of the important key to successful investing is to pick the right business at decent valuations. We finalized these 5 stocks with a long term view (2-3 years) and find them better over other Hidden Gems stocks in terms of valuations, earning visibility, debt management and integrity of promoters towards their business and interest of minority shareholders.

The 5 Hidden Gems stocks which we finalized have a market capital below 700 crores and seen a price correction between 20% to 60% from their peak (made is 2021 - 2022) without any major change in business fundamentals. We believe these stocks will outperform giving much better returns compared to broader indices in medium to long term. Our members can add these stocks in their portfolio with long term view (2 to 3 years at least). We suggest our members to start investing in these 5 Hidden Gems stocks with initial allocation of 1-2% and increase allocation gradually to 3-4% in staggered way in case stock prices of these companies falls by another 10% to 20% or more during ongoing market correction.
Important parameters which we looked into while finalizing stocks are as under:

1. Industry – Operating in Industry / sector which is expected to grow > 12% CAGR during next 3 years
2. Business – Leadership position in the business or one of its business segment in certain geography
3. Management – Prudent & trustworthy management keeping interest of minority share holders
4. Valuations – Reasonable / attractive valuations compared to peer group companies
5. Earnings – Consistent past performance & strong earning visibility with planned / recent expansion
6. Debt Management – Company is able to generate cash flows with low or reducing debt on books

If you wish to receive our Special Report - 5 Hidden Gems Stocks to Buy / Accumulate, you can subscribe to our Hidden Gems service. We will soon release another Special Report - 5 Value Picks Stocks to Buy / Accumulate in Feb 2023, you can subscribe to our Value Picks service, to receive the same.

If you have patience and want to add extra power in your portfolio, start investing some portion of your savings in fundamentally strong small and mid cap companies - Hidden Gems and Value Picks.

Moreover, if you have invested in stocks and believe that your investments are not performing well, subscribe to our Wealth-Builder service and get your portfolio reviewed by us. We will review fundamentals of the companies you are holding and guide you which stocks to hold and which to exit. We will also review your equity investments across sectors and companies to ensure that your portfolio allocation is right and outperforms major indices giving you better returns in medium to long term.

Start building your equity portfolio by making educated investment decisions, subscribe to our Hidden Gems, Value Picks, Wealth-Builder, Nano Champs annual subscription services.

SARAL GYAN
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Do write to us at info@saralgyan.in in case of any queries, we will be delighted to assist you.

Team - Saral Gyan

Our Services: Hidden Gems | Value Picks | 15% @ 90 DAYS | WEALTH-BUILDER

Posted by Saral Gyan at 6:34:00 PM
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Tuesday, January 17, 2023

Why Share Price is Not Important while Buying Stocks?

Dear Reader,

Why is a stock that cost Rs. 50 cheaper than another stock priced at Rs. 10?

This question opens a point that often confuses beginning investors: The per-share price of a stock is thought to convey some sense of value relative to other stocks. Nothing could be farther from the truth.

In fact, except for its use in some calculations, the per-share price is virtually meaningless to investors doing fundamental analysis. If you follow the technical analysis route to stock selection, it’s a different story, but for now let’s stick with fundamental analysis.

The reason we aren’t concerned with per-share price is that it is always changing and, since each company has a different number of outstanding shares, it doesn’t give us a clue to the value of the company. For that number, we need the market capitalization or market cap number.

The market cap is found by multiplying the per-share price times the total number of outstanding shares. This number gives you the total value of the company or stated another way, what it would cost to buy the whole company on the open market.

Here’s an example:

Stock price: Rs. 50

Outstanding shares: 5 Crores 

Market cap: Rs. 50 x 50,000,000 = Rs. 250 Crores

To prove our opening sentence, look at this second example:

Stock price: Rs. 10

Outstanding shares: 30 Crores 

Market cap: Rs. 10 x 300,000,000 = Rs. 300 Crores

This is how you should look at these two companies for evaluation purposes. Their per-share prices tell you nothing by themselves.

What does market cap tell you?

First, it gives you a starting place for evaluation. When looking a stock, it should always be in a context. How does the company compare to others of a similar size in the same industry?

