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Diwali Stock Picks

On behalf of entire team @ Anavaran, We wish you a Happy Diwali and a prosperous New Year.

May this festival of light bring peace and prosperity to you, your family and our investments.

Continuing with our past tradition, we today reveal a list of stocks that we believe are poised to yield decent return over long term (12-24 months) investment horizon.

After having largely refrained from taking high risk for past two years, we now believe risk-reward ratio to be titled in favor of risk takers.

Thus, this year’s Diwali Stock Picks contain couple of picks whose risk is assessed to be high.

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To access detailed reports on these companies and to access more such multibagger stock picks throughout the year, please consider subscribing to our stock recommendation services. Annual plan begins from Rs930/-.

In case of any queries, please feel free to call us at 022 322 56579

Bad Market News, Good Stock Price!!!


Anavaran.pngGlimpses from the past

In March 2003, a leading business magazine carried a cover story titled  “CAN THE SENSEX TOUCH 4000 in 2003?”.  Now, that shouldn’t have been a question of so importance so as to reach the front cover, especially when markets had already crossed that mark 10 year back in 1992. Surprisingly, of all the experts surveyed for the masterpiece, no one dared to predict a humble 4K mark for the beloved Sensex. 3,800 was their most bullish projection.

 

 

For the record, the article turned out to be good luck charm for the market and Sensex registered a whooping gain of 89% in rather short period of 9 months. With the benefit of hindsight, it can be said that is was not just that year but a beginning of 5 year bull rally that culminated in January 2008 with Sensex breaching 21,000. Moral of the story, none of the market pundits, at least those in public arena, were able to predict the coming bull run in stock market.  So, could be the case this time as well. Afterall, the Sensex had first time breached current levels of 17,000, 5 years back.

Back to the future

Feels  good to see 5% upside in broader markets since upward revision in our market outlook from neutral to cautiously bullish. We continue to maintain our bullish stance on the market, but are becoming increasingly cautious with every point rise in broader market.

Series of bad news continued to flow in since upward revision in our market outlook of which petrol price hike, depreciating rupee and weak IIP numbers occupied maximum public attention. Market eyes are now glued to RBI’s decisions on interest rate on 18 June 2012. Given continued slowdown in industrial growth 25 bps cut in interest rate is almost certain and even 50 bps cut lies within the realm of reality. 

Rate cut, rating cut

Mr Market’s excitement on probable rate cut by RBI is being subdued by S&P’s cautionary on potential rating cut on Indian debt below investment grade.  Rating agencies have been behind the curve for the past decade with subprime crisis in US and sovereign debt related problems of PIIGS group standing epitome to their prowess. S&P’s caution note only reiterated those issues, policy paralysis and rising fiscal deficit, that were already known for quite long. Hence, we don’t foresee much impact of proposed rating cut signals on long term fundamentals.

Because of positive impact of RBI credit policy on interest rate sensitive sectors, falling crude oil prices and more because of the low prices that the stock are trading in current markets, we maintain our cautious but bullish stance on the Indian stock markets.

Grab these stocks before someone else

Please find below some of the stock that  we like with investment horizon of more than 12 months:

  • Allahabad Bank
  • BHEL
  • Can Fin Homes
  • Ganesha Ecosphere
  • GIC Housing
  • IFB Industries
  • Mahindra Satyam
  • Punjab and Sind Bank
  • Sintex

For detailed access on these companies and more such multibagger stock picks, please consider registering for our stock recommendation services.

 


Sanghvi Movers: High growth company @ low stock price

Sanghvi Movers (CMP-Rs104)

Sanghvi Movers is a crane hiring company servicing infrastructure and mining companies. The company owns over 400 hydraulic truck mounted cranes with lifting capacity of 200 to 800 tons. The company has expanded its fleet which has largely been funded by debt which has increased from Rs275Cr in 2007 to Rs640Cr in 2011. 

Sanghvi’s sales increased during the same period  from Rs179Cr to Rs361Cr in  and is poised to cross Rs400Cr in just concluded  fiscal year (FY12).  Net income increased from Rs47Cr in 2007 to Rs86Cr in 2011. We estimate the company to register net profit of Rs100Cr in 2012. 

