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Follow Rules, Avoid accident

market discipline

Investor should eye, realistic returns and not abnormal returns from Equity Markets. To, get the same one must follow few basic rules, which will help us in avoiding accidents. Rules like Avoid, 1) leverage trading, 2) Greed & Fear, 3) tip based trading, 4) trading in derivatives market.

Keeping these rules in mind one should be able to make good money out of his investments.

One of the most important point, which we follow, when we invest in real estate is, we don't see price on daily basis, same thing we must follow while investing in market as well. Equity is also an asset class which needs time to give fruitful returns to us. Markets must be considered for investment purpose only and not for speculation, with patience u will be rewarded.

Market always gives chance, there are always stocks which give good returns, even in weak markets, and the only thing is that you have to enter that stock before it becomes blue chip share from a small cap company.

Today, we have come with one such company that can be star performer for the CY 2016.

Our Pick of the week (08.01.2016)

Meghmani Organics –

Cmp. :-24 Target: -60 (150%) Investment Horizon: - 15-24 months

Meghmani is a leading Agro chemical company diversified across products (Pigments, Agrochemicals and Basic Chemicals) and geographies; exports to 75 countries and 400+marque clients

Looking at its fundamental there is decent upside potential in this stock. Last financial year F.Y.14-15 Company posted a consolidated Net profit of Rs.44 crores, for f.y 15-16 it is expected to close the year with a profit of Rs.80 Crores. For 6 months ended Sept-15, company has posted a profit of Rs.36 crore.

One very big thing which is not yet highlighted is land holding of company, which is close to 60 acres at a very key industrial area, which if co. looks to monetize would add to enormous value to the Balance sheet.

Considering, y-o-y profit growth of 25% consistently along with land valuation, we see a huge value unlocking for the company in coming years. We, expect an E.P.S of Rs.4.00/- for F.Y 16-17 and company growing at such CAGR deserves a P.E multiple of 15, which makes a case for a target of Rs.60/- Agro Based companies generally enjoy rich valuations of close to 20 P.E multiple.

Disclaimer:- The author might have recommended the same stocks to its clients and it is always advisable to consult your financial advisor before investing.

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