Methinks every Indian Equity Investor needs a dose of Rakesh Jhunjhunwala (RJ) every few years! ~ any sooner it could be an Overdose ! 😆 ~ just kidding !
I like the guy ! ~ right since I interacted with him when I invited him around 15 years ago at the turn of this century for interacting in an evening Q & A session with my packed class of @ 90 participants in my Equity Portfolio Structuring and Stock Analysis Workshop at the BSE Training Institute as I thought he would add practical value & he did
“Boss ! I’m a Sadak Chaap ! ” he had told us then as also how he had reconstructed his equity portfolio to concentrate only in a few stocks after the 2000 ICE debacle…so in a sense most of his Wealth has grown only in this Millennium in the past 15 years ~ and to his credit in Selections that were not really Blue Chip or Core
Yesterday had gone for an IMC interactive meet in Mumbai to check out if RJ has sobered & matured in his ‘manner of speak’ over the years ~ I rarely watch Stock Channels ~ don’t even have a TV in office~ so was not really conversant with how & what he delivered in his appearances though knew of his initiating big stakes in companies
I am delighted to blog he has not changed ! ~ shot straight from the hip & mouth again as he always does ” I’m a satodia(translated to mean speculator) & investor & not an economist” ~ his investment portfolio has spread into the Alternatives of Bollywood Movie Production too with Kareena & Arjun starrer ‘Ki & Ka’ being his latest co production~ is into horse racing too and owns a few horses ~ passions perhaps where return on investments need not be measured in monies !?
Many perceive him as Dehati or Crude Dude for his rustic loud boorish way of speech~ but don’t let it fool you ! & he does not make any pretenses ~ he’s a CA by training & wears a fairly sharp mind
Money Talks & Crowd Laps it up all !~ many vigorously & ‘knowledgeably’ nodding in agreement
These RJ’s views & responses to questions posed should interest you :
On The Future of Equity Markets ~ Reiterates this is only the Trailer & we are going to witness a Mother of all Bull Runs.India is a thriving young Democracy with US $ 600 b in Savings every year.Equity Markets receive just US $ 50 b from this.This has to improve and it will ~ anyone ,any doubt!?
On Returns from Equity ~ Ironically while his riches have been through multibagger 1000% + equity gains in concentrated high weightage stocks like Titan & Crisil he asserts that one should be happy with 18% CAGR gains and if it goes to 24% one should be really happyread more
FY 16 has been a mixed year for Stocks with Markets on a downward drift with Sensex closing 9.4% lower at 25341
Sensex disappoints in FY 16 as many of the 30 constituents lose big value
Interesting & Heartening to it’s Shareholders ,Reliance has been the biggest constituent gainer at @ 27%while at the other end BHEL has lost half it’s value at 51% ! ~ another 11 companies have lost between @ 19% to 30 % values
Domestic Concerns revolved around second consecutive failure of monsoon in 2015 & slow pace of Reforms & Corporate Earnings Lethargy with growth in single digits despite boasts of GDP Growth of over 7% and lower Inflation and Oil Price falling 40%
Global Concerns revolved around China’s Growth slowing down considerably & It’s Stock Markets losing a lot of it’s froth in panic falls, continuing recession in Europe & expectations of the US Fed raising rate
Consequently FPI Inflows which were a record US $ 17 b in FY 2015, reversed to outflows of US 2.1 b in FY 16.These outflows would have been higher if last month March 2016 had not seen a reversal back to FPI Inflows of US $ 3.2 b
In the first three months of this Calendar Year 2016 , January & February 2016 witnessed significant outflows of US 1.67 b & US $0.8 b respectively that dropped Sensex to 23000 levels.On the back of many countries like Japan,Switzerland and Sweden embarking on Negative Interest Rate Policy,the US Fed send out dovish signals and has delayed Rate hikes.This saw FPI Equity Inflows smartly cross US $ 3 b in March 2016 getting them back into the Green in 2016 & revive the Sensex back up @ 10% to 25500 levels or else FY 16 would have seen a Sensex drop of nearly 5000 points & @ 18%,double than what it actually did in the end
Here are some FY 16 Trend observations :
Sensex closed down 9.4%.It was down @ 18 % just around a month ago but smartly pulled back on record US $ 3b FPI Inflows in March 2016
Of the 30 Sensex Constituents,amusingly after a seven year itch perhaps 🙂 Reliance is the biggest gainer at 27% taking it’s Market Cap to US $ 49 b,next only to top TCS which despite a flat year retains Top Market Cap of US $ 73b !
