Wealth Creation Idea : Kajaria Ceramics

Kajaria Ceramics is the largest manufacturer of ceramic/vitrified tiles in India. It has 8 Plants- in Uttar Pradesh, Rajasthan, Gujarat and Andhra Pradesh. It offers more than 2,600 options in ceramic wall & floor tiles, vitrified tiles, designer tiles. Kajaria Ceramics exports to more than 30 countries round the Globe.

Financial Performance :

• M-cap:  INR 11633 cr
• CMP:  732 INR (27th Nov 2017)
• EPS: 15.13 INR
• PE: 48.3
• Debt equity ratio :0.17
• Book Value: 82 INR
• Promoter Share holding is 47.39 %.
• DII/FII/FPI Share  holding 29.14%

Why Kajaria Ceramics?

• Company has consistent profit growth of 27.25% over 5 years.
• Distribution Network of strong and loyal 1200 dealers all over the country.
• Company is going to Expand the ‘Prima Plus’ channel network from the current 41 showrooms to 100 showrooms by March 2019.
• Good return on equity track record: 3 Years ROE 27.33%.
• According to CLSA, India expects to build 60 million new homes to be built between 2018 and 2024.
• Smart Cities Mission, Swachh Bharat Abhiyaan (Sanitation for All by 2019), Atal Mission for Rejuvenation, Urban Transformation (AMRUT) and Housing for all by 2022 is expected to provide significant impetus to the demand for tiles.
•  Biggest organized player in Ceramics business in India.
• 29 Year of Business Experience. 
• Due to GST implementation, Organize player like Kajaria get preference in consumers as Price difference between organize and unorganized player decrease.

For long term investment this stock best suited. Next 5-7 year Kajaria ceramics can deliver 3x-5x returns.

Be Smart. Invest Smartly.

Disclaimer : Please take advice of your financial advisor before any investment.

Power My Portfolio Value Pick: Tata Elxsi Ltd.

Tata Elxsi is part of Tata Group providing design and technology solutions. It servers broadcast, consumer electronics, healthcare, telecom and transportation, Infra industries. Company is Leading player in Big Data Analytics and IoT solution. Tata Elxsi’s Industrial Design division helps customers develop endearing brands and products by using design as a strategic tool for business success.
It won International iF Design Award 2017 for design excellence.
 

It’s Transport Design Portfolio includes Indian Multi-Role Helicopter (IMRH), Kochi Metro Rail, Light combat helicopter, Business jet interiors etc. Tata Elxsi's Visual Computing Labs (VCL) is one of the leading animation and visual effects studio in India.Company has good consistent profit growth of 38.35% over last 5 years


Finance Performance:

• M-cap: INR 5804cr
• CMP: 932 INR (21 th Nov 2017)
• PE: 28.4
• EPS:32.7 INR
• Book Value: 91 INR
• Share capital is 31.14 cr of FV 10.
• Promoter Share holding is 44.63 %
• FII/DII share holder include prominent name like Morgan Stanley, LIC, Motilal Oswal

Company is Smart Solution provider for Auto, Transport, Infra segment. And India’s Smart City project will generate huge demand in this segment. IoT, Big Data, Virtual Reality are emerging technology and Tata Elxsi  Market Leader in this technology in India. For Next 5 years , Tata Elxsi can outperform the market. It can deliver 3x-5x Return in next 5 year.


Be Smart. Invest Smartly.

Disclaimer : Please take advice of your financial advisor before any investment.

Power My Portfolio Value Pick : Nilkamal Ltd

Nilkamal is the world's largest manufacturer of molded furniture and Asia's largest processor of plastic molded product. 

 

Nilkamal Core Business  include:

•     Material Handling Solutions,
•     Moulded Furniture,
•     Nilkamal Mattrezzz,
•     Nilkamal Home Ideas,
•     @home, the Mega Home Store Retail Chain

Company has 8 large manufacturing plant across the Indian.Nilkamal products are available in as many as 30 countries. Mr VAMANRAI V PAREKH is the Chairman of the Nilkamal Board of Directors. With 60 years of experience in the plastics industry.Nilkamal Furniture sold on most of the store in India and also online shopping site like Amazon.


Current Price of Nilkamal is 1610 INR (21th Nov 2017).

