Company Analysis: Meghmani Organics

Meghmani Organics is one of the key players in Agro chemicals Sector. They are one of the popular pesticides & pigments producer in India. Company has good potential for growth and capable to compete with established giants in this Sector.

Meghmani Organics pricing seems attractive at Rs: 63.85 as on 14th March 2019, matching my investment philosophy. Below are the parameters that suggested that it was time to enter the company.

Meghmani Organics Fundamentals

RatioValue
Market Price as on 14th Mar 201963.85
52 Week High/Low114.40/42.10
Price to Earning6.92
Price to Book1.84
PEG Ratio0.12
Debt to Equity0.44
Change in promoter holding in last one year0.35%

Summary: Market price is closer to its 52 week Low. Price to book value is very attractive. Debt is reasonably low. PE is 3 times lower than its peers from same segment. PEG is less than 1. Promoter holding has increased by a small amount in last one year, but it is definitely a good sign. Company has good consistent profit growth of 57.45% over 5 years.

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Company Analysis: Tech Mahindra

Tech Mahindra is one of the Large Cap IT companies in India which has good potential for growth, and compete with already established IT giants in India.

Tech Mahindra pricing seems attractive at Rs: 787 as on 14th March 2019, suiting my investment criteria. Below are the parameters that suggested that it was time to enter the company.

Tech-Mahindra Fundamentals

RatioValue
Market Price as on 14th Mar 2019787
52 Week High/Low603.10/840.10
Price to Earning17.68
Price to Book3.73
PEG Ratio0.81
Debt to Equity0.13
Change in promoter holding in last one year-0.02%

Summary: Market price is not around its 52 week High. Debt is very low. PE is lower than its peers in the same segment. PEG is less than 1. Promoter holding has not changed much in last one year.

My Investment Approach: My investment approach regarding this stock is to accumulate over next few months, if the price stays range bound.

Turning bad news or a crisis into profit

Turning bad news or a crisis into profit is one of the key traits of a long term equity investor.

What does bad news mean ?

Bad news or a crisis is something which creates panic in the market, especially by novice or amateur investors. Some of the examples of bad news could be:

  • Exit of a CXO / President / Founding member of a company
  • Failing to adherence to quality norms, in F&B, Pharmaceutical sectors etc
  • Some violence or Strike in the company
  • Etc.,

How can an Investor benefit from it ?

If we take the current situation of the Inter Globe Aviation (Indigo), where the company announced the  departure of  its President & Whole time director Aditya Ghosh. Adding to this, the company has performed poorly during the Quarter ending March’18. This has led to a steep fall in its share price in last four trading days:

Which shows ~20% drop during this period. This definitely looks like a good buying opportunity.

But, Is this single factor enough to make a buying decision ?

Yes and No.

Yes, if the Company:

  • Is well know in its sector.
  • Has good track record of earnings and profits
  • Is one among the top two companies in that industry

No, if the above mentioned points aren’t true for the company. In that case it may just be another company going towards bankruptcy. It would be better to avoid buying the stock.

Will I bought Inter Globe Aviation (Indigo)?

I bought Inter Globe Aviation (Indigo), Not just because of the steep price drop. But also due to other positive factors about the company:

  • Largest fleet operator in India, with over 1000 flights per day
  • Has performed better than peers on flight schedules
  • In Flight crew is well behaved when compared to SpiceJet or Jet Airways
  • Handles crisis well, for instance: smoothly handled situation when recently Aviation Regulator Directorate General of Civil Aviation  grounding of A320 Neo flights.
  • Future cash flow value per share is Rs: 1884, so current share price is at least at 25% discount.
  • P/E and PB are on a higher side, but this is the risk that an invertor should be ready to take.
  • Expected annual growth rate is ~19.8%
  • Revenue growth is expected to be better than its peers and to that of the Market

Please be advised that me buying the stock doesn’t qualify for other to buy, so this is not a buy recommendation from me, rather it is my view on the company.

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Which stocks to buy during Feb 2018 Crash / Correction

I had published an article on 1st Jan 2018: “Time to exit equity market and book profits” the markets have started correcting and this might be theĀ  Crash that has just started. Only time will tell. Now is the time to identify which stocks to buy during Feb 2018 Crash / Correction.

I have sold most of my holdings which are high gain stocks and high gain mutual funds by end of Jan-2018.

I am still holding few stocks that have not appreciated much. So selling them was not a good idea, as the returns would be minimum. Moreover these were potentially good companies, such as Apollo Tyres, M & M etc. I held them as I wouldn’t gain much if I sold them, and moreover It would be good idea to buy more of same stock when the price dropped for a better overall gain, over long term.

Coming to Which stocks to buy during Feb 2018 Crash / Correction: I’ve bought shares of some of my shortlisted companies such as, Kitex(@225.4)[I’ve exited this stock at 114.7 after reading this post , though there are comments countering the views, there is high possibility that one may loose all the investment], Avanti Feeds(@2287.7)[The share price has been falling since and I’m buying at dips], Motherson Sumi(@325.4)[The share price has been falling since and I’m buying at dips], as they are available at discounted price at present. With a conservative target growth of 15% to 20% CAGR. I’ll continue to accumulate themĀ  when the prices fall further, .

I have few more companies in my wishlist, which have not yet reached our purchase price. I’ll mention them in another post when the prices drop further and I buy them for my portfolio.

If you couldn’t book your profits during peak price, don’t worry, just hold the stock for longer.

I still feel there is still downside to Market at current levels, and use every dip as buying opportunity.

Don’t sell in panic. Instead, keep an eye on your watch-list, and buy them when the price is right.

updated this post on : 7th July 2018

You may want to have a look at model ingenious portfolio, for more insights into different stocks.