Turnarounds : some opportunities

Hi all

It is well known that turnarounds present great capital gains opportunities, as do companies witnessing sharp growth in profitability.

Here are some possible turnaorund scrips, identified from diverse sources including TA, and some from 'smoke' (as in ... theres no smoke without fire)

Will welcome informed views/info which could confirm that these cos are indeed turning around ... and where possible... pl give insights into how their resp business models are improving to enable the turnaround.

And yes, I do have positions in some of these scrips, and thats the reason I am trying to get more info from informed sources , many of whom will be on this forum

- Madhya Desh Papers, (Icici code MADDES)
- Nirlon
- Nocil
- Nagarjuna Fertilisers
- Mangalam Timber


Also , will someone pl tell me why Teledata is priced at a PE of below 1.5 ? And what's its outlook ?

Finally , I welcome others to post their own turnaround reccos. Remember, some of them can easily outperform markets, hence will be good hedges during bearish markets (which can again descend upon us ... who knows)

Thanks

AGILENT

Hullo.... anyone out there ?

C'mon folks.... surely these are not names from Mars or out of earth !

Pl share whatever info u may have .... or if you dont , at least post some of yr own turnaround reccos

AGILENT

hi agilent,

teledata is just another classical example of how the promoters play the market.

first they jack up prices

then comes with excellent reasults & promises (remember those teledata ads on cnbc)

and then sell their holdings (just have a look at the shareholding pattern and you will understand what i mean) to gullible investors.

fundamentally you will find nothing wrong with the company, but then......

cheers,
jdm.

P.S.- Pentamedia had a PE of 4 (if i remember correctly) when the price of its share was quoting 1200 odd rupees during the haydays of kp led tech bull run.

JDM
Thanks my friend for some valuable insights into price rigging

I'm not a statistician (just an engineer) but find it strange that of 80 odd members who have so far read this thread (other than two of us) , not even one has any exposure or interest in any of the 6/7 scrips I listed.

Nor does any of them have any interest in the concept of turnarounds i.e medium/long term investing

Defies the law of probability , wdn't u say ?

Or maybe ... all are keen just in daytrading ?

AGILENT

hi agilent,
no problem with the folks out here, only the very nature of these "turnaround" stories that might kept people (i was also in the list before this post) out of the discussion.

coming to your list i can say a few words about one company (i do not name it, i hope you understand)

the script was a turnaround story and was recommended when prices was hovering above Rs.30 (ahh i gave you a hint) by the research cell (it was a fundamental pick) of the broking house in which i used to work. but then prices never picked up. now in a meet we caught up with the analyst who in turn said, theres nothing wrong with his analysis. the problem lies elsewhere. the promoters have started playing. he further emphasized that the company shares an office in the same building where the headquarters of our company is located and on this ground he knows some of the guys in the company (some of them is also our clients) who has further confirmed about the playup story by the promoters. sadly its true for 99.99% of the turn around stories.

the main problem with identifying turnaround stories is, once one identifies such stocks, rather i say, once one get the news of that turnaround story the market already discounts all such news.

the problem is, one needs to identify them when the market has not already discounted them. sadly TA is probably not the right approach, atleast doesn't works for me. one has no option rather than going the fundamental way. but then also the problem is, even in this age of information, very little material is found about those companies (they only come up with those flashy Balance Sheet only after prices has peaked out ) take modi olivetti for example, the company got delisted in 1997. now it is back again in the bources (got relisted in 2003) in its new avatar as Spice Ltd. and is said to be the new turnaround story. now with no records for so many years in between, where do one go?

i can give you a couple of methods which i follow while i pickup those future turnaround stories, provided theres no news in the media about that company and significant price built up has not taken place (now i agree the last part is very relative. normally a price appreciation of more than 50 times from its low is not uncommon but then a price buildup of 10 times from its low might look expensive, but then ....... as i say very relative)

the dividend payout method.
the most common method is when a company starts paying dividend after a long lull. suitable example will be hanil era textile. the company after a long lull paid its maiden dividend in 2003. pitti laminations can also be a similar example.

the niyat factor ( the motive factor and not nyet as we say in russian )
one cannot ignore the factor that the Indian market is infested with shady promoters, who not only raises money though IPO, debenture or/& FD's from the common public but also from the institution, and then they square up the books and refer their company to the BIFR or simply disappears leaving everyone in a lurch and adding to the list of vanishing companies in the books of Sebi.

now my lookout is for those companies who even during their tough times kept their commitments. take ISSAL (after restructuring trading as ISMT Ltd at BSE) for example. the company was going though a very bad patch. but even then, it honored paying interest to its debenture holders @ 18% till the debentures got redeemed a couple of years back. no mean task honoring 18% in todays time. and just see how the company performed. after a bit restructuring a year back the stock prices zoomed.

well i am neither a statistician nor a engineer (just a drop out ) and these methods may not be perfect examples, but then thats how i read the market. just some arbitrary thoughts.

cheers,
jdm.

i think all is in price. if a chart shows a buy - one can enter with a stoploss

Hi,very interesting views form the senior members.Its my belief that purely on fundamental play one needs to identify and go by research of ones own it is hard work i understand but its ur hard earned money.And nothing beats the pleasure when ur hard work pays u. And pays u well.
We have another example of Global Trust Bank.
If i am investing i wud look for fundamental plays(and keep it simple)
factors like
1)Whats the companys end product,ie infra,services,fin etc(Know abt sector)
2)Whats the demand and quality of products(state of affairs,balance sheet,p/l)
3)Whether the demand is sustainable(Growth potential)
Regards
Amit.

Thanks Amit/Alok/Jdm .... nice to see some interesting perspectives.

Will Mysore Cement (see attachment) qualify as a turnaround ? I think it does, but how does one estimate a target for say 3/07 .... do u think it could touch 100 ?

AGILENT

PS Psst... I think I know the 'answer' , but would love to hear some views

Attached Files

myscem quarterly perf.pdf (2.8 KB, 12 views)

Keep an Eye on PolarInd for a turnaround provided they play the cards correctly NOW. The appreciation in stock may come earlier though, may be in a few months. Sorry, can't provide the logic behind fundamental call.

Technically, the stock is moving in a wide downward channel and has right now started a upward journey after making lower pivot with price moving above adaptive MA. Chart Attached.
Best Regards,
--Ashish

Attached Images

POLARIND.png (33.4 KB, 28 views)

There u r Ashish...

will give u my views on Polar soon

(Thanks by the way for that advice on tax)

AGILENT