Thursday, March 16, 2006

Savita Chemicals

Pl keep this scrip in your watchlist

I'll start with 'things-that-hurt' on this scrip. The stock -
a) Is rather close to it's 52-week high
b) Is below my 10 crs a quarter rule
c) Is fairly above it's NCAV (4x above)
d) No news value

Now, what I like about this stock.
a) Savita Chemicals has improved in sales and profits by 20% for the last three quarters
b) It's fwdP/E ratio is 11.08
c) The company hardly deploys debt in it's balance sheet .. just 20.24 crs
d) Cash in the company is 21.66 rupees per share. Not much, but good enough to convince me of another dividend ... of atleast 12 rupees.
e) Dividend yield would come to 2.33%

The charting of this scrip has me stumped. Savita Chemicals has virtually no volumes to speak off, however it has consistently grown in the stock market. Price on 16-March-2004: 100 rupees; Price on 16-March-2005: 235 rupees. Only one dip - in the month of Nov 2005 when it went down to 275 from 375. I feel the stock will fall down to 350 rupees and not more ... sooner or later. It might be a good idea to pick a small stake once the stock touches 375 rupees to a share.

85 Comments:

Blogger Shankar said...

Update: The stock rose by 3.48% today. Price has jumped up to 446 rupees on the BSE

10:38 PM  
Anonymous Anonymous said...

Hi Shankar..

I must say excellent blog... And what I admire the most is yr selection/view on stocks purely based on Fundamentals.

I have KEI Industries / Paramount Communication / JK Cement / Marksans Pharma / IDFC / TCS / AlokIndustries / Aarvee Denim in my portfolio.

Please share your expert view on these scripts.

Thanks and Regards,

Supal

11:52 AM  
Blogger Amol said...

Hi Shankar,
Very good analysis. I am a software Engineer and regularly invest in stocks. Actually I do not have much knowledge in the finance domain but do look at the basic things like profitability, growth, order book, debt etc.
Appreciate your analysis.
Thanks,
-Amol.

12:46 PM  
Blogger Arun Kottolli said...

These small caps stocks are closley held. As a result the volumes are low. It may be a good idea to see the volumes when this stock drops to Rs.350, if the volumes are low or max 110% of the daily trading average volume, then it makes sense to buy it. If the declining volumes are large - then there can be insider trading or so large investor is dumping the stock. In both cases, its not worth buying the stock at Rs350 or below.

Arun Kottolli
arunkottolli.blogspot.com

4:55 PM  
Blogger Shankar said...

Hi Amol,

You might want to start by reading a book called "The Intelligent Investor" by Benjamin Graham.

That's step A. For step B, start practicing the learnings given in each chapter of that book to Indian stocks.

Warm Regards
Shankar

8:40 PM  
Blogger Amol said...

Shankar,
Thanks for the suggestion. Incidently I am on the 5th chapter of the book :-). I have read a few books like 'One up on wall street', 'beating the street' by Peter Lynch, also "the warren buffet way". But somehow I feel Finance guys have a lot more knowledge in this field than us. I am following your blog, its good and helping us to gain better understanding.
-Amol.

5:16 PM  
Blogger Shankar said...

What is hell !!! The stock is at 530 rupees. A good 100 rupees more .. in 15 days. And I didnt buy !!!

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