Hi Hardik, @hardik_shah1 thanks for wirting in.
My stock buying is based on 3 to 5 years view of growth, valuations, management guidance amalgamated with actual results. I sell if results and management guidance is worse than my expectations. I sell, if actual results are not positively aligned with management guidance for 2 or 3 quarters continously. I add if company continues to meet/beat guidance and stock price has not fully aligned itself positively.
It is difficult for me to convince myself if management itself is not clear or not remaining true on their guidance. Some companies saying they will bounce back in August 2025, I will not buy them. I will let them bounce back, be little late and/or pay higher. I shall take fresh view in January/February 2026 post results, if they are right and if there is further potential improvement guidance and valuations remain in my range then I might buy. Why should I wait for August 2025 or remain invested till then, is there any other company which is much more clearer? which has strong growth guidance, good valuations, and they have been proven right by their results.
I sold XPRO after Sept-23 results as company’s sales decline YoY and margins were also lower. I sold around 1000 now its 1200. So I am wrong in this case but my main thesis in the company was sales and margin improvement. May be I reacted early and should have waited for one more quarter.
Recently I entered Tejas based on their strong order book. However, Q3 FY24 results of the company were not in line with my expectations. I was expecting EBITDA margin of 5% with sales of 700 to 800 crores. They did sales of 560 crores and negative EBITDA. However, I have not sold as I will wait for may be one more quarter. Price of the stock is down 10% since my buy. I am ready to take longer time with a Tata company.
Another case, I bought Rategain from price of 370 in December 2021 but it dipped to 260 and remaind between 260 to 300 for almost a year. I continued to buy it and held it. Main reason was managment guided for strong growth of 25 to 30% and margin improvement of 200 bps every year. So I stayed with improving fundamentals and management’s stable guidance all the time. Stock price is now over 760. Similar situation played out for me in Mapmyindia.
So basically, company should continue to improve its fundamentals and management guidance. This information I amalgamate with valuations. XPRO with low growth, lack of management guidance, margin contraction, PE of 40, increasing competition, I was not very convinced.
On valuation front Rategain and Mapmyindia do not look very tempting but I shall continue to play them as long as management guidance does not change negatively. Their ROE/ROCE profile is also good.
I do not mind selling at loss or 10-15% lower levels. For example, Affle management guided for 25%+ growth however, when their consecutive 2-3 quarters remained flat, despite management’s bullish guidance I sold. We should amalgamate reality and valuations also with management guidance. I sold 1-2 years back around 1000rs now its over 1200.
In many of the cases you can find that I have not gone right but I have to be with my call. My call is based on growth, valuations, management guidances and actuals (reality) aligning. Price is not the main indicator or signal for my action. Though price is not main indicator it leads sometimes so we need to double down on our research for conviction. Most of the times conviction can only be strenghtend with positive management commentry.
Apologies if I confused you more.
Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example purpose. I may buy more , exit or partly sell the stock without any prior intimation.
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