Stocks for the long and short term portfolio

[jamit_05]

IIFL NCDs have an option of monthly and annual interest payment and the yield works out to 12.68 per cent per annum for the monthly interest option and 12 per cent per annum for the annual interest option. The NCDs will be listed on NSE and BSE and will have a trade able lot size of 1 NCD.

as per my understanding it will give 1,000 per month income for 1 year(our target) or 12,000Rs income on initial investment of 100,000 and when sold have to pay short term gain taxes too. above 1 year no tax.

conclusion: Biyaj par chada do paise.

What does India Infoline do? Nothing substantial. I don't care what the ratings have to say. It does not have a decade long presence, leadership in its sector nor a substantial asset base.

Buy its shares or NCD, it is a high risk bet, which I am better off without.

 

[Mr.G]

was just checking IIFL india infoline ltd. balance sheet, yes they are over leveraged (but again finance lease sector) without proper earnings. standalone they are clean 0 debt they have raised capital through their subsidiaries, 8,100 crore debt and 100 crore PAT/annum.

They have high chances of going bankrupt(if there is anything like this in india(kingfisher)).
such company raised 1000 crore through bond with no collateral (NCD). whom they are selling it to?? blind investors???

to Mr.G
1. Can I buy their NCD with 1 lakh rupee??(just assume)
2. If i hold them for 1 year and sell it how much should I get?? (in case they don't broke).

Yeh bethe toh hue hain TV, money control pe! Brokerage houses mein investors ke paise chusne ke liye.

They give **** calls and go and hide somewhere when it goes bad. Paise toh investor ka gaya na!

Jamit is the only analyst other than me who is recommending not to buy! No conservative investor would buy these things.

Yaar 12% ke return ke liye you will put your money at risk? I can assure you at the first hint of trouble the bond price is surely going to drop more than the 12% you will make.

This is a private company, IIFL will default on its obligations and thats the end of it, parent company ka kuch nahi gaya, show khatam paisa hazam.

I have given my report on this already: http://ghanishtnagpal.com/analysis-iifl-ncds-issue-sep-2013-yielding-12-68-p/

 

[jamit_05]

A classic example of what is expensive.

Look at Tata Steel. The world is going through a recessive period. Growth is arrested and loans are getting more and more expensive. Amidst all that, Tata Steel has highest Inventory and highest Debt and yet it is quoting at PE of 17 !!

A stock where the greater fools theory best applies. It is a cyclical stock in its down cycle, yet PE is 17 !!

 

[sabhlok_r]

A classic example of what is expensive.

Look at Tata Steel. The world is going through a recessive period. Growth is arrested and loans are getting more and more expensive. Amidst all that, Tata Steel has highest Inventory and highest Debt and yet it is quoting at PE of 17 !!

A stock where the greater fools theory best applies. It is a cyclical stock in its down cycle, yet PE is 17 !!

In that case Amit, won't it be good to short tata steel here?

 

[Cubt]

In that case Amit, won't it be good to short tata steel here?

Yes, technically it is short now with stop loss as eod close above 392. It may go down to 350s..

 

[stockman]

Amit - Your view on persistent systems?? I read it has got niche products & business when compared to the large players? How do you see this company considering for long run?

 

[jamit_05]

In that case Amit, won't it be good to short tata steel here?

Hi sabhlok,

The core discussions revolve around how to surely make good money and a good life. Know where and how to put your hard-earned savings to have them grow such that it makes the investor free to live a life of his liking and not having to do a 9-to-5

In that light, shorting would be out scope

That was an idealist-talk. Pragmatically speaking, although Tata Steel is a weary horse, it may still run. If it has reached a PE of 17 in off-season, who is to say it won't reach a PE of 27 before coming down to its rightful place? That would pose a real problem, right.

 

[jamit_05]

Amit - Your view on persistent systems?? I read it has got niche products & business when compared to the large players? How do you see this company considering for long run?

stockman,

I tried looking at a few places. I am unable to find organized data for Persistent. I will have to pull-down the Annual Reports for the past few years from the Cos website.

From what I understand, this company is in the small cap category, which I have still not started looking into. Because they are very volatile. They have a small and a niche customer base. If something should go wrong, poof goes my money. Therefore, I stick with largish ones, where a certain amount of consistency in performance can be expected year after year.

Regards,
Amit.

 

[jamit_05]

About One Mid-Cap stock which I have mentioned before.

Such are companies that make ideal long term investments. Numbers are all super, the lineage is top-class, the business is stable and predictable. Even if something goes wrong in the sector, we can count on the management to be patient and not do anything drastic and unpleasant.

It has a very reliable, large and a cheap source of fund. And we all know that it has very strict norms for doing business. It won't walk an extra mile into the woods to get more business or "lock a customer".

But, the only problem, which is common with most good stocks, is that it is very expensive right now. In fact, its PE is the highest in its history.

I am talking about Gruh Finance, with Mr.Deepak Parekh of HDFC bank on the board.

In the next post, I will try to justify why Gruh Finance could probably be bought at PE>20 and yet be one of the best long term investments.

 

[jamit_05]

"Buy a business that is so good.. that even an idiot can run it" - Warren Buffett

But regarding Price to Earnings. i disagree after making my own extensive research on 50+ companies. there is no prof that high PE cannot go higher, and low PE will definately go UP. this is just a physciological ratio (Price to earnings). we have a debate on it in another thread those who are interested can catch the conversation there.
http://www.traderji.com/fundamental-analysis/16-move-over-p-e-make-way-peg-4.html#post899484

No debate there. I agree. Any PE can go even higher. IT stocks have seen PE of over 200 ! Who knows, even our stocks may someday scale such heights.

I agree it is a psychological barrier, albeit a logical and an important one. Purchasing stocks at high PE seems agreeable only for growing companies and hence Mid-Caps and not large caps.

Generally speaking, for large caps PE above 10 seems expensive... as there won't be much growth in EPS. But, mid-caps like Gruh which are likely to grow by 10 to 20% EPS every year expensive is good.