The market generally classifies stocks into three categories:

• Small Cap under Rs. 1000 Crores 

• Mid Cap Rs. 1000 - Rs. 10000 Crores

• Large Cap above Rs. 10000 Crores

Some analysts use different numbers and others add micro caps and mega caps, however the important point is to understand the value of comparing companies of similar size during your evaluation. You will also use market cap in your screens when looking for a certain size company to balance your portfolio. Don’t get hung up on the per-share price of a stock when making your evaluation. It really doesn't tell you much. Focus instead on the market cap to get a picture of the company’s value in the market place.

IMP Note: This article is written to safe-guard our readers who are new to stock market, and make them understand about the actual facts. We keep on receiving mails from our readers regarding the price range of stocks we covers under our Hidden Gems or Value Picks service. The misconception in mind of new investors is regarding the stock price, majority of them believe that if stock price is less, like below Rs. 50 or even below Rs. 10, changes of stock price appreciation is very high and they can buy more no. of shares rather than buying a limited no. of shares of high priced stock. 

We have a subscriber base covering almost all major states in India and from 20 other countries across globe. During the last 10 years we have interacted with several investors seeking multibagger return from stocks. 

It was 17th Dec 2011, we recommended Cera Sanitaryware as Hidden Gem stock of the month at price of Rs 157, later it went up to Rs. 450 in period of 15 months. Based on strong quarterly numbers, attractive valuations and consistent performance, we recommended buy again in the range of 400-450 which was taken as a surprise by our members as we received several queries and feedback.

Below are some of the common queries of our subscribers which often lead them to opportunity losses.

1. How come a stock priced at Rs 450 can generate Multibagger returns?
2. Cera is almost 3 times moving from 170 to 450, why are you suggesting buy again?
3. Where is the room to generate Multibagger return from this level?
4. I don’t like such high-priced stock, please give me stocks priced below Rs. 100.
5. I want to buy more no. of shares, hence please recommend low price stocks below Rs. 10.

Cera Sanitaryware touched its life time high of Rs 6450 last year and currently trading around Rs. 5500, Cera is a 40-Bagger stock in 11 years from our initial recommendation and is a 12X stock from our reiterated buy at Rs. 450, which was not liked by our subscribers.

The story does not end here, there is a long way to go. Our suggested stocks is with a view-point of 1-3 years at least and not just 6-9 months. If fundamentals of the company are intact, we would not suggest our members to do profit booking or exit. Investors who stayed away just because of high price simply missed yet another opportunity. We held Cera for long term and suggested complete profit booking to our members in the stock around 3500 - 4000 levels in 2017.

There is a general misconception among the investors that high priced stocks can't generate multibagger returns. They often think that high-priced stocks are overvalued. In terms of valuation, a 50 rupees stock may not be cheaper than that of a 1000 rupees stock. There is no co-relation between the valuation and market price of a stock. To understand whether a company is small or large, you must look at market capital of the company and not at stock price. To judge valuation you must have to look at Price to earning ratio, Price to book ratio, Price to sales ratio etc.

Lets try to understand this with an example, Rajratan Global Wires share price was Rs. 54.77 on 30 Nov 2017 (stock split and bonus issue adjusted price, actual price was 639). Today the stock price is at Rs. 1225 giving absolute returns of 2137% i.e. more than 22 times within 5 years against double digit return of Sensex in the same period. 

We suggested Buy on Rajratan Global Wires at price of Rs. 639 under Hidden Gems service on 30 Nov 2017 and if any of our subscribers have not invested in the company thinking he/she can get only 15 shares by investing Rs. 10,000 has made a big mistake. Today those 15 shares have increased to 175 shares on account of bonus shares issued by the company in the ratio of 4:3 in 2019 and later stock split of 1 shares into 5 shares (face value of Rs. 10 to Rs 2 per share) in March 2022. And the current share price of Rs. 1225 is still very high for those who looks at low price stock. We advised partial profit booking in Rajratan Global Wires to our Hidden Gems recently at Rs. 1300, booking returns of 2270% (almost 24X) in period of 5 years.

