At difficult times like this, you must turn to the originator of the stock idea – this time it is Daljeet Kohli of IndiaNivesh.
Daljeet was uncharacteristically silent about JB Chem and so I rushed to MMB to see what the punters there were chattering about.
Sure enough, the punters at MMB had their finger on the pulse of JB. They had analyzed the results threadbare and decided the verdict: It is a strong buy. Apparently, the loss of Rs. 6.47 crore was caused due to a one-time write off of a disputed amount of Rs. 64.50 crore which was due from Cilag over the sale of the OTC business. If you eliminate this write-off, the results are very encouraging, they said.
JB itself released a press release which anticipated the investors’ nervousness and explained how good the results were otherwise. It emphasized that the operating revenue was up 17.24% while the operating profit was up a whopping 90.65%.
The MMB punters had also correctly anticipated that JB Chem would wake up with morning sickness and the stock would tank. It is a great buying opportunity, they said.
So, forewarned, I was no longer dreading the break of dawn. Instead, I was already logged into Keat Pro with my finger on the BUY button.
When the first rates came in, JB Chem was down a whopping 7%.
Whoosh, I swooped down and bought a nice little chunk at Rs. 121.
However, before I could implement the second buy lot, the MMB punters had got their act together and a massive buying wave swamped the counter, neutralizing much of the losses.
Anyway, something is better than nothing. So, I bought the rest of my quota at whatever was available.
Later in the day, Daljeet Kohli took charge of the situation. He crunched the numbers and confirmed the verdict that the MMB punters had arrived at 12 hours ago – that JB Chem was a strong buy at the CMP.
That soothed investors’ nerves and as against the loss of 7% at open, the stock closed with a gain of 1.8%. However, the many that sold in panic in the morning were left ruing the day while a few like me made hay, thanks to the brilliant analysis by the MMB punters.
Now, the question is what you should do. First, you must check whether you have any Pharma stocks in your portfolio (Pharma is the “hot” sector nowadays). If not, you should carefully evaluate Alembic Pharma, Ajantha Pharma, Cadila Healthcare and JB Chem. Each one of these stocks has reported strong earnings and looks set to deliver solid gains over the next several quarters. If you are in the mood for a bit of risk, you can also consider Ranbaxy and Wockhardt, which have fallen off the cliff over the FDA ban. You saw what happened to Aurobindo Pharma when the dark clouds of the FDA lifted. The stock just took off like a rocket. If you are not in the mood for risk, you can stick to the straight and the narrow path and start a SIP in any one of the names mentioned earlier.