"If there's one person one can bet on in India, he is Ratan Tata." A friend of mine told me this while we were gossiping about the stock markets and the state of the world economy. I partly agree with this. Let me say why "partly". Mr. Tata has taken far too many risks at the wrong time. If those acquisitions had taken place a year later, his debt would have been considerably lower. But that's the chemicals, steel and auto businesses. The IT business of Mr. Tata is as strong as ever. With a large lot of government projects and contracts in its kitty, TCS is roaring. It had an IPO in 2004. With a price band of Rs 810-Rs 850, the company gave bonus of 1:1. So, equivalent share price is 425 rupees (people paid 850 a share). The CMP of Rs 574 (a P/E of 11), and increased price, is still attractive given the prospects of this company. A long term investment, if one has to make, it is this.
Okay, I know when Mr Tata asked Rs 850 a share, it was too much. But then it had prospects like no other IT company in India.
I should also add here, that one can always wait for a cheaper price. With the global economy in a downturn, when stocks fall, they fall together. So, irrespective of the fundamentals of this debt ridden company, there is a possibility that you may get some cheaper shares. And when you see them cheap, don't let them go away. A good investment decision is always difficult to make. You may know a company to be good, but you may not get the right price. TCS is perhaps, the only sensex scrip which has not created wealth considering CMP yet for its public shareholders. (I am not considering the inflated -and now deflated- realty stocks like DLF.)
With the government gearing up for more e-governance ideas and innovations, and with the world getting more tech savvy, TCS is poised to a beautiful future. Good government and domestic projects on hand, it will be less affected by the US crisis. The domestic growth has the potential to shadow the international decline. But Mr Tata had worked up a plan to overcome this as well when TCS acquired Citigroup Global Services.
Bharati Shipyard: Opportunity?
Bharati Shipyard is one stock that's trading at a tremendous discount. Its IPO had a band of 55-66 rupees. It got oversubscribed by 78 times. It listed at a nice premium. It has touched a high of around 850 rupees. And now, as on 21/03/09, its Last Traded Price on the Bombay Stock Exchange is 51.1 rupees.
The negatives to the company are in the form of the FCCBs that are maturing. The company had a total debt of $100 million, out of which $48.9 mil remain to be repaid. FCCBs worth $1.4 mn matured on Dec 13, 2008. The remaining $46.9 mil have to be dealt with before Dec 13, 2010.
The company has the Total Order Book - Rs 46353.575 million as on March 2008. With reserves (excluding revaluation reserves) of 5452.723 mil rupees as on March 2008, I think the troubles are not so severe, and the bear has mauled this scrip. It has definitely bottomed out, in my opinion.
Bharati Shipyard also won a defence order worth 281 crore rupees. If the reports are correct, Bharati Shipyard has decided to build the first LNG fuelled ships in India. LNG is cheaper fuel, and such ships will be in great demand globally. Apart from the debt position and the possibilty that Bharati Shipyard may get lesser orders now courtesy the economic slowdown and the credit squeeze, nothing is wrong for Bharati Shipyard. But this is a major issue also. The debt to be repaid is significant. If the company does not want to hurt its reserves, it has to book better profits. But with rising input costs and lower orders, I personally doubt that the profits will be beautiful. There is a ray of hope here, since ship builders do not pile inventory like others and naval architects from IIT, the promoters of this company may manage it all in this slowdown. One more negative news I heard about this company was that its group company gave a loan of 200 crores to Great Offshore's promoter(Sheth) who pledged his shares to them as collateral. The company needs money, according to my analysis, to pay off the debt. If there is a brighter side to this news, it is a possibility that the company does have enough money to give loans, and pay off debts. If the promoters know what they're doing with this company, and that their intent is not selfish (as Raju's), the stock will prove to be a multi multi bagger.
I opine that this scrip may reach Rs. 900 in a time frame of three to four years. Four years is a lot of time, yes. But at the moment, no one really knows what the dollar is up to.
