Valuations are important for sure. However, human instinct is to avoid averaging down when the shares we bought are trading at a significant discount. But good companies (market leaders, high ROIC, low debt, good promoter share) are better value at x/2 than at x. If the company is good, I don’t see why I would not invest when the shares are falling in price. I am thinking if tomorrow companies like Colgate Palmolive, Hindustan Unilever, Nestle all fell by 25%-50%, I wouldn’t hesitate buying them and averaging down on them as my time horizon is 10-20 years. If my weightage doesn’t go above 5%-10% in a stock on average then adding another 5% doesn’t really affect portfolio balancing. I think at this point, I wouldn’t want to be thinking in a formulaic manner.
Posts in category Value Pickr
E2E Networks Ltd – Listed small Cloud computing player (28-10-2023)
Latest article on E2E networks
Oberoi Realty-A simple real estate story (28-10-2023)
Good performance. Bottom line in coming qtr. will be better as inventories are ready for sale as project are completed/near completion and having occupancy certificate !
PPFAS Financial Opportunities Forum (28-10-2023)
KIE analysis sounds fair.
In times like these, Its good to be defensive and be extremely picky about the small cap stocks you keep in your portfolio. Regardless of the quality of the stock, its valuation (low/high PE), there will be draw downs, but as long as there’s conviction in business model, one can use it as an opportunity and keep adding. There’s a time to take risks and a time to be defensive, one can’t always allocate 75% PF to small caps, its okay to rebalance.
P/E ratios are not particularly useful for cyclical companies, look at the business momentum and try to think 2-3 quarters ahead. During a crash, markets won’t spare low P/E companies either.
Max India – Demerger, Will sum of parts be greater than single entity (28-10-2023)
Reference to ConCall, i am requesting the management for a tour of their Care Home & AGEasy Health Studio in NCR.
Please let me know if anyone would like to join ? Would be better, if we can have a group of investors.
IDFC First Bank Limited (28-10-2023)
Book value post merger would increase by 4.9% post merger. Exact number shall be known at that time basis prevailing BV.
Did quick Back of Envelope calculations:
- Current # shares : 705 cr
- Post merger # of shares : 670 cr (on like to like basis)
- Current SH’s fund : 30,700 cr.
- Projected SH’s fund : 35,785 cr.
- Increase in SH’s fund in Q2’24 is ~Rs 1100 cr (w/o equity dilution)
PS: ROE is likely to improve in line 1st hypothesis on cost.
Disc.: Invested.
IDFC First Bank Limited (28-10-2023)
There is no QoQ Page in Key Highlights, although one can calculate easily. Earlier bank used to give both YoY and QoQ in key highlights section. May to hide muted QoQ growth.
Why not leave it to the experts? (28-10-2023)
Nice viewpoint.
One query- you have said that once the capital reaches 1 cr, then 12-15% yearly increase will also be good enough. So may be you are indicating that once you reach 1-2 cr, then instead of subjecting your sizable capital to your own risk, it should be handed over to mutual funds and be satisfied with average returns of 12-15%, which will be good enough…is that what you meant or i read it wrong?
Praveen’s Information Attic (Obervations, Lessons, Thoughts) (28-10-2023)
It’s easy to say than execute. Let’s say someone bought Sona Comstar (which I think has very good growth prospects) at 790. Does someone average it when it falls to 650. Then what about when it fell to 550 and 450.
Does anyone keeps averaging until the price bottoms out? Let’s say one averages at all the said prices. Wouldn’t the weightage in PF be too high?
And the returns would be negligible if not negative.
Instead if someone has bought a beaten down stock with low valution at cyclical low, there are better chances of one of the two factors (valuation rerating and earnings growth) playing out.
Point to consider is in a PF of 20-25 stocks the odds matter and odds are in favor while buying at reasonable/cheaper valuation with decent growth prospects.
Note: in the first post of this topic I’ve mentioned some examples. One can see that the cos mentioned are one of the best in their industry and some are FII/DII favorite. One can imagine what would happen to other laggards
Sugar Cycles: 7-8 years of losses followed by 2-3 years of super gains! (28-10-2023)
UP based Dwarikesh Sugar and Dhampur Bio Organics have pointed out negative impact of State Government order imposing additional levy obligation by treating both B and C Heavy molasses equally in recent Concall/Investor Presentation.
Dwarikesh has provided Rs 19.92 Cr as additional expenses due to additional levy order for the Molasses Year 2022-23.
Dhampur Bio Organics Ltd has not provided Rs 20.30 Cr on this account, since the matter is sub judice.