Multibagger Value Stock : Invest Now !! 6 times in 6 months !!

#1
Valuation of SEL

Based on Book Value
Current Book Value = 183.8
Current market Price = 85
Current Market Price/Book Value = .46
Expected Market Price to book value = 1 2
Valuation if SEL attains the expected ratio: 183.88 to 367.6

Based on PE Ratio
FY09 Revenue = Rs. 606 Cr
Cumulative Aggregate Growth Rate since last 4 years = 74%
Projected FY10 & FY11 Figures
FY10 Revenue = 1055 Cr
FY11 Revenue = 1836 Cr
Current TTM EPS based on FY09 Revenue Rs. 32
Expected EPS for FY10 = 55.7
Expected EPS for FY11 = 97
Current TTM PE Ratio = 2.65
Expected FY10 PE Ratio = 1.52
Expected FY11 PE Ratio = .87

Appropriate PE Ratio for SEL
Current PE for similar textile sector firms is around 10. This itself is a low PE considering India in among the top two textile export countries next only to China
US Consumer market is picking up again in 2010 on the back of huge stimulus package, directly benefitting the Indian firms exporting to US
The decline in rupee has further increased the earnings of exporters
A responsible management who has been able to show strong increase in revenues since the last many years
In light of these developments even a PE multiple of 10 looks paltry and a the right multiple should be around 15

Expected Price of SEL for FY10 based on PE multiple of 10 to 15 for FY09 = 557 to 835.5
Expected Price of SEL for FY11 based on PE multiple of 10 to 15 for FY09 = 970 to 1455
Price Target March 2010 = 550 to 850 (Returns of 650% to 1000%)

A 3 Months returns 6 to 10 times look a bit ambitious, but we have seen in the past during the rally from Mar 2009, how some undervalued companies having good value and good growth prospects having multiplied 20 times in less than a year.

Investors who do not buy now will be missing another rare Gem of an opportunity, which can give them multi bagger returns.

Disclaimer
I am not a stock guru, but a sound investor who looks for value because market has a way of rewarding value eventually.
I do have an investment in the above stock, so its performance would affect me also. This is to let you know I am not one of the analysts giving useless gyan like others on TV
I hope the stock will return 6 10 times in the next 6 months, however I will be satisfied with 3 4 times also, and will probably book profits
Each investor should invest at his own risk! However, as they say you get huge returns only if you take a bit of risk !! :thumb::)
 
#2
CO IS SEL mfg co ..BSE code is 532886. Yearly low /high are 38 /110 ....38 in march 09 & 110 in april 09... thanks for information...
 

SwingKing

Well-Known Member
#4
Valuation of SEL

Based on Book Value
Current Book Value = 183.8
Current market Price = 85
Current Market Price/Book Value = .46
Expected Market Price to book value = 1 2
Valuation if SEL attains the expected ratio: 183.88 to 367.6

Based on PE Ratio
FY09 Revenue = Rs. 606 Cr
Cumulative Aggregate Growth Rate since last 4 years = 74%
Projected FY10 & FY11 Figures
FY10 Revenue = 1055 Cr
FY11 Revenue = 1836 Cr
Current TTM EPS based on FY09 Revenue Rs. 32
Expected EPS for FY10 = 55.7
Expected EPS for FY11 = 97
Current TTM PE Ratio = 2.65
Expected FY10 PE Ratio = 1.52
Expected FY11 PE Ratio = .87

Appropriate PE Ratio for SEL
Current PE for similar textile sector firms is around 10. This itself is a low PE considering India in among the top two textile export countries next only to China
US Consumer market is picking up again in 2010 on the back of huge stimulus package, directly benefitting the Indian firms exporting to US
The decline in rupee has further increased the earnings of exporters
A responsible management who has been able to show strong increase in revenues since the last many years
In light of these developments even a PE multiple of 10 looks paltry and a the right multiple should be around 15

Expected Price of SEL for FY10 based on PE multiple of 10 to 15 for FY09 = 557 to 835.5
Expected Price of SEL for FY11 based on PE multiple of 10 to 15 for FY09 = 970 to 1455
Price Target March 2010 = 550 to 850 (Returns of 650% to 1000%)

A 3 Months returns 6 to 10 times look a bit ambitious, but we have seen in the past during the rally from Mar 2009, how some undervalued companies having good value and good growth prospects having multiplied 20 times in less than a year.

