Great time to make fundamently strong blue chip portfolio

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by kharb, Sep 2, 2015.

  1. kharb

    kharb Well-Known Member

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    I don't drink presently but enjoyed for many years.I know Bihar ban may be followed by some other states .But as I have experince of drinking I know people will consume some of their quota when on visit to non ban states, some may do it illegaly.I have full faith in its consumers who will never leave their habit due to influnce of family or govt.So this ban will have small impact on consumption of aprox 5% ,which may be compensated by next govt in future .So it is small negative.As I am fan of blue chip leadership companies and was not having this leader of Alcohol in my portfolio but it was in my radar like all sector leaders blue chips.So took token entry in United Spritis on bad news.Good stocks are always buy in bad news.Alcohol consumption may continue till last man live on the earth.
     
    Last edited: Nov 27, 2015
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  2. Abhilash Padival

    Abhilash Padival Member

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    Ha ha.. Fully agree with you sir on this!...
     
  3. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Good point. Cigarette is example. Despite ill effects being known consumers buy to smoke.

    But investing in sunset stocks is not good idea when so many good quality stock are there.
     
  4. kharb

    kharb Well-Known Member

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    Dear Mukherjea,Sun will never set for bad and ugly attractions for human beings.More over market cap of Alcohol leaders in all countries are more than tobacoo leaders .But it is reverse in India and will correct some day.You see market cap of ITC and United Spritis. Then you see the catch up distance.Yes many high growth high quality stocks are available but I am always after blue chip sector leaders who can beat sensex or nifty in next 10 years.More over population of 1.3 billion always gives me comfort for consumtion leaders.But as now I am interested party so would not argue further.
     
    Last edited: Nov 27, 2015
  5. Sachin pathak

    Sachin pathak Active Member

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  6. Sachin pathak

    Sachin pathak Active Member

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    The report states that the average returns from a company listed on the stock exchange was about 10% per year from the period between 1900 and 2010. Tobacco stocks, however, produced annualized returns of 14.6% during the same period. In terms of hard cash, this means that a single dollar invested in tobacco stocks was worth $6.3 million by 2010, while a dollar invested in a stock market index would only be worth $38,255.
     
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  7. New_Investor

    New_Investor Active Member

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    Sachinji, Please look at the followin g link for "How a secretive trade deal could help American tobacco companies hook new smokers"
    https://www.washingtonpost.com/news...ion-this-century-obamas-trade-deal-will-help/
    These people have ruined hundreds of families in developing countries just to earn profit.
    You guys want to earn money by trading in stocks of companies, who earn profit by poisoning lives of hundreds of human beings.
    Please stay away from Alcohol and Cigarette Stocks.
     
    Last edited: Nov 28, 2015
  8. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    100% Agreed with @New_Investor When there are good stocks why go for sin stocks like cigarettes and liquor?
     
  9. New_Investor

    New_Investor Active Member

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    Investors who hold Alcohol stocks and wish to exit owing to the BAN news need not exit in haste. They will have a golden chance to exit. Come Christmas and New Year, Alcohol products will see huge demand and obviously Alcohol stocks also will be in demand.
     
  10. New_Investor

    New_Investor Active Member

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    Small correction in my earlier post dated 28th November 2015 @ 07:01 PM
    These people have ruined hundreds of families in developing countries (and not developed countries) just to earn profit. Cigarette and Alcohol Majors are mainly located in Developed countries and they target developing and poor countries. They even go to the extent of distributing free samples to college kids in poor countries.
     
  11. kharb

    kharb Well-Known Member

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    I don't agree with your views, alcohol and tobacco consumption is present since whole world was underdeveloped.In western and developed world consumption is very high even in females as compare to underdeveloped females.Just blame west for every thing has become old fashioned.To consume or not is purely choice of individual and devolping countries are not to be blamed for this.No foreign company is in Biddi and hooka manufacturing , marketing more health hazard than cigarette. Country made alcohol being consumed since many thousand years is more harmful as compare to IMFL.I don't drink and don't smoke ,don't advocate consumption for these .I have ITC since many years and has just added United Spritis. At least both are giving compartivly refined and less health risky substitute to deadly Deshi Biddi , Hooka and Deshi Daru .More over consumption of low and disciplined quantity of Alcohol has scientific support for consumption .I am neither recommending consumption nor stocks.
     
    Last edited: Nov 28, 2015
  12. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    @kharb

    My view is in India we have separate culture ...people will not accept it and people will think it is a bad habit
    and more over Women are strongly against there alcohol and tobacco ....
    normally people will not drink or smoke in his house ....
    most of the political parties are trying to catch women vote bank , in many states sate governments are closing illegal shops (particularly in Andhra Pradesh government now taking strong action against belt shops ) in future in my view with in 20-25 years in India complete alcohol ban may be possible and it may take next 4 to 5 elections

    Investor is also look in to national culture and government is also imposing heavy taxes on these products
    is also very negative factor
     
