THIS MONTH SIP :WHY SOME STOCKS ARE UNDERVALUED ?

hello mahesh sir, I'm shiva from chennai.on your Aug.12th post told that some shares are undervalued than book value, but there must some drawbacks or some negative news behind that ? why these stocks are so? please explain me sir. thank you. ask by shiva

1. Shiva ji , there is many reason for a stock that's make him undervalued so i told you some of the reasons which make a stock undervalued.

2. first reason company high debt, when a company plan to expand his debt than it is a negative sign for company future so big player want to sell there stock and as you knew market formula that low demand give a low price to stock. example of these type stock Reliance communication and kingfisher

3. i remember in 2006-2009 our analyst on TV always say Arvind ltd is a high debt company so investor may quit from Arvind ltd that time price of Arvind ltd is 12-36 but i buy it because of it good revenue per share and good book value now arvind ltd is repay most of his debt and now CMP of arvind ltd is 80 with a target of 140 .

4. second reason sector outlook market players speculate from sector to sector , if you are a old player of market than you remember in 2000 market give decent valuation to IT sector other sector are undervalued in 2007 market run with infra sector other sector like banks are undervalued and in 2011 market played with banking sector other are undervalued.

5. so in my SIP recommendation i choose some of this type of undervalued stocks for SIP , this month SIP is Central bank as you see in top 10 undervalued stock list that rel com , hdil , india bull real , iob, vediocon is already in our SIP list so central bank is new SIP

 

ACCEL TRANSMATIC LTD : HOLD

Dear Sir, I'm here by requesting your urgent help regarding the below mentioned stock Accel Transmatic 500nos @ 28.73 Regards, George Daniel ji
1. ACCEL TRANSMATIC LTD is a 10 rupee face value storage media company.
2. Year high and year low of ACCEL TRANSMATIC LTD is 18.65 and 7.55 stock traded at 8.34 so year high and year low ratio show a bearish trend in ACCEL TRANSMATIC LTD. 3.Company have very poor revenue and i think stock may show further down prices in coming one year.
4.Promoters holding in ACCEL TRANSMATIC LTD is 58.55 % and promoters of accel transmatic ltd plaged there 20.12 % stocks so this is not good and second thing company have low number of shares so easy to speculate in pricing.
5.Accel Transmatic Limited, formerly known as Transmatic Systems Limited, was formed through a strategic merger of Transmatic Systems Limited, Accel Software & Technologies Limited and Ushus Technologies Private Limited. The company operates through two business divisions namely Ushus Technologies and Accel Animation Studios and has its subsidiary company in San Jose, California USA.
6.Overall my view is negative but you may hold your stocks because you already lost 20 rupee per share and average out when stock is stable for recognise stability just track year high and year low ratio now it is 2.47 when it come below 1.5 ( it will take time )than you start your average outing your stock in a SIP of per month.
7. i have no any stock of ACCEL TRANSMATIC LTD .

GUJARAT STATE PETRONET LTD:AVOID

Hello Mahesh ji...

We are benefiting with your detailed analysis on the stocks. Could let us know your views on Gujarat State Petronet Ltd.? ask by Goverdhan ji
1. GUJARAT STATE PETRONET LTD is a 10 rupee face value stock with book value of 44.91 stock currently traded at 77 so it is just traded near double of book value.
2. Year high of GUJARAT STATE PETRONET LTD is 107.35 and year low 62.05 which is normal.
3.GUJARAT STATE PETRONET LTD June 2012 revenue is 270 Cr and net profit 124 Cr how it is possible? this mean company earn near 50% margin , i think this type of margin is risky and when margin is down stock is also down.
4. promoters holding in GUJARAT STATE PETRONET LTD is 37.73 % and FII holding 2.87 % and FII continue decrease his holdings in this stock which is not a good sign.
5.i think we will wait below 40 to this stock any speculative run may be possible in short term due to high delivery volume near 46 % but i think it is a distribution from large player selling to general public.
6. my view is clear AVOID

HOLD:Reliance communication

Mahesh Ji,
I am doing a systematic SIP in Reliance communication. And now I am worried about the recent announcement of spectrum auction. With the profits of all mobile companies coming down, what will be the prospectus of Reliance communication.?? ask by Rajiv daniel
1. Rajeev daniel ji do not worry because you already see a 20 % appreciation in Rel com price in last one month.
2.You wonder that currant net revenue per share is 53 in reliance communication and 53 is market price also.
3.Book value of reliance communication is 218.97 and as my fundamental targeting of a share average out both values it is 135.5 and reduce 10% for market fluctuation than it is 121.95 so i think reliance communication may be traded over 120 in near future ( time is no limit it may be 6-12 months ) and that is the time wen you closed your SIP and partially book your 10% profits at every 10 % rise.
4. Rel communication is in my personal holding so this is my dis closer.

IF NET REVENUE PER SHARE IS HIGH AND COMPANY HAVE POOR OPERATIONS?

