Mudar Patherya has mastered the difficult art of finding ultra micro-cap stocks which are flying low and are not on anyone’s radar. Such stocks have the potential to give multibagger returns to their investors. However, such stocks also suffer from a high mortality rate and can perish if the market conditions are adverse.
In an earlier piece, we have carefully analyzed the performance of some of Mudar Pathreya’s recent stock recommendations. We saw that the stocks have put up quite a spirited performance and some have already delivered multi-bagger gains.
We also saw the four “dark horse” micro-cap stocks that Mudar Pathreya has recommended.
Now, Mudar Pathreya has recommended three “hidden gems” stocks for investment.
Let’s take a quick look at them:
| Stock | Market Cap (Rs Cr) | YoY Return (%) |
| Sumeet Industries | 93 | 40 |
| Lakshmi Energy & Foods | 282 | 309 |
| Mercator | 1049 | 101 |
Sumeet Industries:
Mudar Pathreya has described Sumeet Industries as a “No-brainer yarn spinning opportunity”. He says that the stock is quoting at “ridiculous discounting” and opines that the discount “could deepen if it can maintain its current run rate and add expansion benefits”.
Lakshmi Energy Foods:
Lakshmi Energy Foods is already a glittering multibagger. It has given fabulous 300% gains in just the last year. Mudar has opined that the Company is on the verge of a “turnaround” and that more mega bucks are on the anvil.
Mercator:
Mercator is a shining example of Mudar Pathreya’s brilliant stock picking skills. He recommended Mercator on 25th January 2016 when it was wallowing in heavy losses and had no takers even at the throwaway price of Rs. 22.
“I can smell an imminent turnaround in loss-making Mumbai-based Mercator” Mudar proclaimed with supreme confidence in his tone and gave cogent reasons for his theory.
This prediction has come true. Today, Mercator is standing tall at Rs. 43 and has made investors richer by nearly 100% in just six months.
Mudar sees more potential for Mercator. He has given cogent reasons on why the stock can be a “vibrant play” even from this stage.
So, if you have an appetite for ultra micro-cap stocks and are prepared to adopt a “basket” approach, you can consider dabbling with Mudar Pathreya’s “hidden gems” stocks!
Agree with mercator holding it since levels of 12
#Nivezareview on #MicroCap #Stocks ::
Sumeet Industries operates in Textiles segment with products such as PET Chips, Polyester yarn, Woven fabric, Menthol, Allied products etc. The sales of the company has posted a sales of INR 1,235 Cr for FY16 with EBITDA of INR 94 Cr and PAT of INR 18 Cr. The market cap of the company is just INR 94 Cr and compared to its sales of 1,200 Cr the Mcap/Sales ratio is even less than 0.1. The company has a debt of INR 462 Cr and Book value of 45. IT is trading at 0.3 of its book value. So on valuation parameters the stock is very undervalued and hence long term investors can buy such stock with next 2 years horizon. As and when the company will reduce the debt and overall Debt to Equity will come below 2 the stock will get re rating and prices will increase significantly.
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I agree that Sumeet Industries is value at CMP of 16. It is undervalued in whichever way you want to look at the stock. Debt reduction is of utmost importance if stock has to be re-rated. Disclosure: bought some today.
Its PAT does not even cover the interest on debt. Its margins are too low and seems stable product mix is missing to generate steady cash flow and hence peanut PAT on huge sales turnover. I don’t see the way out for debt reduction. Happy to miss this stock.
These type of stocks or any third grade stocks can move higher in over heated market but poor quality stocks must be traded with strict stop loss. I don’t know these are Hidden Gems or Hidden Land mines. These are never buy right and sit tight portfolio investment grade stocks. These type of stocks are in market for last many decades and always move up in last leg of market and are considered as warning signs. Although smart traders can make money but unfortunately small investors are always late Comer in party and stuck with, when music in market stops. So keep ear on music (direction of market) and jump immediately when market stops or even music intensity lowers.
Nifty Shows 1st Signs of Profit Booking, Weekly Support of 8525 Critical
Stock Market Today by Shailesh Saraf – 11th August 2016
Indian Market Outlook:
Indian Market Index Nifty saw the first signs of profit booking yesterday as it corrected by 100 points. The sell-off was seen throughout the day. The selling was throughout all sectors along with Bank Nifty and CNX Small Cap. A majority of PSU banks are slated to declare their results today and tomorrow. State Bank of India will declare its results tomorrow in market hours which can lead to volatility in the markets. FII and Pro combined have become sellers in index options and above average selling was witnessed yesterday. The combine position of FII and DII have been sellers in cash markets for second consecutive day. This signifies correction is on the cards which can continue for some time.
Top 5 gainers were Adani Ports, Bank of Baroda , TCS, HCLTECH and Zee Entertainment.
Nifty Futures is expected to open at 8592 as per SGX Nifty at 8:10 am IST, which is 2 points below its previous close of 8594.