AVADH SUGAR

HAVE A LOOK AT AVADH SUGAR ::::::: The co. had EPS of Rs. 84 for Half Year ended 30.09.17. Expected to do EPS of Rs. 175-180 for FY 2018. Currently available @ Rs. 1140 on a PE of <6.5. Expect PE to rise to a minimum of 10 by end of the year leading to a good appreciation. Does not include any additional benefits accruing out of ethanol blending etc. which could be an added bonus.

 

Why isn't the PE not 10 right now itself? Why only after 6months?

What's the 'hidden' triggers which will result in the re-rating you allude to?

 

DCM Shriram is cheep with price comfort PE-4.59 CMP/BV 1.43 better fundamentals and recent value

 

@wild_hipman ,@FUNDOO ,@Kishorekumar Is it right time to buy sugar stocks? I am not sure? They deceptively look cheap near peak..I am just a learner, hence happy to be corrected.

 

I have’nt checked DCM Shriram. I saw Avadh. Liked it and put my view to the notice of the boarders.

 

To be honest, I don’t know whether the sugar shares are near their peak or not. Although the general theme accepted as gospel truth in the market is that Indian economy is on a high and its per capita income is likely to double in next few years. Add this to the fact that there will be additional 10/15 crores people added to population mostly kids ( whose per capita consumption of sugar I presume should be much higher compared to an adult - milk, serials, chocolates, cakes, pastries, cold drinks, icecreams, health drinks, sweets – everything has lot of sugar). Thus sugar demand is likely to rise steadily. And to the best of my knowledge no large new capacities in the sector are in sight. This makes it a deadly combination for making good money by the cos. in the sector. My call, therefore, is that the sugar sector has a lot more to gain. You have to use your own experience to decide what is the probability of my being right. None of the boarders on this board is novice. Majority understand the intricacies of market reasonable well. And I respect them all.

Further, I have always been horrendously wrong most of the time in predicting peaks. Very frequently, a share I sell thinking that it has risen too much too fast and therefore ripe for correction, has continued to rise for a long time. I concentrate on valuation and whether it has met my returns expectations or not and take my decision.

 

I know about no hidden triggers which should result in re-rating. I like its valuation in an era where PEs of 40, 50, even 70 , 80 are being accepted as a norm and investors are flocking to them. On the basis of the available data and my past experience I believe this share is undervalued and hence above comment.

 

Thanks for very elaborately explaining the prospects of indian sugar industry.Also impressed by the humality shown in accepting the inability in recognising the peak.Got new insight. Your reply has stamp of a great investor!!

 

Interesting perspective of the industry's linkage to population.

I know of people who have made tons on sugar stocks closely tracking crop production/failures, farming trends, rainfall etc.

I had attempted trying this when I read reports that sugar prices will rise but it all fizzled off and honestly I have zero understanding of the sector and players therein.

Timing the selling is a big challenge and most people get it wrong. So you are one from the majority.

Maybe somebody in here will write a book - guide on buying sugar stocks