Monday, August 29, 2022

Oil and Gas is not dead yet

Elon Musk says the world still needs oil. “Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble," Musk said on the sidelines of an energy conference in the southern city of Stavanger.

In my view India will need another 10-20 years after the world transition to clean energy as the technology has to be affordable for India to adopt it fully. Many ideas can be executed on that theme as the stocks are severely battered in Oil & Gas sector. Unfortunately there is not much direct play on this space in private sector. I am averse to PSU companies so ONGC, OIL, GAIL, Coal India etc are out of investing universe for me.

But there is a drilling company named Jindal drilling which can be looked at. A small oil exploration company Selan Exploration which underwent management change recently can be looked at as well. 

Adding > 10% of model portfolio to Selan exploration and ~ 3% to Jindal Drilling.

Model Portfolio:

Sunday, April 17, 2022

TV Today Network Analysis april 2022

 # The company is expected to report better revenue and earnings compared to March 2021 quarter primarily due to up elections and economy opening up. 

# I am expecting the company to do a revenue of at least 250 crores and 75 crores of operating profit.

# Based on this assumption TVTN is expected to close the year with the following financial performance:

        Revenue: 938 crores (ATH)

        OP: 272 crores (ATH)

        PBT: 270 crores (ATH)

        Tax @ 26% = 70 crores (ATH)

        NP: 200 crores (ATH)

        EPS @ 6 crores equity shares = 33.3, (ATH)

        ROE: 20%

        EPS growth: 50%, 5 yr CAGR of 15%

        10 year CAGR profit growth = 35%, 

        Market price in april 2012 ~ 60. 

# Valuation: @ cmp of ~ 410, the stock is valued at 12.3 times current year earnings and a pre tax yield of roughly 11%

# if the earnings are valued at modest 15 times and cash equiv per share of 100 added, the target that can be aimed at is 500 + 100 = 600 /-

# So a conservative target of 600 can be aimed for in next 3 months if there is no major geopolitical shock.

# Ideally a company which does 50% growth in earnings in a year can also get valued @ 30 times earnings in buoyant market conditions. If such ideal scenario plays out the stock can even reach levels of ~1000 in next 1 year time frame.

# Also ideally the stock price performs inline with profit growth over long term. Hence a 35% cagr in stock price from 60 levels ( april 2012) gives a target price of 1200.

Downside: Considering the kind of performance the company is doing, it is highly unlikely that the stock will fall below 10 times earnings. Hence there seems a max  possible downside of for 80/- kind of risk, there is a potential to make 2.5 times risk in modest case and even 8 times in case of blue sky scenario.

On chart also the stock recently bottomed out @ 357 and the structure appears bullish:

All time high of the stock = 557.95 (16th mar 2018)

Wednesday, February 10, 2021

The Casino Market - Will this madness ever end?

Having spent 15 years in Indian Stock market, there has never been a time when it felt like absolute chaos and gambling den. Across the globe people are buying and selling stocks not for investment but for story and for speculation.

I come from old school of buying / investing in assets at reasonable prices whether its real estate, share in companies (equities), websites/blogs etc which has at least one of the two essential characteristics:  

1. It gives me cash flow 

2. Holds its value without much fluctuation.

Of all the assets I own, equities have clearly become a non-investable asset class. Its neither giving me even a bare minimum cash flow due to absurd valuations nor holding its value stable. The price fluctuations are so monstrously large that its beyond anybody’s capacity to comprehend. We are adding and losings trillions of dollars in market value in a year based on perception and story. This is extremely unhealthy for equities as an asset class as subconsciously investors lose confidence on ownership in companies and they refuse to buy at any price when prices start to fall.

Compare it with an asset class such as Real Estate or Gold. When real estate prices in your neighborhood corrects people won’t hesitate to commit money and there is floor to the prices. They know they can use to for shelter, shop or rent depending on the nature of the property. Similar is the situation with Gold. When prices correct even 10% people rush to purchase gold jewelry for wedding or investment. Stocks on the other hand are losing and gaining 10, 20 or even 50% in a day. This makes it very hard for people to stay invested which is a very dangerous situation for capitalism and stock market where companies sell ownership.

Individual companies are valued at trillions of dollars these days. Apple + Google + Microsoft is valued at over 5.5 trillion dollar which is 2 times the UK economy.  Companies are no longer being valued on earnings and sales and value investing is claimed to be dead. People are valuing stories. I asked myself yesterday, will I invest in a real estate property with excellent story but no cash flow for next 10 years and the answer was absolute ‘NO’. So how Can I invest in stocks with 100 pe multiples where theoretically it will take 100 years to get back my money.

