1)A couple of my members expressed their concerns regarding recommendation of known stocks.They felt as some brokerages have already identified them,its no point recommending it again.What the F is that?Mywork is not to titillate you guys recommending sexy unknown names but all the efforts are meant to provide returns which would be superior to other asset classes or of peers.Desperate complacent times call for high quality and safety.Times are such where a single mistake can squander your portfolio.If something is of high quality and posses great potential,forget others and buy it truckloads.
2)Often you people skip stocks which had a stellar move to punt on stocks which are hitting fresh lows.Another reason why retailer looses often.An upmove in a stock gives a lot of clarity which is warranted as its all about making risk free money.If you guys can glance through the past recommendations, you would find probably 90% of the stocks are recommended after they have doubled,tripled,quadrupled.Now that's weird right?Sounds too odd?I will tell you the reason.Lets look at few examples.
a)Canfin homes moved to 235 in one week from 160 and bang the recommendation followed.I still remember a lot of members left it to opt for something else as it moved 50%,all in a matter of 5-6 trading sessions.They weren't comfortable with it.So what made me recommend the counter?Canfin was perceived as a lethargic company with no future even when the dynamic MD,Mr Llango was executing strategies to rewrite a new scripture for the company.It may have moved 50% in a week but for the last 16 months, prior to that week, it remained in the range of 140-160,inspite of tailwinds and a violent bull market.All was needed a break free rally and numbers which inevitably followed.Canfin recently hit 700.
b)Premier explosives moved from 140 to 206,recommendation arrived.The company had a great story always but people including your's truly had concerns regarding the promoters as they wrote off some 11crs investment in Georgia few years ago(the easier way to siphon off funds).Few renowned "but hard to convince investors" came and the perception changed.Premier in less than a month,moved over 50%.What will you prefer?I could have never suggested it at 140 as the doubts galored.Isn't it better to skip a doubtful unconvincing 50% for unlimited upsides backed up by conviction and confidence?
c)Even after knowing the amazing story and potential of Kitex,I gave it a pass at 160-200 bucks owing to related party transactions.Tried to talk with the management and they never obliged.Not only me but a lot of HNI's and analyst mates had loads of doubt about the company.Stock moved to 300 and the management clarified everything with huge patience.Answered awkward questions in the most soothing fashion.Doubts got eradicated,stock hit 600 yesterday.What will you prefer?Kitex with doubts at 200 or kitex with high conviction at 322?Oh,very recently, they even appointed 'Ernst &Young as their auditor".
d)Take the recent case of Kesar Terminals.Am tracking it for a long time.Conviction never came as even when the whole sectoral logistics PE went to over 30,even after below averagely managed companies like Patel integrated traded at 50 PE,this KTIL traded in single digit multiple.My research guys contacted Mr Sant khare many a times but he refused to meet or divulge any details.Few of the HNI investors including my associate went to the facility,talked to the relevant guys and stock doubled as conviction followed.PE expanded and stronger hands came.Debt issue though lingers but even a 20% equity dilution will give it 50crs,so that issue got addressed too.Members as you see there's a lot of interesting aspects which one needs to take into consideration before the recommendation.
e)A lot of members clamour for new stock ideas ignoring the old ones.Look at what happened this week.Shilpa medicare moved from 600 odd to hit 900.Fluidomat rocketed to 315 from 210.Kitex,repco hit fresh life time highs.The secret to win from markets remains the fact of buying quality early and then accumulating more as it moves higher,provided the story is intact.I did make sound about Poddar developers and my liking towards it.The first instance I bought,it had all of 32 volumes a day,out of which your's truly swallowed 30 shares at around 200 bucks.Simply couldn't recommend it as there were no volumes but it was of very high quality.Advances from lower middle class customers amounted to 102crs when mcap was less than 100crs.Am talking about the scenario of 5-6 months ago.Within no time,it more than doubled to 500 rs and I bought a bit more.I suggested you guys to keep it in radar and look to add at 700 levels.Scrip came near 740rs only to settle higher at around 1000.This week some renowned Fund got in and look at it,1500 bucks and counting.If you own some high quality stocks with backing of visionary management,investors would ensure it gets most crazily valued in due course.Why?Simply because stock market is a place where quality is of so little,it just get bid higher and higher.
My story:Many years ago,a bankrupt counter called Symphony interested me a great deal.Its present or past was awful but it had a vision,an amazing futuristic thought,had the fire in belly.Somehow the conviction never came and I gave it a miss.It went from just 4 to 28 bucks.I took a very tiny position and the company went up to 70.With each upmove, it hinted about its bright future and started delivering interesting numbers.Mr market started fancing it but since marketcap was too low, institutions or MF couldn't get in.I bought a bit more at 100.Stock went to 300 and I recommended it to guys,hardly a couple of years back.I bought it again at 440.Stock stands at 2000 bucks now.Imagine, If I would have let it go simply because it moved from 40 to 300 in 2 years,would you guys have availed 7x in it?There's no wrong in buying high as long as the story is intact.Its so futile to vandalize your portfolio by opting for losers at the cost of amazing high quality winners.
Quote:Anuh pharma is an old recommendation which got suggested to members at 270 odd during July 2014.Found it today,having the feel to put in the open blog for the benefit of you folks.Modified few lines and here you go.