Market cap: INR 2399 cr

EPS:79.38 INR
PE:19.9

Being dominant player in its sector, this stock has huge growth potential.
For next 3-5 years view, this stock can deliver multibagger returns.

Be Smart. Invest Smartly.

 

Disclaimer : Please take advice of your financial advisor before any investment.

3 Deadly Sins of Stock Market.

Have you ever think why new investors most of time failed in market.  ? Why only few make real money in stock market? What new person in stock market should do or should not do?  If yes I have answer to the root of this problem.

There 3 common mistakes that most investors do. I call them 3 Sins of Stock Market. 

1.Losing Money:

Most Investor knows this basic rule “Never Lose Money”. But still they end up losing money.  Because they keep holding the looser in hope of recovery. Simply say if you have purchased stock and it went down by 20%. And you wait as you not want to lose money. But this same stock has capability to go more 20% down. Not taking loses in market is biggest mistake most of investors do. Short term downside is normal, but if stock is going down for years or not moving for years then this is also one kind of loss as you are missing opportunity to allocate this money to some other good stock.  Remember there is no Successful investor who didn’t book loses. Taking lose is part of Journey and Investor must accept it.

      2. Buying Quantity then Quality:  

      Every new investor does this mistake.  They like buy 100 stocks of 10 over 1 stock of 1000.  Cost is same but he thinks he will get better chance with 100 stocks then 1. But in market price doesn’t matter.  In both case investment amount is 1000. And in both cases if stock goes up 10% you make 100 profits. So your buying decision should not be just on price factor. I have seen stock worth of 5000 in my career which I didn’t added because of price and same stock is now 22000 in 4 years and still going up. And I also seen stock which was 20 buck 4 years ago and still around 20 odd today also. Yes I am taking about Eicher Motors and Suzlon.

         3. Selling Winners:

       This is where successful investor standout form ordinary investor. Buy Right and Sit Tight. When you get stock which has shown potential to go up, you should not sell it for ordinary profit unless it’s really necessary. Stock which went up 50% has capability to go 100%. Smart Investor is one who adds stock on raise not on fall. Averaging should be done for stock which has shown its potential to go up not for stock which has shown its potential to go down.  Buy correct stock and let compounding do its magic.

     "To make money in stocks you must have the vision to see them, the courage to buy them   and         the patience to hold them. Patience is the rarest of the three." — Thomas Phelps

                                                            Be Smart. Invest Smartly. 

Tax Saver Mutual Fund is not just Tax Saver.

Around April most people seeking  for tax saving option and ended up buying product like PPF or Money Back Insurance plan which might the not need at all. Better planning ahead could give you better option to save tax also get good return on your money. Equity Link Saving Schema(ELSS) is the finest way to save tax and generate handy return.

ELSS Mutual Fund investment give you tax benefit under Section 80-C of the Income Tax Act. Also ELSS funds come with locking period of 3 year which minimum of any tax saving option available in India.

ELSS Fund just not tax saver but also great option to generate good return over the period of time.
Let have look of ELSS fund return vs. PPF return.

Type	SBI Magnum Tax Gain Schema	PPF
Date of Investment	01-05-2000	01-05-2000
Investment Amount	10000	10000
Return %	Market Driven	8.8 %approx. (average of 17 years)
Risk	Moderate	Assured Return
Current Investment value	139160	31946
Total Return on Investment	1391.6%	319.6 %

Just look at the numbers, ELSS beat PPF by huge margin. With SIP option one can reduce the amount of risk in ELSS and generate better than average return. There was time when PPF come with 12% return but now it’s come down to 8.1. So investing in PPF now is not wise.
Reliance Tax Save Fund(G) is our pick from all fund.  Its high performance fund in ELSS category. One can start with minimum 500 INR SIP in ELSS fund. Investor can directly invest in Reliance MF from link: Reliance Mutual Fund.  Start your journey of Investment with Tax saving today.

Not taking risk is the biggest risk in life

Be Smart. Invest Smarty.

Learn To Earn: A Beginner’s Guide

Learn to Earn is book by Peter Lynch, one of the Best Fund Manager of all time. He has given a gift on knowledge of Investment in his book.  Unlike The Intelligent Investor, this book for beginner in Stock market.   Today I have completed it and find it quite good for someone to get basic clear.

