Non performing stocks.

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by kharb, Aug 15, 2015.

  1. kharb

    kharb Well-Known Member

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    Now stock market is under correction,so we may hear lot of experts to be fearful ,who were earlier not afraid of recommending same stocks at 20% higher level.Large no of experts are stuck in poor qualty stocks.Their time tested and tried strategy is they will give recommendation of stocks or model portfolio in which there will be three four good qualty stocks and in between they will put carefully one or two stocks of poor qualty in which they are stuck.I daily read or see such information .So those who hold such poor qualty stocks should use these recommendations to liquidate their duds and stay away from poor qualty.But I agree that it is good time to buy blue chip qualty stocks and you can make your own list or may buy fundamently strong blue chips recommended by at least two three or more experts .Bye Bye Duds .I love you quality.
     
  2. kharb

    kharb Well-Known Member

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    I am on cleaning drive of my portfolio. I had already sold and said good bye to IVRCL,Vedanta,Hindalco. On last Friday it was turn of Punj Llyod.Some how I am still holding JP Associates on theory that they have real assets to back their debt.When interest rates will come down,real estate ,
    Cement and infra cycle may turn up.They can come on track by disposing some of their assets and with some working capital availability due to this exercise at that time may help company to tide over crisis.Chances are remote but they have done it earlier after huge loss in Gulf war 1..Still many stocks are under watch for non performance like Tata steel,R power,R infra ,R Com,R capital .But bearing huge loss in this exercise ,60 % to 90% for late decision and my practice of holding for very long term.Here I would like to mention that at time of last boom of 2007,they were mutibaggers but I did not book profit .It is better late than never and we don't get what we don't deserve for not making right decision at right time.
     
    Last edited: Sep 20, 2015
  3. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    Dear kharb ,

    In my view Influencing factors to Stock market in Future ...

    1.RBI Rate cut (positive for market )
    2.lot size of Nifty and Stocks in Futures (negative) because retailers participation may affect
    3.Bihar election Results ( + /-)
    4.china currency war (negative)

    Every high in market there is a chance to reduce our weak stocks .....
    ALL THE BEST
     
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  4. kharb

    kharb Well-Known Member

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    As already mentioned I am in cleaning drive of portfolio resulting in sale of Punj,Vedanta,Hindalco,IVRCL.But still holding JP Associates.My reasoning has been that although highly indebted company, but is backed by huge real and hard assets ,world level Cement capacity,power plants,noida Agra super high way,budha racing car track and list is unending including real estate.Now in last two months Cement prices has gone up by 20% to 40 %,interest rates heading lower, govt focus on infra.It seems now every thing has started going right for JP Associates after a bloody nose in last two years.Although I have still many doubts,But a silver lining is clearly visible for turn around. JP group has done this type of turn around after Gulf war also.What are views of other friends in JP Associates.
     
    Last edited: Sep 24, 2015
  5. jarmoney

    jarmoney New Member

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    You are experiencing loss aversion syndrome. Cut all infra and capital intensive stocks in one swoop! (Mkt will crash between now and Oct 31 so do it now!)
     
  6. bholu

    bholu Active Member

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    JP associates will remain a dud because debt is huge monetizing assets is not possible plus corporate governance is an issue once this happens to any stock recovery is impossible look at lanco gmr suzlon etc etc better sell
     
  7. kharb

    kharb Well-Known Member

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    In my view there is small possibility of turn around in JP associates.They will be able to sell their assets at good price because,Cement industry is under consolidation. Big players don't want fresh addition in capacity to avoid excess capacities in India.So they will like to buy Cement plants available at reasonable price.More over Big players are worried over possibilty of entry of a Big bang player like RIL,who has get lot of cash and searching for a profitable take over of a Big Business .Probabily Cement and Infra suits them as they had tried unsuccessfully in their take over bid of L& T long back.Now AM Naik has made L&T a big players ,too big for take over by any Indian Company.So now JP Associates suits RIL.Huge hard and real assets available at reasonable price. If I would have been in Mukesh Ambani place,I would have gone for this. I just see this as a possibility and wild guess without any information.
     
    Last edited: Oct 8, 2015
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  8. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    Dear kharb ,
    you are correct ....:)

    Your mind is business man mind .....
     
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  9. kharb

    kharb Well-Known Member

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    Exited textile sector ,enjoyed good run.What a great party it was.Good luck and bye to investers of textile sector for further ride. Will meet again on any significantly good correction or some very bad time .I was in need to take out some cash ,as cash portion of my portfolio has gone down after deploying in last mild correction.
     
    Last edited: Oct 8, 2015
  10. kharb

    kharb Well-Known Member

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    Dear RMSC_JP Associates is up 16% on hope rally since my last posting.
     
  11. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    Dear kharb ,
    In my View JP Associates face strong resistance level at Rs. 13.50 - 14
    Range is Rs. 10 to 13.50

    Company is having high debt Rs. 28163 cr.
    Contingent Liabilities Rs. 4910 Cr.

