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Guys,
This is the biggest major correction in this 3 yr bull market. Index is down 15 % from peak. Technically 20 % fall can take it to bear phase ( as they say). At VP we generally don’t (should not) care about index level and focus on stock specific stories. As @hitesh2710 recently said market is always good for the one who is prepared and patient. Also psychologically correction is best time for PF rebalancing as switching is easier.
Some of us can take this correction as an opportunity to get into stocks we always wanted to buy and get rid of our weaker stocks. Some may not do anything as they say not doing anything is the best thing to do.Also it can be a good time to rebalance PF wrt PF allocation framework shared by @Donald i.e most undervalued and highest conviction should max allocation etc ( refer that thread).
I generally have a very concentrated PF having Ajanta, Can fin, Repco, Kitex, Cap first. During this correction I am nibbling in at lower levels Torrent Pharma and Avanti Feeds after their fantastic Q1, with limited downside in FY16. I am reducing Cap first during to prolonged slowdown in real state and LAP etc. At this time it can be a good strategy to have a very diversified PF for preserving the gains.
It would be interesting to know what others are watching buying.
It can make one prepared in case Index dips significantly from this level to buy from real good bargains, Also cash calls can be taken accordingly in counter rallies.
I dont know this is the right strategy or not, or sitting quite for this phase can be a better strategy for patient ones 
I am also watching Shilpa, Indocount, welspun, nitin, Alembic pharma, kaveri etc for any dips to be considered as a buy.
What is your watch/buy list
Any pointers/strategy/put buying for
Cheers
Santosh
Vipul Dyechem is another direct competitor although smaller and with much lesser OPM.
It seems to be a very compettive industry .
I couldn’t find the split of revenues between products (at least by category likes colors vs. dyes) Larger players like Pidilite have a dye business (6500 cr sales from annual report).
Hi @sachit, Thanks for bringing those points.Admire your attention to every single detail in AR.Those are valid concerns but dont have an answer.These are circumstantial evidence and one needs to take a judgmental call. However if we look at even well run companies in India,there are lots of examples of promoters paying themselves hefty salary.
Some recent examples are given below:
1.Sun TV ( Rs. 60 crores for Maran and another Rs.60 crores for his wife Kaveri on a profit of Rs.700 crores.
2.Apollo Tyres ( Rs.30 crores on a profit of Rs.300 crores for Onkar S Kanwar)
3.Amararaja Batteries: (Rs.30 crores for Jaydev Galla on a profit of Rs.420 crores)
http://www.rediff.com/money/report/pix-special-indias-10-highest-paid-ceos/20140910.htm
Your second point is most important and am stumped by your close attention to the balance sheet notes.I was looking into receivables to sales and Inventories to Sales and never paid attention to current Liabilites closer.Thanks again for bringing those here:
AR 2015 page 128 mentiosn about this:
15. Payables include to Pokarna Fabrics Limited Rs. 5085.48 Lakhs (previous year Rs. 4768.88 Lakhs),
Pokarna Marketing Limited Rs. 1213.32 Lakhs (previous year Rs. 1138.05 Lakhs),
Pokarna Fashions Limited Rs 35.00 Lakhs (previous year Rs. 35.00 Lakhs),
Southend Extension Rs. 3.66 Lakhs (previous year Rs. 14.40 Lakhs),
Gautam Chand Jain Rs. 1587.68 Lakhs (previous year Rs. 1949.45 Lakhs),
Rahul Jain Rs. 1022.28 Lakhs (previous year Rs. 918.25 Lakhs),
Prakash Chand Jain Rs. 1260.95 Lakhs (previous year Rs. 987.50 Lakhs),
Rekha Jain Rs. Nil Lakhs (previous year Rs. 14.37 Lakhs),
Nidhi Jain Rs. Nil Lakhs (previous year Rs. 5.43 Lakhs),
Apurva Jain Rs. Nil Lakhs (previous year Rs. 5.43 Lakhs),
Arrush CreationsRs. 6.78 Lakhs (previous year Rs. 32.58 Lakhs),
Southend Rs. 0.03 Lakhs (previous year Rs. Nil Lakhs),
Karvy Computer Share Private Limited Rs. 0.25 Lakhs (previous year Rs. Nil Lakhs)
I was thinking the management will reduce the long-term bank loans using the cash flows of the next few years given that there is no CAPEX needed.
Now,this payables are concerning me as well.When i call their Investor relations,I will ask them about this.
Please bring in more such blind spots that we obviously miss.Do you see any other loopholes in the story?
-Sambath.
Ajanta pharma management on Zee Business special feature(the Connect)
Using smartphone right now. Will get back in couple of days.
Thanks @chintans. Can you share some links/literature on the current state of affairs.
Here are 2 good posts on the state of net metering in India. Link 1 and link 2
The posts make some valid points:
1) Approx cost of rooftop generation is Rs 10 per unit. electricity tariffs are lower than this. Net metering would mean that the customer would have to sell at a loss. Only consumers in high tariff zones will benefit from net metering. Other customers would require more incentives (tax, subsidy etc)
2) DISCOMs don’t want to lose these profitable high tariff customers.
3) Net metering still in the experimental phase in India. Has been implemented only in a couple of states (one of them UP and the other one I suspect is Pondicherry)
4) The experiment has proved quite successful in Pondicherry.
Would love to know about the experience in UP.
Some states like UP have already implemented net-metering. Seven or so states are in last stages of finalizing policies. Many other states have started talks.
Thanks @divygupta
The promoters have increased their stake in the past week. Promoter holding has increased from 49.6% to 54.6%.
P.S: I am not able to buy this script on HDFC securities. Have written to HDFC Securities customer care team yesterday. Haven’t heard back from them yet. Any possible reason for this? Can some one check if the same issue exists on other trading platforms? Would be great if you could let me know.
The company keeps on talking about REC repurchase obligations (RPO) being enforced on state DISCOMS. Given the poor financial state of affairs of DISCOMS, I think relying on RPO enforcement would be impractical in the short/medium term. If there comes a regulation to enforce coal/gas based power producers to buy RECs then that might be a big growth trigger for the company.
I have some background in solar energy project viability estimation and would like to share my thoughts. Broadly speaking, there are generally 2 kinds of solar power projects:
1) Large commercial projects
2) Small roof top projects
Small roof top projects might require a battery for storing excess solar power generated during the day. The cost and life time of the battery makes such projects un-viable in the short/medium term and also increases the operational headache (One has to perform regular battery maintenance, replace battery every 3-4 years etc). Hence you won’t find a lot of these roof top projects on residential buildings. It might make some sense for commercial establishments which have a a large rooftop area and power requirements during the day. However the trigger for roof top based projects would come when state DISCOMs start implementing the net metering system. In net metering, the rooftop generation is connected to the grid in a 2 way mechanism. One can sell excess electricity generated to the DISCOM during the day, thus avoiding the use of batteries to store the excess power generated. And purchase electricity from the DISCOM when there is no sunlight via the same connection. There is no net metering in India at the moment (correct me if I am wrong).
In the AR the company has not talked a lot about taking up large scale commercial projects. This is a negative in my opinion, given the current state of affairs in India only large scale projects would be viable for most investors and the success of roof top projects depends heavily on the implementation of net metering. That is not likely to come anytime soon.
Awaiting more clarity on the future steps of the management. This could be taken up in the investor concall.