Your Equity Approach & Strategy will or should depend on whether you want to make money or don’t want to lose any !
So if you are a guy who sweats at falls you ought to be taking less risk and looking at the ‘N’o or Low risk ‘N’s…NHPC @ Rs 25 and NTPC @ Rs 175
But if you enjoy or indulge in Equities hoping for the windfalls,then perhaps you should chase Delta @ Rs 98…Rakesh Jhunjhunwala increased his stake today in this Jaidev Mody company
However what may interest both set of Investors..those not willing to risk capital or those willing to aggressively risk it…. is L & T Finance Holdings that listed today……Issued at Rs 52,it listed around this price,went up marginally and then slacked to below Rs 50…bounced back up to Rs 51 and then again dropped to close below Rs 50
This is Larsen Groups first Public Offer in nearly 25 years and that too a share with FV of Rs 10 offered at Rs 52 and available below Rs 50 on first day of listing !…..It’s and operation of scale and spreads…. and L & T Finance comes out a winner in both…my valuations for it are strong over One to Three Years….It must be in any and every Investment Portfolio
12 thoughts on “Your Equity Approach & Strategy will or should depend on whether you want to make money or don’t want to lose any !…NHPC or NTPC ?…or Delta?….New Listing L & T Finance is a safe bet for both objectives”
Dear Mr. Gaurav,
I don’t agree with your view on L&T Finance Holdings.
When I looked at the valuations, it doesn’t qualify as a undervalued compared to peers.
It is valued at 2.05 times the Book (FY11 earnings, post issue equity).
We have IDFC, PFC, REC with P/BV of 1.9, 1.6, 1.5, respectively (for FY11 earnings), which are cheaper compared to L&T FH.
It is better to own L&T, than L&T FH.
I would say this is the time to buy IDBI and not L&T Finance.
Dear Gaurav, a very good choice pointed over LT Holdings
Sir, but what if i want to invest in a casino company and not look at its share till 2018 as no new licenses are to be issued till ’18 ?
Among -the two ‘N’s i prefer NHPC as they have almost ‘free’ fuel source – water although they have to pay royalty to the respective State Govt for its usage.
The problem with NHPC is that its a SUPER ONG term winner as Hydro-geological eng projects are complex & can overshoot budget & timelines.
Hold & forget for the next 5 years you’ll beat FD’s & the like.
NTPC looks good at the forst sight but the problem is COAL is UNCOOL & exploiting coal from Forests & tribelands is MORE UNCOOL & now with the rightful interest shown in GREEN matters thanks to the wonderful initiative taken by Mr. JaiRam Ramesh(may God bless his soul) env. clearanceas aint gonna be easy.
In a nutshell i will not buy a single share in NTPC
Why will i invest a single rupee in L&T when you have such wonderfiul finance companies like Shriram Transport finance, Muthoot, Mahindra, etc…..
THIS IS JUST MY PRIVATE, INEXPERIENCED RANTS
Kindly take it with a bag of salt.
Happy ID all. Jai Hind!
Look Forward guys….it is a game of scale and spreads as I have stated….. L & T F H notched a PAT of @ Rs 400 crs….spreads are good and ROE is good as the company is in high margins lending segments..Infrastructure earns a spread of just undr 5% while Retail and Corporate lending spreads are even higher than this….With the IPO raising over a Rs 1000 crs and with leveraging on this the additional funds for deployment will ensure a PAT of over Rs 600 crs this year….and more in the years to follow….EPS will cross Rs 4 and move upwards Rs 7 in the two years to 2013…….my sense is price movement towrds Rs 100 in the next year or two …Book Value post IPO of Rs 24 should move to Rs 27 this financial year and cross Rs 30 next financial year….Networth should move from Rs 4000 crs towards Rs 5000 crs…when it crosses Rs 6500 crs in three years,the Book Value would be @Rs 40….Share Price closer to Rs 100….in anycase there is not much downside…Panic may see it fall towards Rs 40..super buy at this price….I see it this way Praveen & Varun….I also see IDBI,IDFC etc as good bets…however their spreads are not as strong as L& T Finance Holdings subsidiaries…Ofcourse the parent L & T remains my favourite too….and do remember,last year they have invested at Rs 67 in L & T Finance Holdings..Anchor Investors Blackstone and Malaysia’s Khazanah have entered at Rs 55….The Compan had gross Loans and Advances of @ Rs 18000 crs and disbursements over Rs 24000 crs as at March 31,2011 for FY 2010/11….These figures will move up in the years ahead…..I’ve taken a call
Dear Mr. Gaurav,
I’m carrying forward this discussion, for a healthy information sharing.
After all, you are more knowledgeable and experienced, than me.
Few counter arguments from your views.
1. Agree with you that infrastructure lending earns 5%; retail lending margin is high. Not sure about corporate lending margin. But what about NPAs from retail lending, in a rising interest rate scenario?
2. Let us assume that price moves closer to 100 in the next year or two. With a book value of 30 in the next financial year, it will be trading at 3.33 times the book. Too costly, I feel.
Some of the small private sector banks can be bought for less than 2 times the book.
So, why L&T FH; unless, we feel its future earnings will grow exponentially
3. Investment by parent company at the rate of 67, does not inspire any confidence. Because, L&T holds most of the shares at the face value of Rs. 10, so even if they buy few more shares at a higher premium, their cost of acquisitions will be near to Rs. 10 only.
These are my views and in no way these are arguments.
Lot of scripts towards 52week low.What would be your top picks for long terms?
Stumbled on your blog. Fascinating thought process you have. If I read everything here I might end up getting out of the stock market! Are so many promoters really so crooked. Does that leave a few Tata/PSU cos for anyone to invest.
While on the subject , would appreciate your advise on investing in any Yash Birla company.
Im trapped at a higher price in ramsarup industries ……you being an experianced market man do you know if the ramsarup management is crooked or its in bad shape for genuine business reasons …….if you say its crooked ill book my losses and walk away
ps please use your well read blog to warn people about the sahara group ( Indias SECOND most corrupt group we all know the most corrpt group hint hint it split up 3 years ago lol ) and its debt instruments that whole pyramid scheme could come crashing down ANYTIME
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With new norms L& T finance cannot start a bank unless L&T reduces holding to 49%.
If L& T starts a bank, L&T Finance shareholders get no benefit.
Do we hold?