Buying Strategy - 52 Week Lows !

You can still buy more when the prices come down in a deep correction. This will increase your avg cost of purchase but the increased holding size (no. of shares) will add to your overall profits. But try to buy as low as possible, when mkts (& the stock ) seems to have bottomed out.

Rakesh Jhunjhunwala (some consider him the W Buffet of Indian mkts) first bought the stock when it was around 80. I'm sure he didn't stop there.

I know rakesh jhunjhunwala, infact it was him who had advised me to buy beml. I recently asked him about beml and he insisted that i hold on to it.

Talking of undervalued picks - here's one :-

Albert David Ltd. (Rs. 89)


(BSE Code - 524075)
52 - Week High/Low- 144 / 62
December 12, 2006
Albert David (ADL) is a 68-year-old pharma company, which produces bulk drugs, intravenous fluids and disposable needles and syringes. ADL has the potential to benefit immensely from growing trends of Contract Research, Contract manufacturing, Contract marketing, Co-Marketing, E.M.R. (Exclusive Marketing Rights) by large foreign companies to Indian companies. The Albert David scrip at Rs 89 quotes at 5 times expected FY07 expected earnings (Rs 17-Rs 18) and appears undervalued as it trades at a discount to some of its peers in the industry. Given its growth prospects and decent track record, the Albert David share is attractive for medium-long term investment.

Incorporated in 1938 at Calcutta, Albert David (ADL) is a 68-year-old pharma company, which produces bulk drugs, intravenous fluids and disposable needles and syringes. The company has manufacturing facilities in Kolkata, Ghaziabad and Madhya Pradesh. ADL is recognised as a large IV fluid manufacturer, both in glass and polyethylene containers. ADL has a technical collaboration with World's largest manufacturer of Amino Acids, Ajinomoto Co Inc. of Japan. It also has a tie up with Roussel Morishita Co. of Japan for manufacturing and marketing a wide range of Crystalline Amino Acid Infusion Solutions, Oral solids and liquids in India. ADL derives 80% of its revenues from the domestic market and the balance 20% consists of exports to EU, USA, Africa, South and West Asian countries. ADL is a leader in human placental extract therapy. ADL has a strong presence in various drug therapeutic classes like Immunomodulators, Vitamins & Nutritional Supplements, NSAIDs, Appetite Stimulants, Liver Protectives, Anti-Ulcerants, Laxatives, Anti-Arthritic Preparations, Muscle Relaxants, and Adaptogenics to name a few.

ADL has concrete plans to further diversify into lifestyle segments like Cardiovascular Therapy, Anti-Diabetic drugs and Psychotropic agents. ADL's core competence stands out in the manufacturing of specialty Formulations, Herbal Products, Disposable Syringes & Needles, Bulk Drugs and I.V Solutions. ADL is trying to consolidate its operations and strengthen its marketing wing to meet challenges from domestic and global players. ADL has been successful in gradually increasing its turnover and profitability over the last three to four years. It is also focusing on formulations to maintain an edge over its competitors. ADL also plans to establish overseas outfits and it is looking at countries like Vietnam, Myanmar and some of the African nations. ADL is also considering new formulations in areas such as gynecology, gastroenterology, anti-diabetics, cardio-vascular, vitamins, anti-ulcer, anti-inflammatory and haematinics. The company is working to introduce a slew of herbal drugs too.

For the Q2 ended September 2006, ADL posted net sales of Rs 38 cr.(up 17%) and net profit of Rs 3.34 cr.. For the half year ended September 2005, ADL has posted sales of Rs 74.3 cr.(up 10%) on 79.5% rise in net profit to Rs 10.7 cr. For the year ended March 31, 2006, ADL had posted net sales of Rs 116.8 cr. and net profit of Rs 7.41 cr. On equity of 5.7 cr. (Promoters' stake- 62.06%), the EPS was Rs 13 and the dividend declared was 25%. ADL has the potential to benefit immensely from growing trends of Contract Research, Contract manufacturing, Contract marketing, Co-Marketing, E.M.R. (Exclusive Marketing Rights) by large foreign companies to Indian companies. Based on first half FY07 results, ADL is likely to post an EPS of Rs 17-Rs 18 for the year ending March 2007. The Albert David scrip at Rs 89 quotes at 5 times expected FY07 expected earnings (Rs 17-Rs 18) and appears undervalued as it trades at a discount to some of its peers in the industry. Given its growth prospects and decent track record, the Albert David stock is attractive for medium-long term investment.

Financials

Year ended March 2006
Net Sales - Rs 116.8 cr. (up 23%)
Net profit - Rs 7.41 cr (up 76%)
EPS- Rs 13
Dividend-25%
Book Value (BV) per share- Rs 63

Half Year ended September 2006
Net Sales - Rs 74.3 cr. (up 10%)
Net profit - Rs 10.7 cr. (up 79.5%)
Equity - 5.7 cr.
Promoters stake - 62.06%
FY'07 expected EPS - Rs 17- Rs 18
P/E- 5
BV per share (FY07)- Rs 74-Rs 75
Current Market Price - Rs 89

From the above you can see a good company quoting at a PE of 5 in a sector that has an avg PE of around 15-18 & in a mkt that's quoting at near 23.

If you buy it at a price below 75 you actually get it at below it's book value!

And it's also a 10 FV 25% dividend paying company.

(And during a deep correction it would probably hit a new 52 wk low thereby satisfying Saga's criteria! - but still remain a good medium/long term bet)

Just an e.g. of value investing.

Regards,
Kalyan

My word!!! ..... ToxicExp ...... What are you doing in this forum then!?

why?, if i know him that doesnt entitle me to be in this forum?

No no Didn't quite mean that I mean knowing the great man personally ...... you'd know everything there's to know about the stk mkts. This forum wouldn't be of much use to you anyway When in doubt just pick up the phone and ... you know what i mean, don't you?

i do that but not everyday... once in a few months to ask him what to buy and what to push off... he adviced me buy century, beml, punj lloyd, ivrcl, praj, titan, lupin, bel, voltas, nararjuna cons, aptech, viceroy, pantaloon, ashok leyland . . . not all at once though but as and when i called him

He has picked up a sizeable stake in Viceroy Htls.(& also Sayaji Hotels if i am not mistaken) that i know. Ashok Leyland is also interesting as i feel this is a solid company (given their large standing in the defence sector) that has not got the attention it deserves - always playing second fiddle to the glamour of a Maruti or Telco. [I am also interested in a smaller company called ANG AUTO that is set to become ALs biggest manufacturing partner in the tractor-trailer segment]

By the way what was his last (latest) reco?

His last reco was punj lloyd at Rs.620. He never gives short term picks. Only long term - over a year minimum.

"Today people say india doesnt have infrastructure (we dont have the shoes to run), but still we are doing 8%+ GDP growth. Tomorrow india will have the infrastructure (we will have the shoes) then what will do?" - Rakesh Jhunjhunwala