Mahesh Ji,
I read the net revenue concept for share valuation in your blog. What if a company has good sales but a poor operation??? Say they incur huge operation costs and that is why it is going to loss. Please let me know your views ask by Rajiv daniel ji
1.Rajiv ji i tell you a simple example for more clarification ,suppose you have a simple fruit shop and your net sell per year is 1000000 rupee but due to competition you have no pricing power and you also buy a refrigerator for food store with a cost of 50000 and open some other outlets so end of the year your fruit shop is in loss.
2. But next year your fruit shop have not to require expansion plans and not to buy any refrigerator's so your company may be turn around in profit.
3. this is the concept that if a company per share sell of 500 rupee than one day it will be earn 10% profit of this earnings it is 50 rupee per share so if a stock have EPS of 50 than at p/E of 10 market price is 500.
4. Now i give a practical example i always say in this blog that MTNL is best choice in telecoms sector ( i think you remember my former post about making a SIP in MTNL and other telecoms )
5.Now we check last year net revenue of MTNL it is 33689900000 rupee ( i use bseindia dot com site for check last year net sell ) and total number of share in MTNL is 63,00,00,000 so now divided it 33689900000/63,00,00,000=53.47 so we easily assume that when MTNL earn simple 10% profit than EPS of MTNL is near 5.5 and at a P/E of 10 price of MTNL is 50-55 is genuine price so in last few months MTNL is traded near 20 and if any one buy it in this concept than he /she earn more than 100% profit in MTNL within 2-3 months.

SPICE JET : HOLD FOR 45

Dear Mahesh Ji,
Following the question I asked you earlier about Spicejet. There is a significant increase in the sales and company posted a good turn around profit in Q1. Again I have concerns with the cases against Marans and the stock is getting beaten up due to that. But im hearing further news related to investments in Spicejet from foreign airlines. Please let me know your opinion. I was waiting for my buying price to sell this off. Still this has not come to 37. Do you think it will show some improvement in the near future? ASK BY RAJEEV DANIEL JI
1.Oh Iam so late to reply your question because in 22 Aug spicejet touch 37.85 and i think you sell your stocks.
2.Spice jet ltd is a 10 rupee face value airline stock year high 37.85 and year low 15.35 stock traded at 30
3. promoters holding in Spice jet is 48.59 % they increase there holding from 43.59% and earlier 38.61 % so continue increase in promoter holding is very very strong point.
4. In my net revenue per share concept it is near 1200 per share per year so my view is  HOLD for spice jet and exit near 45
5. i have no any share of spice jet ltd .

BF INVESTMENT LTD:GOOD TO BUY

Dear Sir,
What is long term view for BF investment stock . i have 100 stocks for purchase 5 year ask by mahesh
1.BF investment ltd is a 5 rupee face value investment company.this company is related to kalyani group which other company is Bharat forge.
2.Book value of BF investment ltd is 164.10 that's great because stock traded at 40 only.
3.Year high of BF investment ltd is 58.80 and year low 38 that is also normal range.
4.But BF investment stock have very low revenue in June 12 only 5.72 cr and net profit 4.10 cr. i not believe this type of income/net profit ratio because i think how it is possible to earn such type of profits where profit margin is more than 100%.
5.Promoters holding in BF investment is 70.91 % which is also good.
6. company have a good reserves and good book value so overall i not find anything negative in bf investment ltd you can download annual report of bf investment from this link for further details CLICK HERE TO DOWNLOAD ANNUAL REPORT 2012 OF BF INVESTMENT LTD
7. my view is positive for BF investment and i have no any share of b f investment ltd.

JSW ENERGY LTD:

Hi Mahesh ji !
I am heavely invested in Jsw energy @ 105/- but at present it is @ 48/- . pl guide me.
Regards
R S rajawat
Reply
1. Jsw energy ltd is a 10 rupee face value energy stock.
2.year high of jsw energy ltd is 76.80 and year low 35.75 stock quoted at 45.
3. promoter holding in jsw energy ltd is very strong at 76.72%
4. jsw energy ltd have a good revenue in June 2012 company net sells at 1606.04 cr. and a net profit of 56.93cr but EPS is still poor 0.35 only because jsw steel is a high equity stock ( number of shares is high) so i tell you a low equity energy and power company ENERGY DEVELOPMENT CORPORATION INDIA LTD where company is in loss and traded near 26. i think when ENERGY DEVELOPMENT COMPANY LTD is turn around in profit than it run very fast.
5.Just hold your stocks of JSW ENERGY LTD and wait for a good time to exit company is not very poor , only high equity is a problem.
6. My dis closer:- Energy development company ltd is in my personal holdings so my interest is there, any body track my holdings on my website maheshkaushik dot com .

SHREE ASHTAVINAYAK CINE VISION LTD :AVOID

Dear Sir,
I have invested on SHREE ASHTAVINAYAKA stock. Am holding the stock from long, daily its coming down. Please suggest your view on this stock where to hold it or sell off.
Regards
SUNNIL KUMMAR
1. Shree ashtavinayaka cine vision or shree ashta is now a one rupees face value share.
2. SHREE ASHTAVINAYAK CINE VISION LTD is give bonus of 4:1 at 2 Feb. 2010 (record date for bonus) and due to price bonus adjustment price of this share is down and enter in a 2-3 year sleep zone.
3. To know about sleep zone and  how price is adjusted after bonus? please read my former article on this link
http://sharegenius.blogspot.com/2009/10/bonus-issue-gives-only-psychological.html
4. promoter holding in shree ashtavinayaka cine vision is only 5.03 % which is reduced from 5.97% so very poor promoters holding .
5. Year high of SHREE ASHTAVINAYAK CINE VISION LTD is 7.88 and year low is 2.00 and as my rule when year high/year low ratio is more than 2 than it is show stock is in bearish trend.
6. Recently at 24.07.12  KARVY FINANCIAL SERVICES LIMITED sell 5342855 share of shree astha through a bulk deal i think this huge sell is also negative.
6.My view is negative for shree ashtavinayaka cine vision .i have no any stocks of shree ashtavinayaka cine vision .