Based on FY12 earnings, the company is trading at PE of 4.5x. Given strong business fundamentals and high growth potential, we expect he company’s valuation multiple to be re-rated upwards over the coming years. This coupled with growth in earnings will boost company’s valuation over the coming years. 
At CMP of Rs104, we expect growth in company’s stock price to exceed hurdle return rate of 18%. Dividend yield of 3% further sweetens the deal. Hence we rate the company a BUY for long term investors. (Investment Horizon:2-3 years)

However, the company high debt and capital requirements to fund its expansion coupled with week market sentiments will keep the stock price pressurized over the near-to-medium term. Hence fresh position in the company should be taken only with long term investment horizon.
To access target price of Sanghvi Motors and our other multibagger stocks and to get your queries resoled by our analyst, please consider registering for our investment research services.

Multibagger Stock Picks: Must Hold Stocks for your portfolio

 

 

Fall in stock markets over the past few weeks has created some attractive investment opportunities. 

Taking advantage of this, we have identified several multibagger stocks that could double over the coming 2-3 years. 

And as subscriber to our newsletter, we want you to be among the select few to have access to these multi-bagger stocks at 20% discount on our Safal plan. The annual subscription is available at Rs1,560/- instead of usual price of Rs1,920/-


So @ Rs4.5 per day, one gets:

 

  • Immediate access to 3 of  our latest stock picks.
  • Access to over 20-25 long term stock picks over the coming year
  • Access to our medium term investment calls
  • Besides, reports issued from our side, get up to 30 of your stock queries resolved by our analysts.
  • Online support during market hours.
  • Portfolio Review: Subscribers of our Safal Plan can get their existing portfolio reviewed by our analysts.
  • 30 day trial period with 100% money back guarantee.

 

Good things don’t wait forever. Offer ends of 11 June 2012. To register for services click here.

Have any queries? Write in to us at support@anavaran.com or you can also contact us at 022 322 56579.

 


 
Call: 91-22-322 56579 Live Support: To Chat with our representative click here   Email: support@anavaran.com

 

 


A Cautious Bull: BUY CHEAP, SELL DEAR

All the market gyan and investment theories on making money in stock market basically sum up to a  four word surefire mantra:-

“BUY CHEAP, SELL DEAR”

However, Mr. Market has always been an ultimate contrarian to this simpleton’s logic.

From the roaring BULLS in Feb to everlasting BEARS in MAY, markets have almost turned a full circle in three short months. We @ Anavaran, feel rather satisfied with being just a bystander to this downward spiral, which cost 14%  loss to benchmark indices and much severe pain for broader markets.  However without being in a hurry to pat our backs for correctly predicting uptrend in December 2011 and subsequent downtrend from February 2012, we would like to confess that momentum of these trends did took us by surprise both the time.

Gazing the crystal ball

With austerity plans in Europe likely to be butchered on altar of populist politics, sovereign debt crisis is set to accentuate over the coming months. Moreover, United States, with its muted growth, is not in a position to provide much boost to the global economy. Closer to home, concerns on government’s fiscal deficit and policy paralysis have taken the Indian story into hibernation mode as reflected by low, and often negative, IIP numbers in early months of 2012.

No doubt, concerns on global and domestic front will weigh on the market sentiments but as John Rockefeller once said:

“The way to make money is to buy when blood is running in the streets.”

So while we don’t expect a lot of good news over the coming year, the economy is likely sail through FY2013 without any major mishaps. Amongst the factors that we believe will help in averting the doomsday are as follows:

• Monetary Stimulus: RBI is left with ample leg room to cut interest rates to boost economic growth. In our opinion, prevailing interest rate leave room for rate cut by over 250 bps in the coming year, if situation worsens on the growth front.

• Fall in crude oil price: With muted growth across the globe, energy demand and resulting crude oil consumption are likely to falter over the coming months which will mitigate India’s inflationary and trade deficit pressures. Consequent fall in subsidy bill will improve central government finances.

• Tailwind benefits: With inflation running in double digits for most of FY12 and industrial growth hovering from low single digits to negative territory and qualitative issues in sectors telecom, financials, mining etc largely accounted for, we expect tailwind benefits to accrue to economic growth indicators in FY13.

These factors, along with 14% fall in benchmark indices and more than 25% decline in broader markets from its February peak has driven upward revision in our market outlook from neutral to cautiously bullish. At the risk of being repetitive, it is pragmatic to reiterate that it is a medium to long term outlook. Over the short term, at any given point broader markets could fall over 10% in as small as a week time for all sort of apparent reasons, ranging from ugly ducklings to black swans.

Taking stock of stock picks

As with the market, most of the stocks under our coverage experienced extreme volatile during the past 6 months. Please find below some of the stocks that we rated a BUY from late 2011 to Jan 2012 period that attained their target price in early 2012 and are now trading subsequently below our calculated fair value price.

