Saturday, September 29, 2012


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

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