Chapter one was on History of Capitalism and I didn’t find much interest while reading that. One can skip it if do not have interest on history

Second chapter the basic of investing was quite useful for readers. In this he explains very clearly how to invest in individual stocks and how to gather information about them. It details what a brokerage is, how it functions, why you may or may not want an expensive stockbroker, how to gather information about companies and decide whether to invest in them, what dividends are and how they work, and so on.

In one part Mr Lynch Mentioned:

“You many not triple your money in stock very often, but   you only need few triple in life time to build up a sizeable fortune. Here’s the math: If you start with $10000 and manage to triple it five times, you’ve got $2.4million, and if it ten times you’ve got $590million and 13 times, you’re the richest person in America”

In next chapter Mr Lynch has given information of how company’s life cycle works. At each stage of the company’s life, the risks and rewards of investing were different – it was a growing stock, a steady stock, a value stock, and a growth stock again at various points along the way. Lynch does a great job of explaining this relationship of a company to its stock, making the connection very clear.

And in last chapter he mentioned very important point about investing. Success of companies depends lot on Leadership. And what does that mean to the investor, or the person learning about personal finance? A great leader means you’ll have a valuable stock – a bad leader means you’ll have an under performing stock. Lynch puts a lot of value in this, and he provides a lot of interesting examples and evidence for the argument.

For someone who doesn’t know ABC of Investment, this book is good guide to start. You can get this book from any library or you can buy it for your personal collection from here:

Click to get your copy: Learn to Earn by Peter Lynch

Be Smart. Invest Smartly

The Warren Buffett Way

Appearing on the PBS show Money World in 1993, Buffett was asked what investment advice he would give a money manager just starting out.  “I’d tell him to do exactly what I did 40- odd year ago, which is to learn about every company in the United State that has publicly traded security. “

Moderator Adam Smith protested,  “But there’s 27,000 public companies”

“Well”, said Buffett, “start with the A’s “

Para above is from the book The Warren Buffett Way. One of the great book of Investment one can have on   his/her Library.  Though book talk about Mr Buffett Investment philosophy which might not suite to many Investors today still I believe the core idea display in book will help individual investor to look the business from eye of Mr Buffett.

We here try to highlight essence of book in few words:

Author has classified Mr Buffett all investment in four core principles:

1. Business
2. Management
3. Financial
4. Value

With above four principle you would find how Mr Buffett has discovered his greatest investments like Coco-Cola, Washington Post  , Gillette, Wells Fargo  etc. The idea of finding successful business is still applicable but after Mr. Buffett no such a great investor came who have applied it with such a ease.

Later part of book displays how to manage portfolio and psychology of money. Robert Hagstrom,the author , did true justice to the idea of Warren Buffett in the book. Writing book on such a topic is not easy. He had kept the thing simple that reader can connect with it. Get your copy today if you have not yet read it from here:   The Warren Buffett Way

“We don’t need to be smarter than rest, we have to be more disciplined than the rest” ~WAAREN BUFFETT

Be Smart. Invest Smartly

Man behind D-Mart: Radhakishan Damani.

D-mart is very well known in India.  Retail market chain which is changing the future of Indian retail market with its sound business model.  Since 2000 when D-mart is started, it has not shut a single store of it. This only justifies strategy and sound business model of it.  And the brain behind this successful business model is Indian Stock Wizard RK Damani.

Rakesh Jhunjhunwala consider Mr Damani as his Guru in his success journey of stock market. Mr RK Damani himself is on of value investor. He has made big fortune in Indian stock market by investing in great Indian corporations in late 80’s. At last known equity portfolio value of Mr RK Damani is around INR 2665cr.

Mr Damani started from almost nothing. At age of 32 with absolute no knowledge of Stocks , he enter the family  business of stock broking. He began as a speculator at the stock market. within no time, he understood that watching was not the best way to make or grow capital, and hence, taking inspiration from the legendary value investor Chandrakant Sampat, he started playing for the long term. His philosophy was long term, say 5 to 10 years. He would see if the product has the potential that far in the future. Gradually, his judgement began getting right, and within the next couple of years he was standing at par with the ranks of the biggies on Dalal Street.

As his nature Mr Damani in 2001 , entered in new unknown space which he has no knowledge about, Retail Business. In a market where more recognized and larger counterparts such as Spencer’s (RP-Sanjiv Goenka Group), More Store (Aditya Birla Retail), Star Bazaar (Tata Group-owned chain of hypermarkets) and Hypercity (Shoppers Stop-owned). In such a competitive market   D mart has successfully managed to crack the code in just about a decade.