There are many examples like above by which we can illustrate that there’s nothing called high price. Multibagger returns is not dependent on the current market price of a stock, so don't be afraid of investing in high priced stock. You need to look at fundamentals like future growth prospects of the company, PE ratio, PB ratio, ROE, ROCE, debt on books, cash reserves along with other parameters to judge a stock whether it is undervalued or overvalued. We agree with you that judging valuation is not an easy task. So, take expert’s advise when ever required.

Another misconception among investors is to buy more no. of shares. They often think that its better to buy more no. of shares of a low price scrip (ranging below Rs. 10 or say below Rs. 50) instead of buying less no. of shares of high priced stocks. They often think that low price stocks can generate multibagger return quickly. During last 5 years, we have reviewed existing portfolio of our members under our Wealth-Builder (an offline portfolio management service) subscription, we have noticed that many of their portfolio is filled with such low-priced stocks and most of those are in great loss because of poor fundamentals. You may think that a two rupees stock can easily generate multibagger returns even if it touch to Rs. 5 or 6. At the same time don’t forget that the same can even come down to Rs. 0 levels which can evaporate all your investment giving you 100% loss! In terms of valuation a two thousand rupees stock may not be expensive than that of a two rupees stock.

Lets try to understand this also with a simple example, Lanco Infratech was a well-known company from Infrastructure sector. At the beginning of 2010 the stock was around Rs 55. After 10 years, it was hovering at just Rs 1.30 and today its not operational any more. Those who purchased the stock during 2010 are in 100% loss! Rs. 1 lakh invested in Lanco Infratech in Jan 2010 was valued at merely Rs. 2,000 in 2020, a complete wealth-destroyer! Isn't it? Those who bought this stock at levels of Rs. 30 and later again at Rs. 10 or Rs. 5 to average out thinking that stock has came down from all time highs of Rs. 85 are still waiting to get their buying price back. There are many such stocks like Suzlon Energy, GMR Infra, GVK Power and Infrastructure etc which have continuously destroyed wealth of investors over a period of last 5 to 10 years.

We do not state that all low price stocks are wealth-destroyers, it all depends on the fundamentals of the company. So, do ensure that you check out the fundamentals and valuations while investing in stocks instead of looking at stock price. Please get out of the misconception that low priced stocks will fly high faster giving you extra-ordinary returns. Always remember that stock price is just a barometer, actual valuations of a company can be determined by its fundamentals.

If you wish to invest in fundamentally strong micro, small and mid cap companies which can give you far superior returns compared to major indices like Sensex or Nifty in long term and help you creating wealth, you can join our services like Hidden Gems, Value Picks & Wealth-Builder.

The stocks we reveal through Hidden Gems & Value Picks are companies that either under-researched or not covered by other stock brokers and research firms. We keep on updating our members on our past recommendation suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future outlook.

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 - Nano Champs, Hidden Gems and Value Picks are the micro, 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.

Please write to us at sales@saralgyan.in / info@saralgyan.in in case of any queries.

Regards,
Team - Saral Gyan

Our Services: Hidden Gems | Value Picks | 15% @ 90 DAYS | WEALTH-BUILDER

Posted by Saral Gyan at 7:24:00 AM
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Thursday, January 5, 2023

An Opportunity Missed Is An Opportunity Lost. Act Now!

Dear Reader,

Finally, time has come to say Goodbye to the new year celebrations with end of Merry Christmas - Happy New Year 2023 Offer,  our offer will close today at 11.59 PM. We are thankful to our readers for giving an overwhelming response to our offer by joining our services at best discounted prices and also grabbing valuable freebies. We will close our offer mid night today, if you are still thinking to join, Act Now!. Our ongoing offer will disappear from our website on 06th Jan 2023.

Since 2011, Saral Gyan team has published hundreds of articles providing insight to equity market and today cherish association of more than 40,000 readers. Articles published on our website received lot of appreciation as it helped our readers to make educated and smart investment decisions based on facts.

