Basis of Stock Picking

Basis of Stock Picking

1. Futuristic Stocks

2. Each one shall be one of the leader in expanded markets in future.

3. Innovative Stocks with innovative products.

4. MNC status exclusively or in JV with MNCs

5. Most of the scripts are practicing debt-free business model.

6. Reputed, ethical management with no corporate governance issues.

7. Most of the scripts are not affected or influenced by the political decisions.

Caveat

1. Equity investment is not for income generation but only for wealth creation and
    enhancement.

2. Investment in equity should be only with the money not required in your life time and
    not even for any retirement plans etc.

3. Though we have given target price of 5 years, the Investors are likely to reap real
    values after 10-30 years only.

4. Investors are kindly advised to investigate thoroughly for each script and its merits
    before taking the final decision.

Game Changer Stocks Portfolio-II

                                         GAME CHANGER STOCKS
                                               PORTFOLIO-II

S No	Name Of Scripts	Current Market Cap (Cr)	Expected Market Cap( 2019)	Current Market Price (CMP) on 15-12-2014	Target price ( in 2019)	Current Market( CMP) Price on 15-12-2014	Return Till Date(%)	5 year Rate of Return(%)
1	Stampede Capital	361	2800	162	1320	162	0	815
2	Tata Communications	12351	90000	434	3177	434	0	732
3	Tata Elxsi	1871	9282	599	2986	599	0	499
4	Lovable Lingeri	632	5000	372	2975	372	0	791
5	Meghmani Organics	574	3732	22.3	148	22.3	0	664
6	Jubilant Life	2037	22500	127	1403	127	0	1104
7	NIIT	860	5000	52	302	52	0	581
8	KPIT Technology	3860	17820	200	914	200	0	457
9	Ricoh India	1288	5560	323	1403	323	0	434
10	Praj Industries	1171	5565	66	314	66	0	475
11	Patel Integrated Logistics	213	1365	140	897	140	0	641

Basis of Stock Picking

1. Futuristic Stocks

2. Each one shall be one of the leader in expanded markets in future.

3. Innovative Stocks with innovative products.

4. MNC status exclusively or in JV with MNCs

5. Most of the scripts are practicing debt-free business model.

6. Reputed, ethical management with no corporate governance issues.

7. Most of the scripts are not affected or influenced by the political decisions.

Caveat

1. Equity investment is not for income generation but only for wealth creation and
    enhancement.

2. Investment in equity should be only with the money not required in your life time and
    not even for any retirement plans etc.

3. Though we have given target price of 5 years, the Investors are likely to reap real
    values after 10-30 years only.

4. Investors are kindly advised to investigate thoroughly for each script and its merits
    before taking the final decision.

Game Changer Stocks Status Report Oct 2014-Dec 2014

GAME CHANGER STOCKS

STATUS REPORT OCT 2014 TO DEC 2014

S No	Name Of Scripts	Current Market Cap (Cr)	Expected Market Cap( 2019)	Current Market Price (CMP) on 16-10-2014	Target price ( in 2019)	Current Market( CMP) Price on 12-12-2014	Return Till Date	5 year Rate of Return(%)
1	Wockhardt	8,495	35,520	772	4,000	1054	36.5	418
2	Webco India	7,213	30,722	3,803	20,000	4416	16.1	426
3	Dynamatic Technologies	1,391	8,346	2,416	16,913	2062	-14.65	600
4	Marico Kaya Enterprise	742	5,061	576	4,500	977	69.6	682
5	Gujarat Pipavav Port	7,829	46,976	162	1,134	169	4.3	600
6	Multi Commodity exchange ( India)	3,929	7,858	770	2,311	864	12.2	200
7	Ramco System	1,125	5,062	464	2,550	461	-0.65	450
8	Aban Offshore	4,204	25,225	622	4,351	447	-28.2	600
9	SML Isuzu	1,224	7,343	846	5,920	860	1.65	600
10	Rane Holdings	877	3,945	614	3,377	673	9.6	450
11	Madhucon Projects	264	2,319	36	350	34	-5.6	879
Total Return from 16.10.2014 to 14.12.2014 ( 2 months )							9.2

Gujarat Pipavav Port

GUJARAT PIPAVAV PORT

Gujarat Pipavav Port is engaged in running a port in the state of Gujarat near to Jawaharlal Nehru Port Trust in Mumbai. The company is controlled by its major shareholder Maersk Shipping which is

one of the largest shipping companies is the world. We have following strong reasons for

recommending this stock:

 

1. The quality of the management is excellent like any MNC and interested to keep

     the company debt free.

2. The future expansion will be funded more or less by the internal accruals and

    hence company will command high FII, DII and HNI interest.

3. Company is going to have 30-40% growth in its revenues every year as India’s

    export growth will be excellent during the next 5-10 years.

4. With expenses to go up by 10% plus like any port business, the net profits can go

     up by more than 70-80% year after year as company is having tax exemptions.

5. Company management has expressed building more number of ports in India

    and with this company’s share price will always be in demand from institutional

    and retail investors.

