[SmartCat]

Originally Posted by JMaruru

Would the same hold good for pharma stocks. What with pharma stocks on fire, am missing out of action there.

I have invested in few pharma funds, but would like to dip my feet into the stocks. Could you recommend any good books/material which provides a understanding about pharma companies n their business models.

You need Annual reports (initial presentation & management discussion analysis) + Google + Wikipedia. You will be bombarded with words like ANDA, CRAMS & drug intermediaries - so Google helps.

Remember that 99% of listed Indian companies make something called "Generics" - basically copies of drugs (by reverse engineering) made by multinational pharma companies. That's why Indian companies are dragged to court frequently, but most Indian companies win those court cases because its not illegal to make generics of a particular drug after X years.

Pharma stocks will continue to grow because Indian companies have now acquired a level of expertise, which is difficult to surpass for other generic players.

Indian Pharma since 2010 has been a bit like Indian IT in 2003.

[alpha1]

Originally Posted by smartcat

That's why Indian companies are dragged to court frequently, but most Indian companies win those court cases because its not illegal to make generics of a particular drug after X years.

Actually it is not the lawsuits that we need to worry about in case of Indian Pharma makers.

Most of the (high valued stock) Indian Pharma manufacturers cater to the export market. In poor countries like India and Africa there are govt regulations for very low prices of drugs. Therefore not very profitable. However, the market in US (and I believe Europe) offers great profit margins.

Now the whole issue with US is that FDA inspectors arrive without any prior notice at the company gates to complete the audit of the premises and specifically the unit that is producing the drug being exported.

Needless to say Indian Pharma companies are being run like any other indian establishment. "Sab chalta hai boss". There are no proper tamper proof records of what happened with which batch, what was the result of tests, the signing authorities are not properly designated (or do not sign at required places by required time lines). And lot many other issues.
These are the things that FDA does not like. The inspector report non compliance to xxx clause (e.g. there are sections like 21 CFR part 11 which codifies record keeping, electronic signature, etc).

Imagine what happens next. All the drugs of this company are pulled out from the markets in US. We are looking at potential loss of huge profitable revenue. Wham Bang! The stock prices drop overnight.

Of course there are conspiracy theories about how US drug makers try to pull the plug on Indian drug makers by using FDA as a pawn. But to be honest, I would not trust the Indian drug makers as much. (We have a thread about Ranbaxy's misdeeds somewhere on tbhp itself).
http://www.team-bhp.com/forum/shifti...y-ranbaxy.html

[DudeWithaFiat]

I am doing a little research at this time about investing in some stocks. Noticed that the shares of 'Bank of Baroda' and 'Punjab National Bank' tumbled down by almost 80% in Jan 2015. Googl-ing on Bank of Baroda, I got a link from reuters saying the share value went down because Bank of Baroda increased bad debt provisions by 66 percent in the third quarter, contributing to a big drop in profits. Could any of the more experienced guys throws some light on this please? The shares are trading at Rs.170 at this time and I think its a good buy for long term.

[binand]

Originally Posted by DudeWithaFiat

Googling on Bank of Baroda, I got a link from reuters saying the share value went down because Bank of Baroda increased bad debt provisions by 66 percent in the third quarter, contributing to a big drop in profits. Could any of the more experienced guys throws some light on this please? The shares are trading at Rs.170 at this time and I think its a good buy for long term.

Looking at:

http://www.bankofbaroda.com/fin/NewDecember_14.asp

There is a massive drop in Net Profit going from Q2 to Q3; split about 50-50 between tax levied in Dubai for earlier years (doesn't matter, as I expect there were provisions in those years for this demand), and non-tax Provisions (row #8, I expect this includes provisions for NPAs).

Look at the rows pertaining to NPAs under #17. Net NPAs (which is gross NPAs less unrecovered interest less provisions) went up from 1.74% to 2.11% of gross advances (the denominator for this ratio can be found in the balance sheet extract a little further down; under Advances: Rs. 3936 crores). Basically the message the markets read in January is of a bank losing a large chunk of profits due to an increase in NPAs. And unless the Q4 numbers show any improvement signalling strong management action on controlling NPAs I wouldn't touch this stock.

[VindyWheels]

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

[shajufx]

I am from a 12 year long International Forex exposure, specialising in Euro/USD and training clients all across the globe throughout this journey. I must have trained over 150 people so far via real class room and virtual class room sessions. I have taken a break from the financial world since 3 years and involving more in the creative photography genres. I want to divide my time between trading and photography now.

My question here is: How easy it would be for me to indulge in the Indian Stocks, which I have never tried ? I am more of a chart based decision maker than on fundamentals. What is a good starting platform and where to look for pointers and analysis ?

Tips highly appreciated.

[amit]

Originally Posted by VindyWheels

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

I am invested in Kitex from 540 levels. All experts are suggesting it's the next Page industries but looking at the way it's zooming now, would it be a good time to invest more or should I wait for it to come down a bit? I think investing via SIP in Kitex would be a good idea. What do you suggest?

[Lalvaz]

Originally Posted by VindyWheels

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

Yes VindyWheels, Thank you, Based on your reco, I had picked up CCL, and its already up 30 % in less than a year. One thing I must admit though, I did buy their Continental Coffee (Arabica) and I did not really like it. But I really liked the appreciation in my portfolio.


