Thursday, June 16, 2011

Why certain stocks quotes high?

There are certain stock which are discounted high on the broweses.We keep on thinking why that happens.Some stocks are such that even it is showing loss it is discounted high.
If I give an example , when I gave a call on Lumax Ind it was making loss and still it was quoting at Rs.100...and still I gave the call ..and I am sure many would have not bot it looking at the bottomline.....but Lumax Ind gave excellent return and still way above my recomended price of 95.
One stock which I would mention here is Jyoti Ltd which I recomended here from mid 30's and now it is at Rs 95 after touching to 129.Well, the last year eps , Mar 2011 year ended is 9 and still the stock is quoting at Rs 95?Which is still around 11P/E and other stocks whose eps are high still quotes low......Why?
Why that happens?We as an investor always look at the BS and take decision.We try to see the valuation by looking at the P/E, Mcap/Sales , BV/Price etc etc and most probably we fumble .We make mistake looking at that.
Investors need to understand that when market is giving high discounting it means market knows that the Co product has got great future and it will blast one day showing big bottomline.
Had anyone seen the sales of BF Untility?It is mere 17 cr for whole year and 5 FV stock is quoting at 735 ,means 10 Fv at 1500.....why that is happening?
Because market knows it can deliver the earnings much much bigger in future.
Now that doesn't happens with each and every stocks.Sometimes market do not know what is going on in certain stock and hence it lies low on the broweses and then when market get to know the real worth it starts moving rather say running.
Let us take one more example of Ramco System Ltd which is quoting again at Rs 95 and the bottomline is in RED.Then why the market is giving so high a valuation.Because we are not knowing what market is knowing.
I remember I replied to one of my reader query named Sanjana not sure about the name,She was asking me about what I think about Mahindra Satyam and I told her to look at Ramco System, GSS America , Allied Digital in cloud computing space.I remember I also asked her to write Cloud Computing in Google search and see what is happening there.I have already seen couple of bulk deals in GSS America and has moved up against the market trend.That is the headwind we are getting and if we don't understand that we are at loss....Your ears should be alert to understand the headwind, your nose should be so sensitive that it should be able to smell the oppertunity.....
I haven't mentioned on the front page about cloud computing as I wanted my readers to come out with it but none came out.That is why I always say, read my replies as well to queries asked.I had a bad habit of mentioning stocks or sector in my replies.....
I donno whether she did that or not as I didn't heard  more from her but the key here was I gave a hint to her of an upcoming sector in IT space, Cloud Computing.
This is one sector which is going to blast by next couple of years.I am not going to write anythign about it in detail.Let readers explore it and find it by themself.I will only say that this sector has huge upside.Foreseeing the future of sector  helps us buying stock cheap before others buy.
That is the Key to be successful in stock market.Buy before ayone buys.Buy before anyone take a call, Buy when no one is buying and for that one need conviction and for that one needs to be well read and updated of each and every move that is taking place in the horizen.
Ramco System is in Cloud Computing space and it has given latest annoucement at bse.Go to the bse site and read it.Try to understand what Cloud Computing is and try to match what Ramco is doing in that space.
After all you are putting your hard earn money and you need to take care of it by yourself....


  1. Hi Rajeev,
    Giving below the link of Ramco Systems recent announcement on


  2. rajeev,

    I went through your recommended companies and also through cloud computing. I have also started investing in some of ur recommendations.
    I feel you are doing a great job.

  3. some more views on market ;

    Everybody knows something about something, but the market knows everything about everything. The market is the sum total of all the players. It knows at any point in time the news, expectations and opinions held by every individual as well as the impact of every buy or sell decision he makes. This enormous amount of knowledge in turn gets reflected in the stock prices. Stock prices reflect every bit of information - public or private --, and the impact of every trading action of every market participant. The price of a stock is not just some number but it is an indicator of the aggregate/consensus view held by all the market participants at a given point in time. Prices reflect what all participants-- day traders, specialists, market makers, hedge funds, insiders, foreigners, individuals or institutions— are collectively thinking and how they are acting as of the moment!


  4. Reshma,
    Perfect understanding....Looks like you have understood the market exceptionally well...kudos for that...

  5. Market does't reflect information available but it reflects views of all participants on all available information.
    participants are always short sighted.

    That weakness is always exploited by all successful investors/speculators

  6. thanks... learning from you ....

    warm regards

  7. rana kapoor said he will grow balansheet of yes bank by 10 times in 10 years
    Godrej said that they will increase their revenue by 10 times in 10 years

    Both persons are trustworthy.

    What else do u want?


  9. The bank, which achieved a 50% growth in its balance sheet from 2007-10 , is now planning to slow down a CAGR of 35% till FY15, which will make it a $35 billion bank. "After that in Version 3.0, we would expect growth to moderate to 25%, which will make us a $100 billion bank in the next five years," says Kapoor.

  10. sameer,
    I can't give a call on Yes Bank or Godrej as I do not track any....

  11. Sameer ,
    We always see what we want to see :)
    You are correct the weakness is encashed by
    the Speculators
    But nice reading anyway.!!!Opens the gate of our
    way of THINKGING @!

  12. Hi Rajeev,

    Any view on AHMEDNAGAR FORGINGS ? cucurrently price at 115,book value 142 sales will come to 900 to 950 cr and profit to near around 100 to 120 cr. they have completed expansion and look like it is reflecting in their sales and profit.

  13. bipin,
    I do not track Ahmednagar forging so no view...

  14. Hi Rajeev,

    Is GTL Ltd a good buy now? Its down to Rs.140/- from Rs.400/- .


  15. Ramki,
    Even if GTL comes to 40 I will not buy it....

  16. hi rajeev,
    can you have a look at natural capsules ltd bse code 524654.The stock is having low equity of 4.5
    market cap of 18.19 sales turnover of 34.14 favouring sales/market cap ratio.Very low debt and all other financial parameters like ROCE,EPS and Book Value consistently growing for last 5 yrs.Whats your opinion abt this stock.this seems to be a multibagger,
    your views will be highly appreciated.
    with regards

  17. surjeet,
    I do not track natural cap so no view

  18. Dear Rajeev,

    How do you find Eimco Elecon. very small equity base with Foreign promter holding.Good BV.Very good managenent of elecon engg.

  19. Dear Rajiv

    what are your views on titan...shall it be investment sell OR hold at cmp

  20. Kishor,
    Titan is a hold for 2 more yrs.....