6. Indian economy is based on domestic consumption theory and export potential is not at all

    tapped. India’s exports have a long way to go up and exponential growth is very

    much possible in the years to come.

7. We have seen this company’s profits going up from Rs. 57 crores to Rs. 191

    crores in the last 3 years when export growth of India was subdued. In case of

    good export growth figures like 30-40%, the profits will go up exponentially.

8. This stock will be real money spinner in longer periods like MRF we covered in

    the first article.        

 

Caveat

1. Equity investment is not for income generation but only for wealth creation and
    enhancement.
2. Investment in equity should be only with the money not required in your life time and
    not even for any retirement plans etc.
3. Investors are likely to reap real values after 10-30 years only.
4. Investors are kindly advised to investigate thoroughly for each script and its merits
    before taking the final decision.

Marico Kaya

MARICO KAYA
Another Game changer

Marico Kaya is a demerged company from its parent Marico, the famous FMCG giant. Kaya is established to create prime space in running skin clinics and selling its 60 plus skin products. It has 85 skin clinics in India and about 23 in middle east. Middle east clinics are more profitable than domestic clinics. In future, Kaya management will give more focus on selling of its products along with running the skin clinics. We found the following strong reasons for terming it as a game changer stock:

1. Marico Kaya belongs to famous Marico group and have excellent management to back its operations with 100% integrity and corporate governance.

2. Though it has gone up from Rs.300 to 1000 in a span of 5 months but still it is a baby and there are sufficient strong reasons in a country like India to make it a boy and then a strong man in the years to come. India's upper middle class and HNI population is increasing very fast and with increasing trend of money spending in young population, kaya products are going to increase their business manifold. Imagine if after 5 years 1% of the population i.e., 1 crores use its products for Rs. 5000 per year, the total sales of its products only should be not less than Rs. 5000 crores. These are all high end premium products and company will have at least Rs. 600-700 crores ( 12% of sales ) as Net Profit. Its current annual sales is only Rs. 350 crores, so there are chances that this company will show tremendous growth in sales as well as profits.
 3. If the growth is only 30% of estimated as per point 2, the Net Profit will not be less than Rs. 200 crores. Page Industries ( Jockey brand ) shows an annual profit of Rs. 200 crores and its market valuation in stock market is more than Rs. 11,000 crores. Marico Kaya market valuation is only Rs.1200 crores and hence, there is full chance that its share price can go up 9-10 times in next 5 years. As a conservative estimate we have taken the target price with growth of 4-5 times only by 2019 which is very likely to happen.

4. Kaya products and clinics sale is directly related to working women salaries and incomes. In middle east skin clinics are charging Rs.100,000 per female customer on an average. The average female earnings in middle east is Rs. 80,000 per month whereas in India urban educated females on an average is earning Rs.25,000-40,000 per month. There is likelihood that India female shall be earning Rs. 50,000-80,000 after 5 years. At present, Kaya Indian skin clinics are charging Rs. 14,000 per customer on an average and hence with increased female income, this average charge will increase 3-4 fold. This increase in female salaries in India will ensure manifold increase in spending power for kaya type of products and skin care.

5. Marico Kaya skin clinics provide medical solutions for skin disorders and at present there is hardly any competition. VLCC which is in beauty solutions provider where so many players are there. 

6. Marico Kaya has not started marketing of its products and once this is started in full force in malls and through e commerce, the products sale can increase very fast which will ensure sustainability in sales and profits.
 7. Marico Kaya products are competitively priced in comparison to MNCs products and its packing, look etc is very good and appealing.

8. Marico Kaya skin clinics being more profitable, are in Saudi Arabia, Oman and UAE. It looks possible to spread the same type of clinics in other countries also and hence expansion of geographical spread is very much possible. Marketing of its entire product range in middle east may also be attempted by the management in future.  

 

9. Therefore, it looks that Marico Kaya will be the future Indian born MNC like Asian Paints.

DYNAMATIC TECHNOLOGIES

Dynamatic Technologies, a Rs.1,650 crores company, designs and builds highly engineered products for automotive, aerospace, hydraulic and security applications at its state-of-the-art design, engineering and manufacturing facilities in Europe and India. 

 

We recommend this company due to following strong reasons:

 

1. Dynamatic Technologies is promoted by Mr. Udayant Malhotra, ex technocrat of Hindustan Aeronautics Ltd. He has built the company over past decade as a highly technology driven company. If we see the past events, number of Joint Venture announcements with world's leading companies and number of acquisitions in Europe, we can conclude that promoters are having a distinct passion to take this company into a technology driven, iconic company never ever born before and heard in a country like India particularly in the manufacturing field. 