The negatives to the company are in the form of the FCCBs that are maturing. The company had a total debt of $100 million, out of which $48.9 mil remain to be repaid. FCCBs worth $1.4 mn matured on Dec 13, 2008. The remaining $46.9 mil have to be dealt with before Dec 13, 2010.
The company has the Total Order Book - Rs 46353.575 million as on March 2008. With reserves (excluding revaluation reserves) of 5452.723 mil rupees as on March 2008, I think the troubles are not so severe, and the bear has mauled this scrip. It has definitely bottomed out, in my opinion.
Bharati Shipyard also won a defence order worth 281 crore rupees. If the reports are correct, Bharati Shipyard has decided to build the first LNG fuelled ships in India. LNG is cheaper fuel, and such ships will be in great demand globally. Apart from the debt position and the possibilty that Bharati Shipyard may get lesser orders now courtesy the economic slowdown and the credit squeeze, nothing is wrong for Bharati Shipyard. But this is a major issue also. The debt to be repaid is significant. If the company does not want to hurt its reserves, it has to book better profits. But with rising input costs and lower orders, I personally doubt that the profits will be beautiful. There is a ray of hope here, since ship builders do not pile inventory like others and naval architects from IIT, the promoters of this company may manage it all in this slowdown. One more negative news I heard about this company was that its group company gave a loan of 200 crores to Great Offshore's promoter(Sheth) who pledged his shares to them as collateral. The company needs money, according to my analysis, to pay off the debt. If there is a brighter side to this news, it is a possibility that the company does have enough money to give loans, and pay off debts. If the promoters know what they're doing with this company, and that their intent is not selfish (as Raju's), the stock will prove to be a multi multi bagger.
I opine that this scrip may reach Rs. 900 in a time frame of three to four years. Four years is a lot of time, yes. But at the moment, no one really knows what the dollar is up to.
My First Post!
I know not how many will read this post, but still, there HAS to be a first post, isn't it?
Stock markets amaze me. Well, we all are inherently a part of the economic structure so as to say, but getting affected by the stock market movements has its own thrill. I have always wanted to perfect this art of investing. People have started classifying investments by their durations. "Short term" and "Long term" investments. In the stock markets, there is no term. Especially, if you have some cash to use for a couple of months, and you want to try your luck at the stock markets, you'll earn only if your luck works. In most cases, it will be the other way round. You will end up losing most of your money.
In a bull market, you never know when the passing of the parcel will end. The big boys can go very long, indeed, but there is limited cash supply everywhere, and sometimes, they find it more appropriate to go short. That happened last year. And the bear always attacks the bull when the bull is running at the fastest possible speed. "Anytime, now." They say. If you do not have the appetite for a long term hold, the stock market is not for you.
I intend to continue this blog for my own use. I wish to use this as a tool to clarify my thoughts on various issues related to the stock markets, and the companies whose shares that are traded there. Expressing my views would help me towards a new line of thought, by pushing the thinking to different spots. I could have done this on my own computer using MS Word, but then, comments of people like you are always valuable.
Stock markets amaze me. Well, we all are inherently a part of the economic structure so as to say, but getting affected by the stock market movements has its own thrill. I have always wanted to perfect this art of investing. People have started classifying investments by their durations. "Short term" and "Long term" investments. In the stock markets, there is no term. Especially, if you have some cash to use for a couple of months, and you want to try your luck at the stock markets, you'll earn only if your luck works. In most cases, it will be the other way round. You will end up losing most of your money.
In a bull market, you never know when the passing of the parcel will end. The big boys can go very long, indeed, but there is limited cash supply everywhere, and sometimes, they find it more appropriate to go short. That happened last year. And the bear always attacks the bull when the bull is running at the fastest possible speed. "Anytime, now." They say. If you do not have the appetite for a long term hold, the stock market is not for you.
I intend to continue this blog for my own use. I wish to use this as a tool to clarify my thoughts on various issues related to the stock markets, and the companies whose shares that are traded there. Expressing my views would help me towards a new line of thought, by pushing the thinking to different spots. I could have done this on my own computer using MS Word, but then, comments of people like you are always valuable.
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