This time I am taking a great multibagger from our much
promising Agri sector.
Yes it is PI Industries. If we have purchased it on year 2003
bottoms, we might have got it at Rs. 17 – 20 Range. And at present, the price is above 450.
At a single look, seeing the price alone may deceive us! ( As a just 25 bagger
converting 5K to 1.25 Lakh in 12 Years, but if it is like that alone, then also
a superior return comparing with market averages)
Ok, let us dig little more in to the details.
As our previous examples, assume we purchased it on 22 May
2013 for 5K rupees ( 296 Shares)
Date
|
Open
|
High
|
Low
|
Close
|
WAP
|
No. of
Shares |
|
22/05/03
|
16.90
|
16.90
|
16.85
|
16.85
|
16.87
|
3,000
|
What will be the present valuation of our investment?
We can dig in to the details. After our purchase of 296
shares of FV = 10/-, the gave
1:1 bonus in 2009 (making number of shares = 296 x 2 = 592 )
1:2 bonus in 2010 (making number of shares = 592 x 1.5 = 888
)
FV split from 10 to 5 (making number of shares = 888 x 2 = 1776
)
FV split from 5 to 1 (making number of shares = 1776 = 8880 )
And present price and chart is given below
So the investment is worth 8880 x 457 = 4,058,160/-
Making Rs 40.58 Lakh, making us financially free, as per my previous
definition.
All these benefits are for those who hold for long term. They did not exit seeing 200% or 300% or so. But, practically, it is very tough not to exit at certain level. Even VPji asks for partial profit booking. Given that, I wonder how you will be able to hold all the stocks of your portfolio for 10-15 years. And, once you exit early, all the calculations of FFS will evoporate. Please comment.
ReplyDeleteTruly said bro,
ReplyDeleteThat's why I started this blog itself!
Its the most difficult part. In stock market, in order to succeed to require only 1 man's intelligence, but 9 men's patience!
I learned it in the hardest way, in the last 8 years of my investing. In first 3 - 4 years, I failed to pint out winners, but later I sold out normaly too early :( , but no regrets :) , atleast I hope, I learned my lessons.
Personal experience: I picked Avanti Feeds [ @ price 37 to 40/-, even before VP recommended it] but started selling around 100 and Completely sold out it around the price of 150/- [My conviction may be low or risk averse]. Even if I hold just 25 % of it now, I will be financially free by that single holding!
Again I m not against selling your winners (but normally not for 200 - 300 % ), but when the price becomes extremely overpriced. But pls don't sell out completely. THATS THE WHOLE POINT.
Even VP recommonding to sell partialy only.
That's why I started this model portfolio as a separate one in a new account, [just while I got a one time gift of Rs 1 Lakh ], and now I just want to SIP Rs. 5000/- monthly in to it.
So I may sell a share only if its business theme becomes out dated or fraud from promoters side. On all other cases only, PARTIAL selling at exuberance prices (That also limited to 50 % initial holding - that's my strategy)
PS: You may be doubting whether I may be able to with stand up and down of the market and my temptation. I hope I can do it. Just a recent case: In my old personal investment, I hold Arrow Coated from the levels of Rs. 15.9/- after VPs recommendation and after my detailed analysis. I didn't sold a single share even at 10 bagger share price 161/-, but intact added few recently at 110/-.
"when the price becomes extremely overpriced" seems a variable phrase. How to get the same when sky is the limit ? However, do intimate us when you feel so for a particular share. I am following you.
ReplyDeleteSure. I will publish it on blog.
DeleteAfter looking at historical market as well as historical single share movements, I almost found 1/5 X to 5 X Theory.
If X is nominal valuation based on ROE, PE & PEG based nominal valuation of a share, in extreme bear market, the share price may be as low as 1/5th of the nominal value and at bull phase, it can be up to 5 five times of the nominal value (X).
So for your kind reference, I am giving my selling price (that to only upto 50 % of my holding) for Avanti [surely not in my list] may be between 40 to 50 PE (assuming an avg industry PE of 8 to 10 for a cyclic business) translate to 3200 to 4000 with in few months. Ofcourse it may go to any levels!!
I hope you got my criteria for extreme valuation.
How do you grade Suzlon? Vpji asks for hold and buy in it. What is its fair valuation? Whether to enter into it?
ReplyDeleteSuzlon may be a great long term turnaround bet.
ReplyDeleteBut I havn't analysed it in details. So couldn't comment about the fair valuation according to me.
But any how @ 20/- and MCap 6000 Cr seems valued very cheaply. Even a single wind turbine costs more than 20 Cr. But how they will deal with the huge debt is the million dollar question.
I know that I am disturbing you much. Still, I can not but ask one question. Would you please share with me which stock/s as per you, going to be next Avanti? No matter, whether it is a VP or NON-VP stock. Don't take it as I am asking cheap tips. I just want to know your views as per your in-depth and trenous studies
ReplyDeleteWe select a potential list of candidates.
ReplyDeleteIf we know which share will become next Avanti decisively then any one will be putting 100% in that bet naa?
From my port, I pick these having most potential.
1. Arrow Coated ( All most all signals are GREEN, they just need to scale up, otherwise also U won't loose anything from here )
2. Nath Bio ( Promotors approach need to change, have to be investor friendly)
rgds
I appreciate nice blog you have built so painstakingly.This will be very useful to small investors particularly. Incidentally may i ask you why you did not include small no of Excel ind rec by VP in your list. Is it to restrict no of scrips in the portfolio?
ReplyDelete:) Thankyou
ReplyDeleteSure, Excel having all the potential to become a multibagger.
Yep, I am restricted on the number between 12 - 24 as limited in portfolio design,
but may add excel later seeing their progress.
Rgds
Hi, I am an amateur investor and a recent follower of VP blog, a basic question to you. When talking about stocks like Avanti feeds, the profit grows higher and higher increasing the EPS and increasing the market price hence maintaining the P/E value. So, as long as the business is going on without any risks and the P/E within buying range, can we expect the stock to raise indefinitely? should we not be worried about its book value which is too less resulting in a huge price to book ratio? And is it a buy in current levels? I guess tha changes of doubling and tripling is very less from thse levels...
ReplyDeleteWE can reply it in two ways
Delete1. A 20 bagger can become another 10 bagger and yet another 30 bagger !
2. What moves up comes down, if it is not fundamentally supported.
thanks for the response... It would be great if you can list all the aspects you would see when you pick a company for the benefit of everyone (both undervalued and with great business n good track record), I mean like ratios, charts, numbers, management chat etc...
Deleteand, from the value investing books I ve read that of Warren Buffet and others, what he suggests is to pick the right one and bet early and bet big and have the portfolio of max 5 to 6 stocks , in other words 5 to 6 major investment decisions in one's life should make him financially free. I was just curious how you would justify having 20 stocks to your portfolio, it minimizes the risks for sure but will it reward you multifold? not unless all stocks rise tremendously....