    Later Year Net Profit Rs. 413.89 Cr.

    how many years will take for debt reduction ? every year they have to pay interest , only solution is asset selling ... and that process is also very slow

    and more over Face value of this stock is Rs. 2

    Book value Rs. 60 , but it is a drop in hole debt ocean
     
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  12. kharb

    kharb Well-Known Member

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    Dear RMSC_ facts U give r OK .But I am just asking for any hope of turn around.Can group come out of the mesh. Fortunately they have attractive Cement assets and many contentenders for that ,so can get good value .Also unfortunately big banks are stuck and simply can not allow this group to go bust,so will try to bail out indirectly and Banks would like to swim with them and do every thing for turn around. I am aware of the bad situation and for me this is case of hope against hope with lowering of interest rates and stake sale ,is there some chance.I have already written off my investment in this stock and just in wait of my NPA recovery like Indian Banks.Other than JP, R power and Tata steel are my other two NPA.
     
    Last edited: Oct 8, 2015
  13. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

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    Dear kharb

    Asset value is good but major problem is asset selling process is very slow and Big companies only
    take over that and with huge cash reserve players are bargaining and no body interested to take over power projects , Reliance power (ADAG Group ) close his take our plans in hydal power projects

    so all players know JP Ass is in a big financial crises,so they try to get very less valuations ...
    that is the problem ...if time is going like this debt pressure will increase more and more year by year

    and more over cement is a cyclical business, very few players interested in this field , so that take over chance is only with cash parties or large cement companies like ACC , ULTRA TECH , AMBUJA , OR INDIA CEMENT

    and more over no body want to take over Infra projects also .....

    Banks are not written off their debt ....no doubt

    It is a growing balloon ....

    If anybody like global players " Black stone " or Reliance Ind , Rel Infra , L&T , ULTRA TECH , AMBUJA , ACC take over problem solved ... but convertible ratio and asset valuation and contingent Liabilities are main items .....
     
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  14. kharb

    kharb Well-Known Member

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    Anil Ambani ADAG group has been in news for last few years for all the wrong reasons. His high premium price IPO of Reliance Power has ruined his reputation .Unplanned growth in non core areas and piling of huge debt has further broken bones of the ADAG group.But If I am not wrong,now I am finding small baby steps by ADAG group to come out of this situation.I think now Anil Ambani has plans to clear mesh.He seems to be more realistic now ,unlike a Angry Youngman earlier who just want to show himself bigger than Mukesh.I am getting first sign of him in right direction is his reconciliatory steps towards Mukesh and RIL.RIL itself under fire from many quarters is also warming itself to ADAG group.We should not undermine Anil Ambani expertise in finiance. He was the man looking afer RIL finiance under Dhiru Bhai Ambani.I am a no fan of Anil Ambani and is rather loser in his compnies as share holder.But as an experienced invester I am looking positively in ADAG pack now .Out of them Reliance Capital looks to be grossly underpriced with One of the biggest mutual fund,private life and health insurance and probably third largest housing finance portfolio and stock broking business under its belt.Japan company has already invested in this business and looking to increase their stake further .In my view stock can give good returns much more than any body can anticipate now. These are my personal views for discussion purposes and not a recommendation to buy. I am invester in Reliance Capital ,so is Biased.
     
    Last edited: Oct 9, 2015
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  15. kharb

    kharb Well-Known Member

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    Reliance Capital is going as per my plan.Stock is grossly underpriced.
     
  16. kharb

    kharb Well-Known Member

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    ADAG pack is on rise.And best of lot is Reliance Capital is grossly underpriced ,has been discussed by me when stock was around 350.Since then stock is on rise .Stock is still moving and expected its north journey till stock is at respectable price band .
     
  17. anindyaswati

    anindyaswati Member

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    You are correct sir.stock market is very very easy ....only in hindsight.Plz read Nasim Taleb.
    A successful investor is not necessarily an expert.After a lot of heart breaking episode i now always book profit after 21.45% and re enter. i have calculated if i do this the overhead trading cost doesn't impact long term average. i have booked 140% profit in LICHSGFN in total but with repeated profit booking.
     
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  18. kharb

    kharb Well-Known Member

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    In order to reduce stocks in portfolio sold two stocks.Sold Reliance Infrastructure ,was holding since long when it was Reliance Energy.Company ventured in power generation and road construction ,infra etc but did nothing remarkable for investers. .Now company want to come out of infra and want to be a big player in Defence.Defence is good sector .But now can not wait further.Also sold Grasim.I was holding it since long ,but now Cement business has been demerged into Ultratech and now it is more of a holding company in addition to viscose and alkali business.Grasim money reinvested in Ultratech Cement and Reliance Infra money reinvested in Reliance Capital.I think these two are compartivly better compnies and are already in my portfolio.
     
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  19. Carl Icahn

    Carl Icahn Active Member

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    "In order to reduce stocks in portfolio sold two stocks"

    Have you thought of alternatives to deploy the funds?
     
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  20. kharb

    kharb Well-Known Member

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    Dear Carl Icahn, Presently I am working on reducing stocks,I am delebrately avoiding new ideas as that will again result into increase in size.Now I am just reducing stocks and reinvesting money in existing names of my portfolio,still portfolio has 31 stocks .Will not add any new till I achivement first target of 25 by Septmber 2016 and after that will add only after kicking out some non performer out of 25 stock list.My final target is to have 20 stocks by March 2017.Although some great idea or bargain hunting is not ruled out .I am convinced that portfolio of more than 20 stocks give breathing space for non performers in useless and futile wait for turn around or bounce back of duds.Bigger portfolio also enable easy entry of weak ideas .Performance of stock should be only criteria for place in portfolio.Either stock should Perform or kick out the dead woods.Bigger portfolio of more than 20 stocks is root cause of underperformance of portfolio.
     
    Last edited: Nov 5, 2015
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