Investors who do not buy now will be missing another rare Gem of an opportunity, which can give them multi bagger returns.

Disclaimer
I am not a stock guru, but a sound investor who looks for value because market has a way of rewarding value eventually.
I do have an investment in the above stock, so its performance would affect me also. This is to let you know I am not one of the analysts giving useless gyan like others on TV
I hope the stock will return 6 10 times in the next 6 months, however I will be satisfied with 3 4 times also, and will probably book profits
Each investor should invest at his own risk! However, as they say you get huge returns only if you take a bit of risk !! :thumb::)
Thnx for the info. But I am always sceptical about such posts and so will the other 'experienced' users of traderji.

Before putting your money into trades, investors ask yourself this,

"When Buffet, Soros and Walker cannot make such claims. Then how can someone else do it".

Please invest wisely and trust your own analysis.

Please Note: In no way am I ridiculing anyone's opinion. But as an active member of this forum, I do have the right to alert my fellow members.

Tc.
 
#5
Dear Raunak,

I do appreciate your concern of alerting fellow members of the forum. However, I would like to make a few points:-

1) I never made a claim about the stock and assure you nobody can ever, even Buffet or Soros after their tremendous experience and wisdom

2) What I did was share a stock, based on my analysis and understanding which seems like a potential multibagger. I may be wrong about my analysis & would truly be grateful if some one could let me know of any fundamental mistake in my analysis, so that I may not incur a monetary loss:)

3) Lot of veteran traders and experienced investors have shared their wisdom, that investing in sound companies at attractive valuations always gives good returns. The same has been proved historically and I hope will be proved this time also

4) Lastly, as my last line stays my post was just a piece of analysis. Everybody is free to make their own choices whether to invest or not. Those who invest wisely and take the right risks can be assured to be rewarded. Atleast I hope I will be:)

Dear Amit,
The price I have calculated is a 10 to 15 times multiple of the expected EPS
eg. for FY11 : Expected EPS = 97, PE = 15 so Price = 97*15 = 1455, CMP = 85. Expected Returns...Do the math


Cheers,
Raj
 

SwingKing

Well-Known Member
#6
Dear Raunak,

I do appreciate your concern of alerting fellow members of the forum. However, I would like to make a few points:-

1) I never made a claim about the stock and assure you nobody can ever, even Buffet or Soros after their tremendous experience and wisdom

2) What I did was share a stock, based on my analysis and understanding which seems like a potential multibagger. I may be wrong about my analysis & would truly be grateful if some one could let me know of any fundamental mistake in my analysis, so that I may not incur a monetary loss:)

3) Lot of veteran traders and experienced investors have shared their wisdom, that investing in sound companies at attractive valuations always gives good returns. The same has been proved historically and I hope will be proved this time also

4) Lastly, as my last line stays my post was just a piece of analysis. Everybody is free to make their own choices whether to invest or not. Those who invest wisely and take the right risks can be assured to be rewarded. Atleast I hope I will be:)

Dear Amit,
The price I have calculated is a 10 to 15 times multiple of the expected EPS
eg. for FY11 : Expected EPS = 97, PE = 15 so Price = 97*15 = 1455, CMP = 85. Expected Returns...Do the math


Cheers,
Raj
Thanks for taking my post constructively Raj.
Good luck Ahead.
 

rajeabc

Well-Known Member
#10
There is another stock-SUMEET INDUSTRIES.
Check their last Q result and decided. They have planned business expansion and lot other things to grow the business. I gave a call on MONEY CONTROL when it was around 18 now its trading at above 22. in next 12-18 months target would be 100. Please check and decide yourself.
 

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