  13. BombayBoy

    BombayBoy Well-Known Member

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    if you are concerned with the ethical part of businesses, you might as well invest in Shariah compliant companies because they strictly forbid investment in any business that is considered haram

    i once had the same thoughts about the social evil of alcohol/tobacco but considering everything, it wasn't worth missing the opportunity to invest in ITC when it was ₹10 paid up and the other businesses that the company has

    also comparing ITC with United Spirits? ITC has a considerable amount of revenue from non cigarette businesses and it is not comparable (FMCG, Hospitality, Agri, Paperboards & Speciality Papers)

    unlike the US where people have won a fortune against tobacco companies, it will never happen in India and there's no reason to be worried

    i'm a teetotaler, non smoker
     
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  14. New_Investor

    New_Investor Active Member

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    Kharb Sir, I agree with you that tobacco products and alcohol products are being produced and sold in developed as well as developing countries since centuries. Even in India tobacco products and alcohol products are being bought since centuries. But in developed countries anti tobacco and anti alcohol promotions are on the rise in the last few years. Many NGOs, Social Organizations etc are running anti alcohol and anti tobacco campaigns in developing as well as developed countries. More in developed countries. If these are successful, how will the tobacco product and alcohol product companies survive? They will have to find new markets in such countries where there is high illiteracy and very few (or almost no) anti alcohol and anti tobacco campaigners.

    Further, I agree with your view "More over consumption of low and disciplined quantity of Alcohol has scientific support for consumption". But medicines should always be "consumed in low and disciplined quantity" but can be poisonous if "consumed in high and undisciplined quantity". Excess of anything is always poison.

    I am sorry to say but I donot agree with RMSC Sir that "in future in my view with in 20-25 years in India complete alcohol ban may be possible and it may take next 4 to 5 elections". I think that it is almost impossible for India to be Alcohol free or Tobacco free.

    Now, I think we should stop the debate. TO DRINK OR NOT TO DRINK is a individual's personal decision. Similarly, where to invest in ethical or unethical business is a investor's personal decision.

    There is no point in debating or fighting on the topic. MAKING MONEY is every investor's motive.

    Anyways, I again request to stop the debate. I did not intend to hurt anybody's (alcohol consumers / smokers/ unethical investors) feelings and I apologize if I have unintentionally done so.
     
  15. Sachin pathak

    Sachin pathak Active Member

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    But nobody is asking or forcing you to invest in any cigarettes and liquor stocks..... But the reality seems to be that in USA the best returns were given by cigarette companies
     
  16. New_Investor

    New_Investor Active Member

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    Ok. Let us stop the debate and move on.
     
  17. Sachin pathak

    Sachin pathak Active Member

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    So if liquor and cigarette companies are sinful, greedy, destroying families, make unethical investment ....what about all those which are collectively ensuring that there isnt much future through pollution, global warming, climate change or the defence companies which thrive causing unrest or those engaged in questionable medical practices or whose produce is on the back of death of millions of animals......
     
  18. Sachin pathak

    Sachin pathak Active Member

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    Let each individual decide what he wishes to invest in or not. Dont try to impose views.

    Besides the hundreds of victims find themselves in the position they are in as a consequence of their own informed decisions.
     
  19. New_Investor

    New_Investor Active Member

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    Ok. Let us stop the debate and move on.
     
  20. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    source : http://rakesh-jhunjhunwala.in/has-p...actical-error-in-buying-this-small-cap-stock/

    Has Porinju Veliyath Committed A Tactical Error In Buying This Small Cap Stock?

    On Tuesday, 24th November 2015, Porinju Veliyath and Rajasthan Global Securities launched an aggressive, no-holds-barred attack on the counter of Globus Spirits, the micro-cap (Rs. 219 crore) manufacturer of IMFL (Indian Made Foreign Liquor) brands like ‘Nimboo’, ‘Ghommar’, ‘Heer Ranjha’, ‘Narangi’ etc.

    The duo was in a rush to grab all the stocks in sight and was in no mood to bargain with the sellers. Porinju pocketed 1,55,000 shares at Rs. 66.30 each. Rajasthan Global pocketed 6,30,081 shares at a slightly better price of about Rs. 65.85 each. The sellers were beaming with joy because the stock rocketed 20% and tripped the upper circuit.

    Porinju has pumped in about a crore of rupees into Globus while Rajasthan Global’s investment is about Rs. 4 crore.

    At first glance, Globus Spirits does not appear to fit in with Porinju’s investment philosophy because it is not a “cheap” stock. At the CMP of Rs. 76, the stock is at a P/E of 26x, which is quite exorbitant for a micro-cap. The stock also has a low average three-year ROE of 3.5% and a poor growth record.

    Porinju’s timing was most inauspicious. The very next day, Nitish Kumar, the newly re-elected Chief Minister of Bihar, made the grim announcement that the State of Bihar will go dry from 1st April 2016 and the sale and consumption of liquor will be banned.

    The rationale for the ban is that “the poorest of the poor are consuming liquor, badly hitting their families and their children’s education” and “Increasing liquor consumption is also a major cause for domestic violence, particularly against women, and has contributed to a rise in crimes”. It is also stated that “Women are suffering more than anyone else due to increasing liquor consumption.”

    The ban will affect a body blow on the fortunes of Globus Spirits. Shekar Swarup, its’ ED, had stated a few days ago that the Company is setting up a distillery in Bihar and that there is a “good response” to IMFL in Bihar.

    Nitin Mathur, an expert, opined that “the ban is going to be a huge negative for companies like Globus Spirits, United Spirits Limited and Radico Khaitan as Bihar forms a significant portion of their revenue”. Priya Sheth of CNBCTV18 estimated that Bihar constitutes 17% of Globus’ sales.

    To compound the issue, Shivraj Chavan, Chief Minister of Madhya Pradesh, came on record to state that “We have decided that we will not let any new liquor shop open anywhere in the state”.
     
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