Six Scrips,including all weather favourite TCS (Market Cap US $ 73b) have remained flat
Of the Four Banks,only HDFC Bank stays in the Green just about,the rest have lost lot of value from one third to one fifth
India Growth Proxy Larsen & Toubro has lost 26% Value
Four Pharma Majors have also dropped significantly from 13% to 28%
Three IT Bellweathers saw Wipro down 10%,Infy up 10% and TCS in between remaining flat
Of the Five Auto Majors,the two 2-wheelers are both in the green,two ,Maruti & M & M are flat while Tata Motors has lost 30% value
Three eternal FMCG Favorites,ITC,Asian Paints & HUL have held up
After a Steel Sector Battering past few years,Tata Steel is now catching it’s breath
All Five Non Bank PSUs continue to flounder ~ BHEL has lost half it’s Value follwed by ONGC down 30% ,Coal India down 19%,NTPC down 13% & Gail down 8%
Housing Finance Leader HDFC too has taken a beating of @ 16%
Controversial Adani Group’s Adani Ports is down 20%
Telecom Leader Bharti Airtel is down 11% despite getting a 4G breather as Reliance’s Jio ,expected to be a sector disruptive force,launch continues to be delayed but should be fully operative by FY 17 year end
Warning !!! ~ Caution on Sang Froid Labs at BSE Upper Circuit Rs 8.71 !
How can BSE even have allowed Sang Froid to be directly listed from October 2015 ! ?
Bulk Trades ~ Lakhs of Shares Trading Volume ~ Buy Reco being circulated under Share Khan Premium Service with website as sharkhan.in which just flashes on your screen repeatedly!!!
PLEASE STAY AWAY FROM SANG FROID LABS
SEBI must investigate how BSE allowed this Listing & the trading patterns in it….Wonder if the Broking Group Sharekhan & Pharma Co Ajanta Pharma will ignore that their names have been misused liked this for recommending Sang Froid…..I don’t believe Sharekhan has recommended this….& I dont believe Ajanta Pharma is associated with this company in any way let alone it being recommended as a Venture with it !
Right Now this the Trap being set on the BSE Counter for Retail Suckers to buy into with the reco on mobile circulation stating to buy 10000/20000 shares for immediate rise to Rs 12/15 in just two days for this Ajanta Pharma Venture !…Oh ! Stoploss of Rs 7 recommended too !
This Company does nothing ! though it says on it’s website it wants to do this and that !…suppose to be in pharma….has no real business….At March 31,2014 it had no employees (Employee expenses were only Rs 48000! & Revenue only Rs 1.75 lakhs).KMP were Ajay & Vijay Kumar Sachdev & and Jitendra H Gohel.
