Sharon Bio-medicine will count as one of Daljeet Kohli’s biggest flop stock picks. The stock did live up to its initial promise and delivered magnificent gains. However, thereafter, something, somewhere seems to have gone wrong and the stock has registered colossal losses. I have conducted a forensic analysis of the stock in my piece What We Can Learn From The Sharon Bio-Medicine Fiasco.
Anyway, Sharon Bio-Medicine has reported dismal Q3FY15 results which has resulted in Daljeet Kohli taking a long and hard look at the stock. After deep thought, Daljeet has decided to cut his losses and has terminated coverage of the stock. This is what he says in his latest advisory:
“Termination of coverage: Sharon Bio-medicine (SBML IN) grossly underperformed in terms of sales, EBITDA as well as adjusted PAT. This is mainly due to y-y contraction in sales coupled with sharp increase in material cost. As a result, SBML reported loss of Rs758mn at EBITDA level compared to operating profit of Rs372mn for Q2FY14. Weak operating performance along with higher interest cost resulted in loss of Rs921mn against profit of Rs171mn at net income level. As of now, there is no visibility on USFDA inspection at its manufacturing facility, which was one of the key trigger for business growth. Though the key trigger was taking time to pan out, operating profit of base business was sufficient to compensate interest outgo. However, Q3FY15 result indicates pain in base business as well. Hence, we terminate our coverage on the lack of any major driver for growth in business of SBML and low visibility on sustainability of operating profit of base business going forward.”
See also: How To Avoid Our Multi-Baggers Turning Into “Multi-Beggar” Stocks
this was waiting to happen…as I had previously written retail investors miss simple things and start digging for gold …and get trapped…in the last 5 years pharma stocks had done so well then why was this stock languishing…and suddenly spiked in the bull run…operators managed to trick investors into buying who are left holding this stock with losses…I wonder how easily has the outlook been changed…I had suggest featuring G. Chokkalingam’s who really gives sound advice
What is the use of this reaction at this point when we have already lost the money. Daljeet Kohli was vouching on the health of the company even when others were sceptical. Even this column was giving incorrect reason for sudden fall in the price. It was not that Axis bank was selling the pledged shares, but panic selling by insider.
Dear Editor / Writer – how on earth can you call it an “Forensic Analysis” ….. obviously, you have not come across a proper forensic report previously.
Please have your articles proof checked before you publish it 🙂
This stock is a crown of big flops in the history of DK’s career. 3 months ago, he raised the target price indicating that change in product mix would result in higher profits. DK should have not have backed up the stock when it started to tank earlier. It was a pile of mistakes on this stock one after the other, damaged his reputation and clients ended up taking a big hit.
which are DKs other duds
@shv he has listed many stocks…i think some NBFC called capital first is latest pick as I read on the blog….look Daljit may be doing his research but his recommendations are hard to understand, I feel whenever you invest in stock look at the alternatives, when there were so quality stocks why do want to take risk and go for debt ridden loss making company..and to question which you raise on your blog…FV is irrelevant…its the market value that matters….because your profit and loss will be based on the market value…..TCS has been far ahead of competition and more expensive but Infosys is trying to regain lost ground…Infosys is also the more admired for corporate governance than any other company in Indian listed space…I took the liberty of responding to you here ..I hope it helps
@Bholu
CAPF is being recommended by many analysts now, also results were good this time
and thanks for your opinion on the post
bhai tum log sab, pahele Daljeet jitna kamake dikhavo. sharm karo
its good if he earns money from investing….there are no issues with that. but why does he make recommendations which lead to losses for investors who put their hard earned money on the basis of his recommendations
Dk is a real expert in picking a loser in this bull market. You can blindly pick a stock and it was up in the past 1 yr. But one should be an expert to pick a big time loser in this market. Great job kohli.
ha ha ha
but only this one failed, from his recent recos
If at all any explanations are required from the gentleman, it is to his IndiaNivesh clients only, not to people who have taken free unsolicited advice & acted on it.
That being said, i feel personally that explanations need not be given. Stocks go up & stocks go down. Even the best ace stock pickers make bloopers. Investing in stocks should not even be contemplated without understanding this. In short Caveat Emptor (Buyer Beware) applies.
that is not true…it was unsolicited advice, hence all the more at fault…he came on various forum with them…yes we all know stocks go up go down but if the company is fundamentally weak and management manipulative…then the recommendation has to be criticized …nobody said anything personal against the analyst
No use blaming DK. Accept the fact that you didn’t analyse the company and trusted him blindly. That’s why its better to do your own analysis rather than blindly following anyone.