Investing in volatile times

Markets have been extremely volatile in the last two or three days. There has been a sharp decline in stocks especially in the mid and small caps. This is a feature of investing in such stocks. The ride is bumpy but has better longer term rewards.

In such a volatile market environment, what should an investor do?

The market can do one of three things at any time.

1. It can go up
2. It can go sideways (consolidate)
3. It can go down

The probability of markets going up or down linearly is usually very low. That means you will not find stocks going up every day for very long. Every few days, it will correct or go sideways.

When markets are going down very rapidly, you again have three choices:

1. Do nothing

My default position is to do nothing if I have conviction in the stock(s) that I am holding. Exactly like I do nothing when stocks are going sharply up. Most of the time doing nothing works to your advantage. The problem with investors is they are mostly looking for action. They are glued to their mobiles checking the broker account or moneycontrol portfolio and this creates an itch to do something at all times. The other problem is they don’t have any conviction in the stocks they have bought because usually it is based on hearing a tip from some random person (and that includes analysts on TV, Twitter, YouTube, Telegram etc). So, a person who has very little conviction will be the first to throw in the towel when the going gets tough.

2. Sell (trigger your stop losses)

The next course of action I think of doing is to cut losses and triggering my stops. This is because I usually do not want to fight with the market. The market can decide to behave completely contrary to what I expect it to do. I respect both my capital and time. But this also means that you need to give a certain amount of breathing room for your stocks to bounce up and down without taking you out of your position.

3. Buy (averaging)

The last option for me is to buy. And 99% of buying is if I am averaging up. I have stopped averaging down with only one exception – when I am in building a position.

If I have cash and the market falls and I wish to enter what do I do?

First is to look at my portfolio or my watchlist and see if there is any stock where the allocation is lesser than what I wish. If so, then I top it up.

The other aspect I do is I will divide my capital to be deployed into 4-5 chunks and then use that every day the market goes down.

In case my allocations are as they should be, and still I have additional capital to deploy, then I will deploy it across all the stocks in my portfolio.

If some stocks fall more than others should I buy more of those?

Only if there is very high conviction in those stocks. Currently, the market is doing a sector rotation every few months and stocks or industries that have done really well see more correction (both price and time-wise). For example, PSU stocks, railways and defence sectors have seen more severe falls than other sectors in the last three days. It is always prudent to let a stock stabilise before jumping in. That may mean you buy higher than the lowest point. But it also means the probabilities are in your favour.

It is results season, so if some stocks fall more based on their results, should I buy more of those?

These are two separate decisions. Do not club them into one. Whether you want to buy a stock based on its results is a separate decision. If you think the results are bad and you wish to exit, then do so.

Always keep in mind the basic tenet of doing nothing if nothing much has changed that warrants action.

SIP is the way to go

Short, sharp corrections are par for the course in a bull market. One of the best ways to invest in an uptrending market is to do a SIP. If you are buying stocks yourself, buy on the days the markets are down. You don’t have to rush in to buy everything in one day. There will always be opportunities in the market.

With a regular SIP mode of investing, you will be better psychologically positioned than investing in a lump sum.

In Summary

When markets are volatile, it is worthwhile to remember these basic tenets:

• Do nothing
• Sell if you stop losses are triggered. sometimes, partial selling is a good option. Here again, my maxim of “When in doubt, sell half” comes in handy.
• But if you have cash. Spread out your buying. And let the market and stocks settle down to an extent before buying.
• If all this sounds complicated, just stick to a monthly SIP mode of investing and keep a long term orientation and you will come out fine.

Q3FY24

• EV : 2.4L units (1.8L units in q2)
• 2W volume: 5.5mn units
• Selected as a supplier for a full headlamp for a european car company.
  • Has received the purchase order for the same
  • Design (in house at Pune design office) & devt. going on
  • No capex needed for now
  • Intend to export from q4fy25 onwards^[1]
• Financials
  • Sales: 483cr [+10.3% yoy]
  • EBIDTA: 64cr [13.5%]
  • PAT: 40.3cr [+25%]
  • Capex=20cr (9m total 71cr.)
• New orders: 51% are LED’s^[2]
• Work with 35 odd 2W EV players across the range. Biggest are like [[Ola]], [[TVS]], Simple Energy, Ultraviolet, Okinawa
• Wallet Share:
  • wallet share on the – for the last financial year FY ’22-’23. So for – like I’ll start with TVS for headlamp, we are having 68% for taillamp is 86%, 85%, RVM 62%. And DRL, we are 100% and lamp is almost 100%, 95%.
  • For Yamaha, headlamp is 83%, taillamp is 63%, winker is 10% and RVM is 82%. Position lamp, we are 50%.
  • For Suzuki headlamp is 71%, taillamp is also 71% and winker is 4%; RVM 100%. Reflector is 100% and is also 100%. For headlamp is 40%, taillamp is 76% and winker is 85%, RVM is 100%. For position lamp and reflecter it is 100%. These are for FY 2022-’23.

[Discl: invested]

1. key monitorable ↩︎

2. (guide to ~60% but feel may go till 65-70% of revenues in future) ↩︎

Excellent Results .

Q3FY24 Financial Highlights
Operating revenue was Rs. 586.1 cr., up by 22.2% YoY driven by market share gains, new launches, the addition of new customers, an increase in our share with existing customers, and incremental contributions from the acquired Teva facility.
Gross profit was Rs. 313.3 cr., up by +30.4% YoY with a Gross margin of 53.5%.
EBITDA was Rs. 133 cr., grew by 73.6% with an EBITDA margin of 22.7%
EPS grew by 17.8% YoY to Rs. 1.84

Business Highlights
US Market
US & North America Formulation business reported growth of 15.8% YoY to Rs. 673.1 cr.in 9MFY24 on account of new product launches and also due to an increase in the share of existing products.

UK and Europe Market
Revenue of Rs. 710.2 cr. from the UK and Europe Formulation business in 9MFY24 as compared to Rs. 561.3 cr. during last year, registering a growth of 26.5%.

Australia and New Zealand Market
Australia and New Zealand business reported Rs. 155.5 cr. in 9MFY24, which grew by 6.4% YoY, due to incremental market share.

RoW Market
RoW business reported Rs. 78.5 cr. in 9MFY24
Other Highlights
In 9MFY24, the capex incurred was Rs 160.6 cr. Capex investment is in line with plan for scaling the acquired manufacturing unit from Teva Pharma in Goa which will drive future growth.
Cash Balance at the end of 31st December 2023 is at Rs 688 cr.
In 9MFY24, Cash from Operations is at Rs 169.0 cr. and Free Cash Flow is at 8.4 cr.

4ef86101-8fef-4acb-8b5e-bb5b96d4ef63.pdf (bseindia.com)

The ongoing beating since last 3 days, so far has beaten overvalued small caps, few names are already beaten by -30%.
how strong does smallcap space look now ?
I am sure it isnt at ~100. So, is it just an intermittent beating or they are driving them small caps out of party ? how hot does it look, still touchable ?
I tried touching few yesterday, it still hurts ! yet trying to touch some