Equity Issued & Subscribed was Rs 5.1 crs but paid up was just Rs 2.80 crs which included forfeited shares.The Negative Reserves were Rs 2.88 crs giving a negative networth at March 31,2014.The auditor was a Delhi Proprietory Firm M Madan & Co who signed the FY 14 Accounts in New Delhi on August 30,2014.There are barely any other Assets & Liabilities
FY 15 Statements show a different auditor,Ahmedabad based Proprietor S Kansal & Associates who signed the FY 15 Statements in Ahmedabad on April 14,2015,within a fortnight of year closure
The Equity now shows Rs 5.1 crs & Negative Reserves are now lower at Rs 2.02 crs given a positive Networth of Rs 3.08 crs which has been applied to Short Term Advances of Rs 1.42 crs & Other Current Assets of Rs 1.7 crs ~ no info on how the Negative reserves dropped so much given that topline & bottomline figures are worse than Lemon Juice Collections by a Street Vendor !…how did subscribed equity of Rs 5.1 crs which was paid up just Rs 2.80 crs become paid up Rs 5.1 crs? read more
Did this one too on “Interpretation of Financial Statements for Stock Analysis” under NSE’s Rapid Series at their NSE BKC Complex
@ 30 Participants,both genders aged 22 to 58 from leading Broking Firms,Corporates,Banks and even Individuals who had come on dot and stayed till 8 pm ! expecting to learn how to read financial statements and market dynamics to assess risks and opportunities in Indian Equities
Common Question right from Manish Shah,who introduced himself to me in the lift going up to the Class ” How are the Markets Looking “? ~ “Where will the Sensex & Nifty head in the short term”?
Had taken a Bull along ! really !…a smaller version of the Wall Street one….told the class I love four animals…Elephants (Lord Ganesha),Lions (My Zodiac Sign),Tortoise(Good Luck & of course Bulls (I’m always one!)….and you’ll always find them on my office desk !…in fact four bulls of various sizes !…and clients know my market view on simply seeing how the bulls are placed !…if facing them straight up (↑) as they sit across me,I’m very bullish…if slanted ( ⁄ )towards them,I’m bullish…slant inclination reveals how much !….if a horizontal view (↔ ) then indicates market will remain flat to rangebound and if the bulls face me vertically (↓ ) I’m bearish !….and slant facing me shows intensity of being bearish !
That got a few knowing laughs from the participants and set off the mood for the Workshop with humour being interspersed right through
Interacted on the Sensex Dynamics right from base year 1978 and in the last 20 years from November 1,1995 to October 30,2015 when despite nearly half of the @ 4850 trading days saw the Sensex close negatively the Sensex ran up over 650% !…but is that enough!…..the Opportunities & Threats that were clearly visible during the years right from 1991 when Modern Reforms set in to 2001 when Markets had bottomed out on the ICE Age Melting to the Sharp drop in Interest rates from 14% to 7% in and around 2004 to post Lehman 2008 levels of 8000 in October 2008 and March 2009….showed them from current Sensex of 26657 how to assess fundamentally where we could be heading and the risks associated….discussed Passive Index Investing vs Active Investing and therefore the need for Fundamental Analysis and therefore the need to Interpret Financials & therefore the need to assess Value vs Price & therefore this Workshop !read more
Anuh Pharma was Rs 280 yesterday morning and is up to Rs 340 this morning !….yet down from ex bonus High of Rs 414.75 on August 12,2015…It was a liberal 2:1 Bonus with xb date being August 5,2015.Cum Bonus the Share Price was at times over Rs 1000. 52 Week xb High of Rs 414.75 implies a cb Price of Rs 1244 while today’s xb price of Rs 340 implies a cb price of Rs 1020 .It was at just Rs 130 twenty months ago in January 2014.Gains are @ 700 % since then in 2014-15 till date
The Face Value is Rs 5 and the Equity has jumped from Rs 4.18 crs to Rs 12.54 crs with the Bonus
FY 15 PAT was @ Rs 22 crs with EPS over Rs 26.Reserves at March 31,2015 were Rs 96.7 crs giving a networth of @ Rs 101 crs and a Book of @ Rs 121
Post the Bonus the Book had moved to just over Rs 43 (Rs 40 at March 31,2015) after considering the Rs 8 crs profit in Q 1 FY 16
Assuming a FY PAT of Rs 25 crs and Rs 30 crs the FY 16 EPS would be @ Rs 10 and Rs 12 respectively
Fy 15 the Dividend was a healthy Rs 7 or 140 % (Interim of Rs 2 ~40% & Final of Rs 5 ~100%)…this was @ 26.5% payout from FY 15 Profits.Assuming similar payout for this year the Dividend should be @ 50% to 55 % on enhanced capital and would entail payout towards @ Rs 7 crs
Adjusted for FY 16 Projected Dividend the Networth should be @ Rs 120 to Rs 125 crs giving a Book of @ Rs 48 to Rs 50 at March 31,2016
Using FY 16 Projected EPS & Book at the current share price of Rs 340 this would give a PE Range of 28 to 34 and a PBV of @ 7
Even if Zero Debt such Valuations are High and need to be supported by high CAGR or non linear growth in the offing over the coming years or a Takeover Situation.Last 5 Years CAGR on Topline is 10% and on Bottomline is 12%….. exciting to run up such Relative Valuations?.So if it’s not based on the Past is there any Game Changing or Life Changing Future or Takeover that’s exciting ?
