Daljeet Kohli keeps a strict discipline when it comes to buying stocks. The fact that a stock has strong fundamentals is not reason enough to buy the stock if its valuations are not reasonable. It is for this reason that Daljeet has put a number of his all-time favourite stocks like Ajanta Pharma and Alembic Pharma on ‘hold’ despite stellar performance.
Daljeet & Prerna Jhunjhunwala had, in their earlier reports dated 4th August 2014 and 27th October 2014, recommended a ‘sell’ on Kajaria Ceramics. In the first report, they said:
“… We are positive on the long term prospects of the company given its leadership position and its thrust to maintain this position. However, we remain cautious on the aggressive expansion plans, higher ad spends and teething issues in the new segments (sanitaryware and faucets). We maintain our SELL rating on the stock as valuations appear rich at current levels. We arrive at a revised target price of Rs 482 per share …”
However, in the latest report dated 28th October, Daljeet & Prerna have pointed out that Q2FY15 results are “Better than expectations”. After an analysis of the results, they say;
“We are positive on the long term prospects of the company given its leadership position and its thrust to maintain this position. We are positive on the execution capabilities of the company given the on-schedule commencement of the expansion plans. On-time execution of expansion plans is likely to result in return of 27.6% ROE in FY16E after an expected dip in FY15E at 25.4% from 27.9% in FY14. The outlook of the sector has become more robust given the government thrust on building new toilets, new government campaign of Swachh Bharat Mission and corporate participation in the mission through CSR activities. We arrive at a revised target price of Rs 635 per share by revising our target multiple upwards to 22x from 18x earlier on revised FY16E earnings estimate of Rs 28.9 per share. Accordingly, we revise our rating on the stock to HOLD from SELL earlier.”
It is noteworthy that investors who may have followed the ‘sell’ rating have not been put to any loss because the stock price has remained virtually flat at about Rs. 600 in the past few months. The stock will probably undergo a “time correction” on account of its rich valuations of 30.0x and 20.9x FY15E and FY16E earnings.
this article proves that even Reputed person like Daljeet can go wrong. You can see in very short time he took U turn.
To create wealth out of Equity, target based strategy doesn’t work. Only brokers make money out of increased volume from buy / sell calls. Brokers can easily drive retail investors mind wherever they want.
Absolutely right Jatin.IndiaNivesh has consistently maintained a hold on Ajanta with a TP of 1380 or so,a sell on TVS M. for a TP of under 150,a hold on Alembic with a TP of 350 around,etc.
However,the brokerage has consistently identified good cos. at low valuations.TP is a different thing,but Ajanta,Alembic,HSIL,Sharon,Force,Hester,etc. have all been good recos.
So,they are good on the analysis front,but brokerages are yet to realise tthe futility of price targets!
The point is how to believe his next buy calls. Any time he may change the decision. Clonners are having hard time with Mr. Kohli 🙂
Mr. Kohli does not change his mind too quickly, it is the companies that change their fundamentals 🙂
That’s another way of looking at it.
As for the cloners, let ’em have a hard time I say.
Disclosure : Fan of Daljeet Kohli here.
Abhi, GOod one 🙂
Disc: I am a cloner 😉
Daljeet’s recos perform better than other brokerage firms but if you really want to see his performance then check how fair his 3 portfolio performed.
In recent run up, his aggressive didn’t performed well. His only significant portfolio gain coming from Conservative !!!
Ultimate point : Don’t invest blindly or exit after getting his reco. Use own brain.