Tuesday, 7 November 2017

BE VALUE SENSITIVE

BE VALUE SENSITIVE

First and foremost, This is no Doomsday forecast.
Just a view to exercise caution in markets since valuations are getting stretched.
Nifty is close to 10500 right now and;
This is no more a stock pickers market but a traders paradise.

When we say be value sensitive, a lot of people argue saying, XYZ is trading at 60 p/e because it is the market leader so it will sustain and 2025 will be great.

Understand the journey of a stock.
Lot of  small,mid & even large cap stocks having completed their cycles of over-valuations in the past were in the undervalued territory in 2013-2014. From there they rallied sharply. As of date, Lot of them are in the fairly valued or over valued territory. That is when Analysts start estimating earnings of 2020 and justifying the valuations or over-valuations. But, A stock can fall to the under-valued territory again as well, We can claim valuations are attractive considering 2025 earnings but then, Before the stock prices rallied, we had no good future? If the future was expected to be good then why the valuations were low?

Understand the cycle from Undervalued to Overvalued to Undervalued again.

So it can happen, there is nothing like, This stock won't correct because it is fairly valued, or say Asian Paints cannot correct from 60x P/E because 2020 numbers are expected to be good.

Btw: Saudi Arabia's ARAMCO the Oil major PSU is going for an IPO in 2018 and the issue size would be close to 100 billion usd, the largest ever in history and bigger than Alibaba's 25 billion usd and a Global listing on NYSE is being weighed right now. (Global Liquidity Sucker?)

This gyaan might seem pointless right now, Remember it when the fall starts :)

Prem Doshi
ACE Equities

14 comments:

  1. Hi Prem,

    What do you make of NBFC's which are quoting at 4 times BV Fy18E and 27 times Fy18E EPS? Do you think, with 30% growth visibility, they are fairly valued in the light of interest rates being at the bottom of the curve?

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    1. Every NBFC is BAJAJ FINANCE according to markets right now.
      Retail investors are very excited right now, I would avoid such bloated stocks.

      Btw, Ibulls Housing Finance is a strong sell on charts.

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  2. Hahahahaha evry nbfc is bajaj fin..killer line

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  3. Cadila Healthcare & PFC any idea???

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  4. Your take on spicejet and Indigo

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  5. Is it right time to enter for short term and what u think of nifty

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  6. Can you please provide your views on Aditya birla capital at 200 levels & capital first at 700 levels. I am holding capf from 500 odd levels. Your timely guidance will be of great help..Thanks

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  7. CMD of Pincon Spirits has been arrested alongwith other directors on charges of fraud and has accepted that 500 cr was deposited in company account. Future of company has suddenly become bleak. Small investors are shocked and are unable to sell due LC. Please share some information about manufacturing and other activities etc.- H Chandra

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  8. Please comment on latest developments in Pincon Spirits

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  9. You are a honest person...

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