Though the Company has acquired 7800 sqm adjoining existing 3600 sqm Tarapur,Boisar Factory Land for expansion it also states that they have enough capacity to produce more on demand and increase market share without further capex spend…they have a rated capacity of 900 mtpa for macrolides etc though maximum achievable capacity is 1140 mtpa and 12 mtpa for Corticosteroids…they are currently operating at 65% of the achievable capacity …that should be @ 750mtpa
FY 15 Annual Report does not show any significant addition to Fixed Assets on account of the 7800 sq m land purchased .This must reflect in FY 16 accountsread more
Last Evening interacted with Ramesh Damani ….glad to have caught up with him after awhile…..he presented historical evidence of Global Bull Runs where Indices have zoomed 5x and 6 x in as quick time as 5 years and the biggest of all being 21 x by Nikkei…. says we have commenced one in India from Sensex 17500 levels in August 2013
Rolling on his thought I asked him that at 28000 currently we are at only 0.6x two years down! so would he hazard a guess where we would be in a few years and would that then make even the passive Index Investing a good if not great Wealth Creation Approach for the next few years
In lighter vein he stated that he had said 50000! at a Phuket get together organised by Tata Mutual Fund and yes Index Investing would be wise too
I would say ~ Well look at it this way ! From 17500 to 28000 in two years is @ 25% CAGR on the Sensex and if we keep this up for the next three years we would have crossed 50000 by 2018…..Our Sensex has returned 17% CAGR since inception over 30 years ago though it’s performance has been lower and erratic in lesser periods of 5 and 10 years.
Oh by the way Ramesh asserts that Direct Equity first and Index Funds next is the way to go and not Equity Schemes of Mutual Funds….am completely in sync with him on this
His pet theme is Pharmaceuticals & the Digital Story & those who support E-Commerce Boom like Logistics Players….does not like PSU Banks even at Book or below…gives a thumbs up to Technology & FMCG going forward
Met Deenaben & Asitbhai Mehta too….she’s a pioneering lady in Indian Broking and Asitbhai & her are a well respected couple in the field ….owe them at least a great dinner now for Deenaben proclaiming among 50 present including Pradip Shah(IndAsia),Dilip Piramal(VIP) and Y Trivedi(Reliance) that I should not be the one asking questions but instead be up there answering them on Wealth Creation through Indian Equities !
Deenaben you’re too sweet ! thank you for the lovely compliment ! hope you did not see me blush !
🙂 Her take on the Sensex going forward is quite straightforward and humorous ! “See BJP has 282 Lok Sabha Seats and multiply by 1000 we are at 28200 levels…NDA Coalition has 330 seats so I’m looking now at 33000!”….can’t argue with such funda logic !
😀 Definitely owe Deenaben & Asitbhai a lovely dinner and before Sensex reaches 33000 !
Oh! almost forgot ! as we were leaving,a relatively young gentleman walks up to me and says ” Sir,I’m a great fan of your blog.It’s one of the best !”…told him to interact through responses on blogposts as I could not recollect the name he gave as being one who has responded beforeread more