During past 12 years, we launched suitable services to help Investors to create wealth by investing in Indian stock market. Its appreciation and support of our readers that one of our most admired service - Hidden Gems ranks on top not only in performance but also on Google search engine. Try it out yourself by searching "Hidden Gems SIP" or "Unexplored Multibagger Small Caps" or "Best Hidden Gems Micro Caps" on Google, you will find our website www.saralgyan.in featuring on top in search results. Its your appreciation and word of mouth publicity which make our website featuring on 1st page in Google.

To celebrate the beginning of new year with right investment decisions at such an opportune time when broader market (small and mid caps) is down significantly compared to last year, we decided to pass on the maximum benefits to our readers by offering great savings and valuable freebies with Merry Christmas - Happy New Year 2023 Offer, we suggest our members to consider ongoing market correction as a buying opportunity and invest in high quality small and mid cap stocks.

Attractive discounts & valuable freebies which make our offer special for our readers are as under:

1. Discount up to 30% on combo pack subscription (valid up to 05 Jan'23 only)
2. Portfolio of 10 Small & Mid Cap Stocks for 2023 (Released on 1st Jan'23)
3. Special Report - 5 Hidden Gems to Buy / Accumulate (to be released in Jan 2023)
4. Special Report - 5 Value Picks to Buy / Accumulate (to be released in Feb 2023)
5. Existing Portfolio Health Check Up under Wealth-Builder subscription

Below table indicates subscription services and discounted prices valid till today, 05 Jan 2023.
 
SARAL GYAN
SUBSCRIPTION SERVICE
XMAS - NEW YEAR 2023 OFFER
ANNUAL SUBSCRIPTION PRICE
PAY VIA CARD
(3% CHARGES EXTRA)
Hidden GemsRs. 14,000 12,600 (10% OFF)
Value PicksRs. 8,000 7,200 (10% OFF)
15% @ 90 DaysRs. 5,000 (No Discount)
Wealth-BuilderRs. 28,000 25,200 (10% OFF)
Combo 1: HG + VP + WB + 15%Rs. 55,000 38,500 (30% OFF)
Combo 2: HG + VP + 15%Rs. 27,000 21,500 (20% OFF)
Combo 3: HG + VPRs. 22,000 18,500 (16% OFF)
Combo 4: HG + 15%Rs. 19,000 17,000 (11% OFF)
Combo 5: VP + 15%Rs. 13,000 11,500 (11% OFF)
 
There is no combo option for Nano Champs, you need to opt for this service separately.

SUBSCRIPTION OPTION

PAY VIA CARD

(3% CHARGES EXTRA)

Nano Champs– 1 Year  - Rs 12,000 10.800 (-10%)

SUBSCRIBE

Nano Champs– 3  Year - Rs. 30,000 27,000 (-10%)

SUBSCRIBE


Simply choose the subscription service / combo subscription you would like to opt and click on SUBSCRIBE! link in above table to make online payment using your debit / credit card.
 
Through Nano Champs, Hidden Gems and Value Picks, we are providing you opportunities to invest in such micro, small and mid cap stocks today. Infosys, Dabur, Glenmark, Bajaj Finance were the small cap stocks in past and today are the well known companies falling under mid and large cap space.
 
Nano Champs Hidden Gems Value Picks Wealth-Builder
If you wish to invest in fundamentally strong micro, small and mid cap companies which can give you far superior returns compared to major indices like Sensex or Nifty in long term and help you creating wealth, you can join our services like Nano Champs, Hidden Gems, Value Picks & Wealth-Builder.

The stocks we reveal through Nano Champs, Hidden Gems & Value Picks are companies that either under-researched or not covered by other stock brokers and research firms. We keep on updating our members on our past recommendation suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future outlook.
 
Moreover, under our Wealth-Builder service, we encourage our members to replicate our Wealth-Builder portfolio by investing in selective high quality small and mid cap companies. We believe, investing in Wealth-Builder portfolio with regular portfolio review from our end can help you achieve market beating, very good returns over a longer team and help you take care of yourself and your family needs, which ultimately lead to a healthy and wealthy life after retirement.