2. Now some acquisition, tie ups and joint ventures with world's leading companies:

    - Bell Helicopter,as a single source supplier of major airframe assemblies for the BELL 407 GX

    - Airbus, to supply flap track beams for Airbus 330 aircraft series as a sole supplier

      - Boaing,the $85-billion aerospace and defence giant, wants to make India a global hub to make parts for its CH-47 Chinook  helicopters.Initially, Chinook’s ramps, pylons and electrical harnesses will be sourced from India.The ultimate goal will be to source sub-assemblies of more (aircraft) platforms

     - HAL and DRDO for its India army requirements

    -Aero Vironment USA, entered into pact with Dynamatic for manufacture of unarmed aeriel                vehicles (Drones). Aero Vironment has already delivered 24,000 UAVs in the USA and 24 other         leading companies and in India UAVs orders are likely to come from Ministry of Home and               Defence.      

    - BMW, Volkswagen, Mercedes, Ford, Nissan & Audi for auto parts

    - Hyundai India, single source supplier for its specific engine components

  -Mahindra & Mahindra, John Deere, Cummins, Escorts, Caterpiller. Catering to all tractor manufacturers in India with 65% market share.

3. Dynamatic Technology's main growth is coming from aerospace manufacturing because of orders from some leading companies of the world and the margins are very good in this area. Auto components main facilities are in Germany and the cost particularly manpower cost which is Rs. 220 crores annually, is very high. Dynamatic management is planning to shift iron casting and some other non critical operations to India and this will improve margins in coming years. Therefore, in the next 5 years turnover will increase substantially with improved margins.

4. Indian Govt is planning seriously for the first time to manufacture defense products and weapons  in India and already the foreign holding in defense sector has been increased from 26 to 49%. There is likelihood that this percentage will be further increased to 75-100% to facilitate fast implementation of the Govt plan. There is very less doubt that Dynamatic Technologies will be the Infosys of defence and aerospace manufacturing in India.   

5. The current market valuation of the company is Rs. 1,535 crores with annual turnover of Rs. 1,650 crores. Imagine, if turnover  increases manifold with increased margins, this company may command 3-4 times market valuation compared to its sales turnover. If turnover is Rs. 3,000 crores after 5 years, the market valuation God knows, of this company may be more than Rs. 10,000 crores.

6. Dynamatic Technologies is paying Rs.100 crores every year interest on its Rs. 450 crores debt. Management is trying to reduce the debts and in future it will be very much possible for this company to become debt free due to increased market valuation. Imagine, if this entire Rs. 100 crores interest is saved and company has extra profit of Rs. 200 crores annually after 5 years, the targeted valuation will be easily achieved. Page Industries( Jockey brand ) with Rs. 200 crores profit is valued more than Rs. 10,000 crores by the stock market.

7. Competition in the sector of defense and aerospace is going to be very limited and Dynamatic Technologies will be in better position to take advantage of the situation.

8. It is likely that Bell, Airbus and Boeing will give further structures to Dynamatic Technologies to built in future due to its dependability and lower costs. This aspect may create substantial orders for the company.  

Wabco India

WABCO INDIA
Changing the Indian commercial vehicles safety standards.

WABCO INDIA is a company owned by Mr. Warren Buffet making Automatic Manual Transmission System(AMT), ABS and Commercial Vehicles New Generation suspension system.

We recommend the stock due to the following strong reasons:

1. It is a Warren Buffet company in new technological areas of automotive parts like AMT, ABS and new generation suspension system for commercial vehicles.

2. At present in India, safety features like AMT and ABS are very rarely used and no body wants to incur extra cost of Rs. 1-2 lakhs on these features which can prevent accidents on the highways. Hence, we are buying this stock when there is no extra demand in the market.

3. Central Govt. is going to implement ABS compulsory w.e.f.  1st April,2015 and Tata Motors is going to provide AMT in all its trucks and commercial vehicles. These safety features will become compulsory in 1-2 years time and demand for these products will increase manifold.

4. WABCO INDIA is having monopoly in these products and it will be difficult for any new entrant to come in the market in near future.

5. Parent company is going to make India a sourcing hub for supplying it to  other countries and hence in future there will be a lot of export of these products from WABCO.

6. At present total commercial vehicle sale is 8 lakhs per year which is likely to increase to 14 lakhs by 2019. Imagine if Rs. 1 lakh worth of ABS, AMT is on one vehicle, 5 years later WABCO can increase its sale by Rs. 6000-7000 crores( 50% market share on 14 lakhs vehicles at 1 lakh per vehicle). It can give additional profit of Rs.700-1000 crores per year to WABCO after 5 years. These projections are on the conservative side and real picture may be better.

7. The stock will command high PE in next 5 years also because there will be lot of excitement, glamour and feeling of safety amongst investors with this stock. Whenever a new game changing product is introduced in the market, the real commercial value is realized after 5-10 years( take the example of internet, dot com industry etc.). Hence, in anticipation of bigger market sales the PE will remain very high even after 5 years.   

8. This stock is true replacement of fixed deposit because WABCO is much safer than fixed deposits. Imagine, if Arvind Kejriwal comes, fixed deposits will be unsafe( banks will feel pressure) and WABCO type of monopolistic companies shall be safer for investors. Its products will safeguard the lives of customers and its stock investment can take way the worries of investors.