Ranbaxy Labs is a shining example of this. On 25th January 2014, Ranbaxy fell off the cliff over the ban imposed by FDA. The stock slumped 20% and wiped out Rs. 3500 cr of market capitalisation.
While all other investors were running around helter-skelter in panic, Ajay Srivastava kept his cool and objectively analyzed the situation. He pointed out that at a valuation of roughly close to about Rs 14,000 crore, Ranbaxy has serious value owing to its strong consumer brands and a large domestic Indian market. Investors should buy the stock, Ajay Srivastava said with a look of complete confidence on his face.
Well, investors who followed that splendid advice are looking at a 40% gain in just 3 months.
Now, history is repeating itself in the form of MCX and Financial Technologies. The news that Jignesh Shah, the master-mind behind these companies has been arrested has sent investors into a panic mode and they are dumping the two stocks. FTIL has already hit the lower circuit and MCX is getting there.
Should investors be contrarian and buy either of these stocks?
Ajay Srivastava has provided valuable and clear-cut guidance. “MCX is a clean company and has settled everything, while it is the promoter of MCX who got into the problem“, Ajay said.
“Going forward, the new promoter will have to pass a very serious test of fitness and therefore the franchise will remain strong and competitive at this point of time. A new owner can only add it, cannot detract from what already is in MCX,” he added.
Ajay also pointed out that MCX has got a wonderful exchange system, the technology works very well, brokers are on to it at this point of time, the competitive exchange has not got volumes to shift from MCX in spite of all the turmoil. “It is a great story!” Ajay added, with a sparkle in his eye.