Now there is an unsaid rule in the market that – “one must not open any store within a 1km radius of Dmart, simply because, no one can beat them on prices.”

As now   D- Mart is coming with IPO on 8^th March , Mr Damani stake of  90 percent will be valued around INR 1600 Cr.  All broker house has given high rating to Dmart IPO so as we also consider it good buy even if one not get hand on IPO,  Investor can buy it after listing long term.

Be Smart. Invest Smartly.

Portfolio2- High-Beta of Tomorrow

Hello Investors,

It’s past 5 months when we have published our first model portfolio undervalue-gems and since then it has delivered stellar 32 % upside so far against Sensex’s 3.69% return.

Now today we bring you our second model folio. This folio we count for investor who has above the average risk profile. So without waiting lets go to our list of high-beta stocks.

Portfolio2 High-Beta	Suzlon Energy	Marksan                Pharma	South India Bank	Manali Petrochemical
Sector	Renewable        Energy	Pharmacy	Bank	Petrochemical
Current Price (23thFeb )	18.05	49.7	20.55	34.85
M cap(cr)	9069	2034	3704	599
P/E	42	121.22	9.51	12.36
Industries P/E	27	27.68	24.03	30.29
Divined Yield	0	0.24	2.43	1.43
EPS	0.43	0.41	2.16	2.82
Book Value	1.23	10.02	30.57	16.43
Our Folio allocation (%)	30	30	20	20

As you notice here we have listed 4 stocks where two are priced high in valuation with PE above industries PE  where other two are at low PE.

Now Suzlon and Marksan Pharmacy are two stock we picked which are currently coming from negative to positive trends. We strongly believe that this two stocks are turnaround story. You can read our last article on Suzlon ‘Suzlon- Wind is Started Flowing’. On other had Marksan Pharm recently got UK regulatory approval from its GOA plant. Year ago due to non-compliance issue stock halved and hit 40 from 100.

For rest two stock South India Bank and Manali Petrochemical, we find that market has valued this stock very low and any positive even can bring them to eye of market. Also both stocks are consistent dividend player which added in its value.

So if you are ready with fund and want some phenomenal return on long side with ability to withstand higher risk then you can pick this folio in one go.

Here we are keeping investment horizon more than 2 year because diamonds took time to get in shape and then shine.

Be Smart. Invest Smartly

Panic of 1901: First stock market crash of New York Stock Exchange

The Panic of 1901 was started because E.H.Harriman and James Hills, titans of rail road industry, wanted to control of Northern Pacific Railroad.

In those days they started buying share of Northern Pacific Railroad from open market quietly and as there was no regulation on such buying no one have any idea of it. In April 1901, E.H. Harriman started buying Northern Pacific Railroad stock quietly and stock rose 25% in a month time.

Since overall market is raising no one predict that takeover is happening in Northern Pacific Railroad. Some trader thought that Northern Pacific Railroad stock rising to fast and they started shorting it.

When someone short stock, he in fact borrowing security from someone else and selling it.  When price of security goes down person who shorted it, goes to market and buy at lower price.

But in this case as there are secretly buying was happening , stock continue it run and when on May 7, stock reach $143 and news floated what was happening behind the scene. When news came that Harriman is in race of buying, Hill and J.P Morgan try to stop him by putting in bids to buy stock as much as they could. Now it was open to all that it was race between Harriman and Hill, and sometime there are many people out there holding short position.

No one was selling and big buyers were forcing the price through the ceiling. Now shorter was caught in trap , they has to deliver the stock to whom they sold else the buyer can go to market and buy at market price and come back with bill to shorter. By the May 8 stock was trading $180 a share.

Next day fear and panic started in shorter and by noon shorter has bid the stock at $1000. When you have to have it, you have to have it.

Now at same time interesting thing was started in market, as shorts caught in very dangerous situation, they started selling other holding to raise money to cover their short position. Most of the other stock was down 10 to 20 points.  Panic continues on next day and most of the other stocks were down 40 to 60 points.

This was the classical example that single stock created rest all stock on down journey.  Same time there were few intelligent investor who has complete understanding of situation and got the opportunity to buy the stock that all are dumping because of their stupidity.

Article Inspired from book “Buffettology “

Be Smart. Invest Smartly.