You ought to have grabbed JB Chem at least when Ashish Kacholia did. If you didn’t and are ruing having missed out on those hefty gains that flowed effortlessly, you have another chance now because Daljeet Kohli claims to have discovered a “big trigger point” which can lead to the stock’s re-rating and create more gains for us
In his latest research report, Daljeet points out that JB Chem has, for the first time, indicated in its press release, that it intends to invest Rs 140 crore in next 12-18 months for creating a new capacity for tablets, liquids etc. The entire funding of expansion will be done through internal accruals. Daljeet emphasizes that this is a “major trigger point” as it gives clarity on usage of the huge pile of cash lying with the company since past few years.
Daljeet also points out that in the past, JB Chem was looking at acquiring some established company. However, due to high asking price by the targets, it did not opt for buying any company. Investors for a long time have been seeking clarity on usage of cash. With this expansion plan, the management has put to rest speculation about how the cash will be utilized, Daljeet adds.
Daljeet further points out that there are indications that JB will resume its exports to Russai. That will be another “trigger point” he adds with a smile.
Daljeet has promised to meet the management to get more understanding on the capacity expansion plans. He has advised a buy with a “conservative” price target of Rs. 211 (P/E 10x FY16E).
I already have a nice little chunk of the stock in my portfolio. If you still don’t, you need to give it serious thought. Whiz-kid Ashish Dhawan of ChrysCapital is already sitting pretty in the stock with a holding of 81,79,608 shares, worth a staggering Rs. 163 crore. Ashish Kacholia is a recent entrant with a chunk of 8.49L shares worth about Rs. 17 crore. These wizards don’t buy a stock if they are not convinced about its prospects and valuations.