All the money printing in the world has already created massive Inflation is paper assets which will eventually flow into good and services creating massive consumer inflation which will force the madness of Central banks worldwide to end this mindless money printing. It might happen in next 3 months or it might take another 3 years who knows, but valuation have always been my guiding torch and I won’t be leaving its company specially in this time of madness even if the pundits across the world says it’s dead. Common sense can never be dead. It’s the greed at that moment that is trying to make us all believe that common sense is for fools. But those who have developed grey hairs like me while being in the market will resonate with my thoughts that the protection of capital is far, far, far more important than appreciation of capital.

Sometimes writing your thoughts makes the big picture even more clear and helps you in taking good decision. I have written this post during market hour today as I felt tired watching the madness in the market and thought of spending some quality time penning my thoughts. This post will also help me in future to go back in time and read what I used to think back then.


Wednesday, January 20, 2021

Equity Portfolio Update - 20th Jan 2021

 # Exiting all the stock positions to go 100% cash.

# Primary reason being the market on steroid which is exactly the opposite of what was happening in march 2020. At 40 time pe multiple based on FY-20 EPS the market is extremely overvalued and stretched. Even if we assume FY-23 Nifty EPS of 700 (almost double of FY-20), it is still trading at 20 times forward multiple.

# At mid sized bank the deposit is yielding 8% or 12.5 pe multiple while the stock market is trading at 40 times on TTM basis and 20 times on an optimistic eps assumption for FY-23 FY. I would rather keep my money in debt rather take risk on stock at current levels. Hence the cash call.

Please check the updated portfolio on what was sold and where has the cash been parked.

Thursday, January 7, 2021

Tuesday, December 1, 2020

Buy Cancer Cover and Secure your Finances

 The risk of cancer has become real and is beginning to threaten most of the population in India. According to the Indian Council of Medical Research (ICMR), this life-threatening disease is expected to affect more than 17 lakh people and resulting in over 8.8 lakhs in the country by the end of 2020. Some other reports specify how cancer is set to engulf even the youngest of the population and will be a major health concern by the end of 2035. 

What is even more burdening is the cost of treatment for cancer. If not diagnosed and treated properly, cancer can cause death most certainly. In such a case, buying a term insurance plan or a health insurance is not enough, it is always wiser to invest in stand-alone cancer insurance to financially protect you and your loved ones from the dreadful disease.

Importance and need of a cancer cover

Cancer is a deadly and financially burdening disease. Moreover, with the recent advancements in the treatment of cancer, newer technologies have become more out-of-reach for the common man. Hence, a specialized cover like cancer insurance provides your financial support in dire times.

Wednesday, August 19, 2020

Best Way to Invest In Gold

If you have been thinking of buying gold for your portfolio either to protect your hard earned wealth from the perils of fiat currency printing by central banks or to simply boost your portfolio return, then there are many different ways to have an exposure to the shiny metal beside the age old way of buying gold jewelry. 

Following are 3 different ways to invest in gold with their respective pros and cons. We will also tell you the best among the three, that we prefer, if you have long term bullish outlook on the metal.

Sunday, May 17, 2020

History of Gold Price in India in Rupees per bhari since 1964

History of gold price trend in India since 1964. Prices in both bhari* (Indian metric system) and per 10 grams.
This chart contains the average annual price for gold from 1964 in gms

Friday, November 22, 2019

How Mutual Fund Investing is becoming simpler and hassle free

Mutual fund investments used to be a tedious process few years back.  It involved numerous visits to the adviser's office, lengthy paperwork & payment formalities. Financial service providers eventually invested heavily in technology to make investment easier and reduce the monotony of the process. However, one thing digitization and technological advancement cannot solve is the dilemma of choosing the right scheme to fulfill your investment goal. To deal with this everlasting problem, ICICIdirect, has introduced One Click Investment a one stop solution for all your mutual funds investing needs. With One Click, investors can choose from 6 thoughtfully researched baskets of Mutual Fund schemes, which are carefully curated to help you power your investments.

There are several categories of portfolios depending on mix of equity and debt exposure to choose from, ranging from 100% debt to 100% equity.
The investment baskets offered under One click are described below. The investor can choose the best basket as per his/her financial goal.

Tuesday, September 17, 2019

Portfolio Update Sep 2019

The broader markets have witnessed humongous damage to stock prices in India specially midcap and small cap stocks since past 1 year or so. The economic slowdown, crisis in PSU and NBFC space and series of corporate defaults and frauds has lead to loss of confidence in Indian Stock Markets which has resulted in heavy FII selling.

The crisis seems to be deepening further and Individuals seems to be coming under financial pressure from loss of jobs, poor confidence in Indian economy and fall in savings rate. According to me there is little that govt. can do to reverse this immediately and it appears that it will play out on its own. If things carry on like this for some more time, the SIP flows will take an impact which might lead to further selling pressure.

The India domestic story doesn't appear that rosy anymore and hence a major churn is done in the  portfolio. Please check the updated portfolio for further details.

15 Stock Investment Tips from Rakesh Jhunjhunwala

1. Always go against tide. Buy when others are selling and sell when others are buying.  2. If you believe in the growth prospects o...