Thursday, May 28, 2015
Electrosteel Steels Ltd: Fairly Priced But Risky
Dear Maheshji I would appreciate if you can provide your research analysis (my is ID 14575) on Electrosteel steels With best regards Jeevan K Shetty.
Respected Shetty ji
1.Electrosteel Steels Ltd is a 10.00 Rupee face value Construction & Engineering Stock which currently traded at 4.16.
2. Year High ( 52 week High) of Electrosteel Steels Ltd is 7.85 and Year low (52 Week low) is 3.28, So as per my 52 week high/low ratio formula this ratio is 2.39, If you read my book then you may knew that If any stock year high/low ratio is above 2 then stock price is not stable and generally I am not recommended to buy any stock which year high/low ratio is above 2.
3. Electrosteel Steels Ltd have total 2409235023 shares, Promoters hold 45.23 % FII hold 0.45% and DII hold 1.04 % shares.Promoters pledged theire 79.53 % stocks so I am not like this stock due to pledged shares.
4. Electrosteel Steels Ltd Net sales on FY 2014-15 is 1831.24 Cr., So when we divided total shares 2409235023 in FY 2014-15 sales then we get a ratio “Net sale per share per year” which is 7.60.
5. So If we compare this 7.60 from current market price 4.16 then we find that CMP is below Net sale per share per year, So CMP is a fair price for this stock.
6. Base Price (3 Year Average Price) of Electrosteel Steels Ltd is 4.94 So CMP is also below the base price so we say currant market price is a fair price for buy.
7.Book value of Electrosteel Steels Ltd is 7.15 , So CMP also discounted to book value, price/book value ratio is 0.58, If you are not familiar with book value then please read this article Book value importance in fundamental analysis.
8. Overall I think I think this share is a risky buying, because stock have fairly priced if we see it net sale and book value criteria but due to pledged shares of promoters and nil dividends plus unfavarable year high/low ratio I am not recommended it as a safe fundamental buying.
9. Discloser:- I am an existing research analyst and passed NISM certification for research analysts. I am also applied for a grant of registration under SEBI(RESEARCH ANALYSTS) REGULATIONS, 2014 and I have/my wife have no any stocks of this company so my personal interest is not included in this stock.
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