Amar Ambani IIFL
There are several practical examples which show that when you buy stocks which are in the throes of difficulty, you stand to make a pretty packet when the tide turns. We saw this play out in Muthoot and Mannapuram and also in Ranbaxy & Wockhardt. Investors who bought at the peak of the crises have taken home a huge reward for their efforts.
A recent example that is still playing out this theme is MRPL.
Anish Jhaveri, CEO, Antique Stock Broking, was the first one to put a buy on MRPL in June 2011. He predicted that the huge refinery expansion would catapult MRPL to the big league. However, he got his timing hopelessly wrong. The expansion ran into huge delays and MRPL raked up gigantic losses, sending its stock price spiraling downwards.
Then, when everything was looking dismal, Nirmal Bang came on the scene in May 2013 and urged a buy on the rationale that while the headwinds were priced in, the tailwinds were being ignored.
But, it is Amar Ambani of IIFL who got the timing perfectly right. In the December 2013 report, when MRPL was languishing at Rs. 41, IIFL urged a strong buy and promised a target price of Rs. 51. The cue for the buy call was that MRPL’s long-delayed expansion was nearing completion. That promise came true yesterday, when MRPL effortlessly crossed Rs. 51, yielding a fabulous return of 22% (pdf) for just a few weeks work.
Now, everybody has jumped into the fray.
Centrum has issued an ‘initiating coverage report’ (pdf) calling MRPL a ‘compelling investment bet’. Centrum has suggested a buy with a price target of Rs. 60 on the basis that MRPL is “A credible turnaround candidate due to (1) Channel checks revealing stabilization of power plant and hence imminent commissioning of phase-III in 1-2 months; (2) Strong business outlook despite building in conservative Gross Refining Margin (GRM) leading to a modest positive turnaround in earnings from FY15E; and (3) Negligible impact of Export Parity Pricing (EPP), if implemented. The stock adequately factors in the continuing delay in capacity expansion and consequent low GRM.”
ICICIDirect has also issued an ‘initiating coverage report’ (pdf) and recommended a BUY with a price target of Rs. 61 on similar logic. It has called MRPL “An investment opportunity; ready to unfold”.
The logic is very attractive and convincing. Once the refinery does go on stream and starts churning out the finished products, you can be sure that the hordes will throng the counter and send the price spiraling up. You need to position yourself in the counter before that happens.
Yup ..I had bought MRPL @46-47 when I read about it “Powering MRPL”. It is under ONGC management ….in July 2013, MRPL moved from using 70% capacity to 100% :-). …it is expected to report a gross refining margin (GRM) of around $6 bbl this quarter as against $2 bbl in same period last year, when it reported loss. this will translate into positive earnings this year. Besides this its Phase III expansion in first half of FY15 would further boost margins. So hold on …Buy Enjoy ..may be along term bet for best returns …heard somewhere ..Best time to buy a stock is in its Crisis Period or Turing around point. another turning around stock for you Arjun sir is PANACEA BIOTECH. 🙂 …Thank you very much for all your articles…South india bank …superb call ..I had mad money in SIB …even JB chem ….MMB punters …you must have read my comments on that board…even Shilpa medicare…daljeet ji rocks…aise bahut sare stocks hai …in last a Big Thanks for such wonderful write up …jate jate ek aur WONDERLA HOLIDAYS IPO
Isn’t it strange? After the stock hits its target, IIFL raises the price target. How can you raise the target after that? What if an investor sold out as per the earlier report. This is clear cheating. No wonder these reports are circulated free.
Today MRPL touched 65/- ….Superb return in short span …Thanks Arjun bhai for Posting this and Increasing mah Confidence on MRPL.
Holding Himalaya International …Deepak Ferti. …DLink India …Haldyn Glass…HT media…Mold Tek Pack.