Rajasthan Cylinder and Containers Limited- A Brilliant case of valuation anomaly!

I already warned that it is very DANGEROUS stock. Stocks and stock picker will both go into DANGER Zone. Stick with Blue Chips Which are well know. DONT GO FOR SUCH UNKNOWN STOCKS IN GREED TO MAKE MONEY FAST

 

Meenakshi Donald of Valuepickr has many years of experience in spotting DANGER Stocks. That is why he has issued a WARNING TO ALL ABOUT SUCH Stocks.

 

Thanks a ton Meenakshi for showing the understanding. I am amused when people say dangerous stock and things like those without going into detail, just because its not one of the famous, well known stocks which people watch on CNBCs and other famous blogs. Thanks for showing the big heart.

For the benefit of all, let me put all the possible risks associated with this stock, since still many of the members who think there is something fishy.
Information unavailability risk:
My View:The company got listed only in October'2014 on BSE. Many people may not find enough information on public websites as they source it from BSE filings. All old annual reports are available on company's website.
Management Risk:
My view: I don't deny the risk with small & micro caps. But there is no reward without risk here.
On management, I only know as much as I could gather from on publicly available information. However few things which I could observe (a) The company is in existence for 40 years with listing in Calcutta exchange. From the days of 80s , there was virtually no regulation and fly by night companies were very common - it would be very easy for them to siphon off everything with shareholder's money, or dump their stake to innocent shareholders at higher price, but they are still in business, and still holding 90% (b) They almost hold 90% in this company - and don't have any plans to dilute stake, still they got the company listed on BSE once the trading on Calcutta exchange stopped - only as a friendly gesture to shareholders. (c) If they wanted, before listing the share in BSE, they could have bypassed this investment in ABIL to any of their closely held companies at a cheap price, but they carrying it in their BS and this investment belongs to all the shareholders.
Foul Play with investment in BalanceSheet:
My view:There is always a risk that management can suppress the value of its investment or pass it on to any closely held companies at a cheap price. however, in today's robust disclosure & reporting, this will not be easy especially for a listed entity. Also, if they have plans to bring IPO of ABIL, these days these foul play tactics will not let anyone be successful in IPO.
Business risk:
My View:The business model and the operations of the company are no different than any other company in their industry. There is nothing in particular which is against it.
Risk of Operator Play/Price rigging/Dumping stocks to retail shareholders -
My View: Promoters, Family relatives, directors & large shareholders together hold 92% in the company. There is nothing available for any operator to rig into the price of this stock. And highly likely that Promoters, insiders will not dump stocks because (a) They are aware of future growth potential (b) The daily trading quantity isn't enough for anyone to sell a large quantity on a single day.
Liquidity risk : Compay's share are highly concentrated, therefore liquidity in shares are less.
My view: This is what it is. Any micro cap will have liquidity risk.

I still invite people to bring out their views/opinions, highlight any statement which gives impression of overstatement, give your counterview or bring any healthy logical discussion.

But just because people haven't heard about this stock on CNBC or from any big investors doesn't make it a fake company. It has its tangible assets, land , plant & machinery and a running operations.

People have lost unimaginable amount of money in companies which were so called very famous, recommended by big bloggers, purchased by big investors, were publicised in CNBC & all those media, still retail investors are taken on ride in stocks like Educomp, Punj lloyd, Unitech, Surya pharma, Opto circuits, sharon biotech, Helios & mathson, hind dorr oliver and the list is endless....

My suggestion is : For any investment, look into the facts, do your own research, if you see conviction then take your call, never risk your money on borrowed conviction. In long term market will give value to where it belongs.

 

Srouta, Just because a stock is unknown doesn't make it a dangerous stock . Go into detail, learn the facts, do your research and have your own conviction before passing the judgement. Atul Auto, Cera, Arrow Coated, Intrasoft, SKM Eggs, Shreyas Shipping, Pokerna, Stampede Capital . all were unknown stocks untill they multiplied 10 times ( or made famous by any big Investor) . If you want to know a stock before its multiplied, believe in your own research and follow your conviction.

 

Srouta, I respect Donald and his experience. He didn't have anything against this stock, he only has warned because I was aggressive in writing about this stock and have breached some guidelines out of ignorance. This too was corrected to his satisfaction. I don't belong to the category of operators or insiders. I am an investment professional in my career, have eared most coveted qualifications in finance ( CA, CFA) and my profile here too is with my original name; you are most welcome to find me on facebook & Linkedin.

 

With your high profile qualification sir you must be knowing that holding as investment cannot be consolidated for revenues purpose and there are better holding companies with cheap valuations the question here is not that your selection of company and the way you present the fundamental but due to you're over enthusiasm you tend to make a tall claim about this stock that all no offence I just posted only the truth that your thread was banned in valuepickr

 

Praisesingh - I appreciate if you read the whole story again, with the changes in companies act and new requirements of application of Accounting Standards, it will be mandatory even to consolidate the results of Associates in profits(except few exceptions) ( Sec 129 of Cos. Act). - And this investment is not a dead investments like Pilani Investments, Kama holdings and so on. This investment is going to be unlocked in future with the IPO of ABIL or any stake sale by RCCL. L&T's macap does include its value of investments in L&T infotech and Aditya Birla Nouvo's mcap does involve investment in Birla Sunlife. RCCL is not just a holding company. I wrote clearly that it may take time to unlock but early investor will be reward well because of the current low price. People expect stocks to double in 15 days of their investment, that is their foolishness. Hold it for long term and you will see the result at the time of IPO of ABIL.
And, banning of thread doesn't make any investment story bad, I know the stock earned a lot of negative publicity and performed poorly because of it, but these people who have banned have can't change the fortune of this company, they done it not because of this investment suggestion but because of the over enthusiasm. Use your own conviction or follow the herd, depends on you. In long term market does give value to where it belongs.

 

Abhishek bro, can it still be bought? If not at what levels would you suggest to enter

 

Its very very cheap till at least the price of 50. You will see the value unfolding over medium to long term.

 

Thanks for the reply. And what would your approximate target be after the expected re-rating of the stock post the IPO

 

I too read the string on RCCL In Valuepickr.com and kept a watch on the stock. Its been in LC since a high of 56.25 till a few days ago. Today closed at 29.35. Volumes 50-200-300 shares daily! I wonder who would recommend such a company?

Raaz

 

MY GOD! THAT IS WHY I HAD WARNED THAT IT IS DANGEROUS STOCK. I hope nobody here bought the stock and burnt fingers.

BUY ONLY TOP Quality BLUE CHIP STOCKS WITH REPUTED MANAGEMENT. Never be greedy for multibaggers like this.

 

I saw the string of RCCL on ValuePickr. He has recommended the stock at low price and thereafter it went up to Rs 56. And so those who bought would have been in profit. And here too he has recommended the stock at 28 only and not at the top price. So I dont think anybody buying the stock on his reco has suffered any loss. And as far as low volume is concerned he has mentioned many times the reason for it- Less number of shares in circulation.

 

Dear friends, you all are free to take your own calls. I find it amusing when people look at the price of the stock and pass their judgement instead of looking at the value in the company and researching more about it. I have presented the whole story, with full facts and every possible explanation and merits/demerits. Take your own call, do not act on borrowed conviction. If you feel there is a value,then invest , otherwise ignore. Why pointing fingers on anyone. Everyone has their own risk appetite and way of investing, if I believe in investing such high risk high potential stocks, thats my way, there is nothing wrong or right in this. Why making personal attacks.