Below are the details of our services:

1. Hidden Gems (Unexplored Multibagger Small Cap Stocks): Based on fundamental analysis, our equity analysts release one Hidden Gem research report every month with buy recommendation and share it with all Hidden Gems members. Stock finalized as Hidden Gem belongs to small / micro caps space with market cap of less than 500 Crores, expected returns from Hidden Gems is nearly 90% to 100% in period of 12 - 24 months. Once target is achieved, we inform our members whether they should continue to hold the stock or need to do partial / full profit booking. If fundamentals are intact and valuations are reasonable, we suggest to continue to hold the stock for long term for multibagger returns. Annual subscription charge of Hidden Gems is INR 14,000 12,600 under which you will receive total 10 to 12 Hidden Gems research reports over a period of 12 months. Click here to read more about Hidden Gems.

2. Value Picks (Mid Caps with Plenty of Upside Potential): Our equity analysts team consider Warren Buffet approach to short list stocks from mid cap segment as Value Picks. Market cap of Value Pick will range from 1000 crores to 15,000 crores. Holding period of Value Picks is 12 - 24 months and one can expect returns of 40-60%. Annual subscription charge of Value Picks is INR 8,000 7,200 under which you will receive total 10 to 12 Value Picks research reports over a period of 12 months. Click here to read more about Value Picks.

3. 15% @ 90 Days (Buy to Sell Stocks for Short Term Gain): Based on technical analysis, our team recommends one stock every month to our members. It’s a short term call under which you can expect returns of 15% within period of 90 Days. Annual subscription charge of 15% @ 90 Days is INR 5,000 under which you will receive 10 to 12 stock recommendations. We suggest lower allocation in 15% @ 90 Days stocks and higher allocation in Hidden Gems and Value Picks which are our portfolio stocks based on fundamental analysis. 15% @ 90 Days stocks recommendations are based on buy to sell and gain strategy, hence we suggest our members to book complete profits once target is achieved and exit in case target is not achieved or stock has broken its 2nd support level as per report. Click here to read more about 15% @ 90 Days.

4. Wealth-Builder (An Offline Portfolio Management Service): Wealth-Builder is our model portfolio of Rs. 10 lakhs and currently we are holding around 16 stocks in our portfolio. We suggest higher allocation in our Wealth-Builder stocks which includes best of our Hidden Gems and Value Picks released during last couple of years. Our team suggest all our Wealth-Builder members to invest in the stocks which are part of our Wealth-Builder portfolio. Every month our team updates our Wealth-Builder members which stocks they need to buy / sell / hold with % allocation of these stocks in their portfolio, the suggested changes need to be replicated in the same proportion. Annual subscription charge of Wealth-Builder is INR 28,000 25,200 under which you will receive total 10 - 15 portfolio updates. We also review existing equity portfolio of our members and advise them which stocks to hold and which to exit based of fundamental analysis under Wealth-Builder service. Our Wealth-Builder service is suitable for those investors who have an existing portfolio of at least 2 to 3 lakhs or planning to invest similar amount or more in equity market. Click here to read more about Wealth-Builder.

5. Nano Champs (Deeply Undervalued & Undiscovered Micro Caps): Under Nano Champs service, we research on micro cap stocks with market capital of less than 100 - 120 crores, the investment horizon is 3 to 6 years with objective to achieve 10x returns in long term (6 years or more). As micro caps involves higher degree of risk compared to small and mid caps, we provide a diversified basket of 10 Nano Champs in our half yearly report. Moreover, as these are very small sized companies, the maximum investment allocation in each Nano Champs suggested is 1 percent of equity portfolio, hence maximum allocation of 10 percent to 10 Nano Champs. Annual subscription charge of Nano Champs is INR 12,000 10,800 under which you will receive total 2 reports (every 6 months) and ad-hoc updates (if any) over a period of 12 months. Click here to read more about Nano Champs.

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. 

Enjoy great savings and receive valuable freebies under Merry Christmas - Happy New Year 2023 Offer by availing  our subscription services. Hurry! Its last day... offer closes today on 05 Jan 2023 at 11.59 PM.

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

Wishing you Happy & Safe Investing!

Regards,
Team - Saral Gyan.

Our Services: Hidden Gems | Value Picks | 15% @ 90 DAYS | WEALTH-BUILDER

Posted by Saral Gyan at 11:27:00 AM
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