Have not bought any of the other stocks yet, but looking at doing fresh investments next month. Will be in touch. Thank you once again.

[hrman]

Originally Posted by VindyWheels

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

Cannot thank you enough. Got decent appreciation on CCL, Ajanta. And more than decent on Shilpa..

[Latheesh]

Originally Posted by VindyWheels

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

Yes, and thank you!

Anything to worry about Kitex?

[pankaj_sachdeva]

Originally Posted by VindyWheels

Hi,

Kitex, CCL, Zen, Shilpa, PI...enjoying the ride?

Yes and many thanks for pointing out these to us. I did my research after your inputs on this thread and invested in CCL and ZEN and the portfolio has appreciated considerably.

I am a newbie in stock market and a silent reader on this thread, but have always appreciated the depth of your posts.

Originally Posted by Latheesh

Yes, and thank you!

Anything to worry about Kitex?

Same question as Latheesh, anything to worry about Kitex.

I am planning to add this into my portfolio.

[VindyWheels]

Hi, I am not worried about any of the stocks. But you have to expect some volatility.

We have been hearing many investors, seniors included, getting worried about the big run-up in stock prices. Many strategies have been discussed for playing the big "crash" in the smartest way.

One idea which looked promising was to get progressively into defensives - Pharma and FMCG majors and also some cash. This involves some bit of timing and there is chance of missing out a big rally too - exiting/converting too early at market PE of 25-30 only to see the PE go to 40 in the next 5 years...the Japanese market during their high growth phase had seen PE of 80!.

I studied the price movements of stocks and sectors from 01-01-2008 to 01-04-2010 a period of 10 quarters. This period covers the peak of last bull run when market PE went upto 28 and then crashed big time only to recover by 2010. Well here are some findings from my brief study.

BSE FMCG - fell 16% by 5th quarter (from the peak in 1st quarter) , but the loss vanished by 7th quarter. Good place to be at market peak. Nestle hardly fell and gave 35% return by the 7th quarter when others were in deep sh**. Page behaved like Nestle in terms of returns over 10 quarters, but had fallen 30% by 5th quarter.

BSE Healthcare - fell 36% by 6th quarter, loss vanished by 8th. Sun Pharma fell 12% only.

Mid and Small Cap indices - worst hit with 60-75% crash and even after 10 quarters there is no recovery. But how did small caps with moat and high growth fare? Hawkins fell 33%, Page 30% and Mayur Uniquoters 67%. Hawkins had the sharpest recovery and for the investor who went through the storm without re-alignment of the portfolio, it still gave 200% returns in 9 quarters! Mayur behaved much like Hawkins, despite the fall by 67%, the investor who held on got 100% returns over 10 quarters. Hence even if you bought these at 2008 peak, you still made 100-200% returns in 10 quarters! Page also gave 70% returns from the 2008 peak in just 10 quarters. Its clear that some stocks behaved very differently from the general indices in this space of small/mid caps.

HDFC Bank did not provide any cushion like Nestle or Sun Pharma, Crahsed 42% and hardly any recovery by 10th quarter.

So what do we make out from all these? Its not easy In the last crash Sun Pharma and Nestle gave good protection, but they were at much lower valuation at the peak of 2008 than now! And they had much better growth in their profits then. How can they protect now when their valuations are stretched considerably and their business growth is less?

Secondly though small companies with high sales growth and moat (page, hawkins, mayur) crashed big time, they recovered sharply. Even if you just suffered through with the 60% crash in their prices in 2008 you still made huge returns in 10 quarters! So why bother about a crash, just hold your small cap gems whose growth visibility is strong?

I read "One-up on wall street" again to see what Mr Lynch says about all these. He is very clear, one just cannot predict the crash-bull timings. His suggestion is to have some stalwarts in the portfolio always - companies which grow by 15% or so and are well discovered and established large ones. But even those stalwarts should be valued fairly or attractively. So stay fully invested always.

My current thesis - I cannot see many 'stalwarts' at fair valuations. I will remain fully invested in my small gems. If they have moat and big opportunity size, they will grow their profits and I will get rewarded. I need to bear a 60-80% crash in their prices when the crash comes around. My portfolio by default has some pharma gems which I believe will fall less. And luckily I am able to find more pharma gems now a days.

I will pull out of the market only if I cannot find any attractive small company. As of now that's not the case.

As always I reserve my right to be wrong

[Darth_Vader]

Sun Pharma were in the news today. A link to the new pact below:

http://profit.ndtv.com/news/corporat...r-drugs-755272

Good days ahead?

[JMaruru]

Have you guys invested in 'VRL Logistics' IPO? The stock has been offered at around 18 PE. If you have some reason for investing/not investing, please let us know.

[Ravijai]

Hi, I am not worried about any of the stocks. But you have to expect some volatility.

We have been hearing many investors, seniors included, getting worried about the big run-up in stock prices. Many strategies have been discussed for playing the big "crash" in the smartest way.

Hope you continue sharing your insights at regular intevals

You have asked long back to research on tasty bites, now it is up close to 40% in two days and I have also missed the bus on ZEN (but it is hugely volatile, sways 40% here and there always).
Do you have any other stocks on your radar which you are tracking but not yet invested.
Thanks for your recommendations on CCL (Nirmal bang owns more than 1% of CCL and they regularly come out with their reports and it is always bullish ) and Shilpa. I am sitting on some good profit in both of these scripts!!