Scripscan:Anuh Pharma Ltd
Company Overview: Founded by Mr. Sevantilal Kantilal Shah in 1960, Anuh Pharma is a foremost Active Pharmaceutical Ingredients (API) manufacturer based in Mumbai and a part of SK Group which is a leading importer, exporter, distributor and manufacturer of bulk drugs, chemicals and pharmaceutical formulations and one amongst Eskay Fine Chemicals, Eskay Specialty Chemicals, SK Age Exports, S Kant Healthcare and SK Logistics.
Business Overview: The company is one of the largest manufacturers of macrolides, a kind of antibiotic drugs in the country.Among the macrolides,the company manufactures antibacterial erythromycin base and several other variants (primarily recommended)for throat infections by ENT specialists and General Physicians); it is the largest producer of erythromycin salts in the country. The company also makes higher macrolides including azithromycin, roxithromycin and clarithromycin;quinolones like ofloxacin; chloramphenicols and over a dozen corticosteroids. The company also offers an Anti TB Drug called as Pyrazinamide. All these products are being manufactured at the company’s Tarapur facility near Mumbai. The company also owns a state-of-art integrated laboratory to carry out research and development activities; this facility was acquired from a Spanish company in April, 2012. The R&D facility includes a chemical synthesis lab, an analytical development lab and a kilo lab with the view to cater to Contract Manufacturing. The R&D facility will help the company in intensifying their research & development activities with a view to enlarge the bulk drugs portfolio. All these things have helped Anuh Pharma to carve out its own niche in the world of APIs. The company is looking at different opportunities in untapped markets and also across a value chain. Today, the company is known for its Government recognized ‘Star Export House’ status; governed by cGMP, the company enjoys World Health Organization’s (WHO) version of GMP (Good Manufacturing Practice). In addition, the company has also filed several Drug Master Files (DMFs) submitted to European Directorate for the Quality of Medicines & HealthCare (EDQM) & US Food & Drug Administration (US FDA) which could create immense opportunities for erythromycin’s exports to US and Europe, going forward. The company has been exporting one-third of total production to over 57 countries and the company recently received approval from COFEPRIS (Health Authority of Mexico) GMP certificate for three of company's erythromycin products.
Financials & Investment Rationale: Over the last ten years, the top-line has grown from Rs.54 crores in FY04 to Rs.266 crores in FY14 at a CAGR of above 17%, however, the profitability was badly affected primarily on account of significant increase in the raw material costs, from 74% in FY04 to 84% in FY13. Nevertheless, during FY14 the gross margins regained substantially and the operating margin and net margin also showcased a significant improvement. The Management broadly achieved the revenue guidance provided in the Annual Report 2013 (it’s incredible that the Management provided a precise figure of Rs.277 crores for the full year in these uncertain times). The company is debt-free and enjoys robust return ratios. The company has reduced its dependence on macrolides and antibiotics, as less than 74% of revenues came from antibiotics as against over 92% in FY10 as the contribution from ‘other chemicals’ increased from less than a crore in FY10 to above Rs.67 crores in FY13. Interestingly, the company’s market capitalization was Rs.202 crores in April, 2006 when FY05 top-line was Rs.52 crores and net profit was below Rs.5 crores, today, it is available at Rs.300 crores when top-line has grown nearly 5x and net profit multiplied 4x.
Outlook & Valuations: The FY14 Sales, EBITDA and Net Profit stood at Rs.266 crores, Rs.27 crores and Rs.18 crores,respectively. I expect FY15 and fy16 Sales to grow ~11-12% CAGR(from 266crs to 330crs) and net margin to improve further to 7.5%(from 17.5crs PAT in fy13-14 to 25crs in fy15-16).Assigning a P/E target multiple of 15x to FY16 earnings, I derive a price of 450 bucks,an upside potential of 25% from current levels of Rs.360,of which, more than Rs.50 vouches for cash & cash equivalents and current investments.The promoters have been shareholders friendly; never missed on dividend since FY98; for the last fiscal, they declared Rs.8.50 per share.They have rewarded the shareholders with bonus issues time & again, ’95, ’99, ’06, ’10. Typically, pharmaceutical companies trade at twice and more of its revenues.A company which has amazing ratios,got payout of 30%, will not trade at less than 1x sales forever(fy14-15 expected revenues at 303crs,present mcap stands at exactly 300crs).So even if it moves up much higher and all those typical doomsayers starts to question,investors would always have the counter argument of making it sustain its higher valuations.Still need help in that regard?Recall the year 2006?200crs marketcap on 52crs sales.
Disclosure time:I personally bought quite a bit of "Daru" recently.We will never have something like "United spirits" in the next 50 years.Anyone having 12-15 years kinda horizon,buy it,SIP it but don't miss it.A 12-15 bagger in 12-15 years.P.S:I am also a satisfied consumer who happens to fancy "VAT69" in celebration rituals.So eventually am the 'Company owner+satisfied loyal consumer of my own produce'.Kya feeling hain yaaron :)Aint that feels great?
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Note: The above is not a research report but assimilation of information available on public domain and it should not be treated as a research report.
Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”
Disclosure: It is safe to assume that I might have anuh in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments.