Archive for March, 2014

Will Market fall now?

March 13, 2014

Few of the subscribers are asking these questions to us:

  1. Market closer to all-time-high in 2008.  Will it crash?
  2. Should we sell all holdings & buy later?
  3. What is the peak level according to Futurecaps?

Our quick-answer is NO!

We expect NIFTY should reach around 7500 levels, the target year should be 2016.

Research

According to our research, Market crash is tied-up with economy.  Whenever the economy is over-heated through boom, market start to crash.

Usually, market will crash 6 months before the economy bust.

Measure

We use NIFTY PE Ratio as the economic barometer.

There is a period of 8.4 year cycle going on this parameter.

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You can see that the NIFTY PE RATIO in 2008 was around 28.

NIFTY PE RATIO in YEAR 2000 was around 28.

IN BOTH CASES MARKET CRASHED!

CURRENT NIFTY PE RATIO IS 18

Advice

We advice you to buy quality scrips for long term holding.

There can be slow down during election period.   The economy is improving & we expect 30-40% advancement of market from current level.

NIFTY PE RATIO might reach 28 level once NITY INDEX is above 7500.

Note

One may ask, Why NIFTY PE RATIO did not increased even after NIFTY INDEX reached 2008 level.

The answer is:

  1. NIFTY PE RATIO is calculated based on PE Ratio of 50 scrips.  Their earnings determines the AVERAE PE RATIO
  2. Banking Stocks lows contribute to the NIFTY PE RATIO lows
  3. Inflation corrodes value of earnings
  4. Currency Depreciation corrodes value of earnings

Deepak Fertilizers – Multibagger Analysis

March 4, 2014

Deepak Fertilizers and Petrochemicals Corporation Limited is a producer of industrial chemicals and fertilizers.

Website: http://www.dfpcl.com/DFPCL/

 

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Warren Buffett Checklist

History of Consistently Increasing Sales, Earnings & Cash Flow Sales & Profits are increasing. image
Durable Competitive Advantage 

Company have good portfolio & client base.

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Future Growth Drivers Agriculture Industry is growing. image
Conservative Debt (long term debt < 3 Net Profit) A tight match, but it is less than 3x of profit. image
Return on Equity must be Above Average We prefer at least 20 for ROE, but company have only 11. image
Low CAPEX required to maintain current operations High CAPEX required. image
Management is holding / buying the stock Promoters are increasing stake.  Good Sign. image
Price is Under Valued (< intrinsic value) Yes. image
Stock Price is consolidating Yes. image

Additional Futurecaps Checklist

PE, PB Ratio PE within 5 & PB within ratio 1.  Means under-valued. image
Cash Flow Positive Not. image
Paying Dividends, Tax Yes.  Company have impressive dividend yield of 5% image
EPS Growth Rate 20% growth is visible, which is good although not impressive. image
Expected Gain in 10 Years We can expect around 5-10 times growth for the stock. image
Power of Brand Branding attracts more sales, more profit margins! image
Corporate Governance, Reputation of Leaders Overall good. image
Fraud reported Not. image

 

 

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Declaration

Based on the parameters above, we declare Deepak Fertilizers as a multi-bagger.  Installment Buy especially optimized for Monsoon seasons would be a good idea.

Allocation

Not more than 2.5% of your portfolio.

Disclaimer

Futurecaps recommends 20 to 25 multibaggers per year, we recommend a 25% to 50% allocation of your savings in equity.  The stocks recommended here are gone through Analysts of several years experience in stock market.  Although they were successful in predicting future multibaggers, the overall stock market is a risky game.  So we recommend the reader to put his/her own thoughts & invest wisely.