• Microtech: In August 2011 we estimated fair value of the company @ Rs180 per share compared to its prevailing market price of Rs110. The stock attained our target price in April 2012 and has fallen back to Rs142 since then.

• Onmobile Global: The stock formed a part of our Diwali pick, when it was trading at Rs57. The stock rose to as high Rs84 in March 2012 and reversed the trend to fall back to 3 year low of Rs48.

• Punjab & Sind Bank: One of top Diwali picks, the stock rose from Rs71 in October 2011 to Rs90 in early March this year. However concerns on loan defaults have taken a toll on stock price which currently trades @ Rs63.

• Nocil: Also a part of our Diwali stock picks, Nocil stock price breached Rs20 in Feb 2012, compared to Rs16 prevailing at time of recommendation. The stock currently trades Rs15.5.

• Sintex: Part of our medium term stock picks, we rated Sintex a BUY in mid Dec 2011 @ 63 with target price of Rs90. The stock breached our target price in early Feb 2012. Since then it has declined to Rs53 largely due to depreciation of Indian Rupee which increases impending cash outflow on repayment of dollar denominated debt, due for redemption in mid July 2013.

• JSW Steel: We rated JSW Steel a BUY in Dec last year with target price of Rs900. At the time of recommendation, the stock was trading at Rs510 per share. The company’s stock peaked @ Rs870 in Feb 2012 and has slided since then to close @ Rs620 yesterday. Rupee depreciation and concerns on iron ore supply are amongst the key concern for the stock.

• Allahabad Bank: Our first BUY of 2012. We rated the public sector bank a BUY in Jan 2012 with target price of Rs180. The stock rose from Rs114, from date of recommendation, to attain our target price in Feb this year. It has been amongst the few public sector banks that has maintained stellar earning performance despite rising loan default. The stock currently trades @ Rs143.

For updated target price, valuation, investment horizon and other nitty-grittties please feel free to contact us at support@anavaran.com or chat with our online support reps

To access more such multibagger stock picks, please have a look @ our investment research services.  


Bearish Year, Bullish Decade

In all this doomsday prophecy of end of world in 2012, that has been too fashionable these days, we thought of commencing the new financial year on a positive note. So here is an endorsement on the long term prospects of investments in Indian stock market from one of the most respected figures in Indian finance – Deepak Parekh, the patriarch figure at HDFC and HDFC bank:

Interviewer: Supposing somebody came to you, youngish guy and said I have Rs 10 lakh, I don’t want to look at them for another 10 years, should I put them in the stock market, what would you say?

Deepak Parekh: I would say that if you do not put it in the stock market you are a fool.

Interviewer: Really you are that optimistic?

Deepak Parekh: But not in all companies in some companies where there are growth opportunities.

Interviewer: A 10 year horizon you put 10 lakhs, you should be okay?

Deepak Parekh: You should be okay.

Source: CNBC TV 18 Interview dated 07 May 2010.

Our long term outlook on the stock market investment remains broadly in sync with what HDFC Chairman said in the above interview. One might be bearish for months or year, but when it comes to decade there is no other signal but that of screaming a BUY.
But as with all things in life, investing in stock market has its own caveat. As Mr. Parekh said, “But not in all companies in some companies where there are growth opportunities.”

value style
It is over here, that Anavaran can render its services in separating the flower from the weed. While our valuation service remains exclusive for our subscribers, here we reveal some of the investment themes and companies that we believe could yield good returns over the long run.

Mid Sized Public Sector Banks: Most of the public sector banks are currently trading below Price-to-bookvalue of 0.5x and PE range of 4-5. Impressive dividend yields, as high as 5%, further sweetens the deal. These PSBs have been growing at 15-20% per annum for the over the past 5 years. Being government owned, most of these banks have followed conservative lending practices thus keeping their NPAs under control. Given historical trends and fundamental precedents, we expect these banks to trade at PBV of 1.0x over the coming 2-3 years. While, rise in NPAs could keeps stock prices under pressure over the short term, we view these government owned financial entities as attractive investment proposition over the long run. Some of the banks we like in this category include:

Andhra Bank, Bank of Maharashtra, Central Bank of India, Corporation Bank, Dena Bank, Punjab and Sind Bank, Union Bank of India, United India Bank etc.

Housing finance companies:- An investment story similar to that of public sector banks with similar operations and ownership but with added advantage of lower operating costs, focus on single sector and rising trend in housing finance. We like Canfin Homes, GIC Housing Finance and LIC Housing Finance amongst housing finance companies. Feeling sad to exclude HDFC, whose stock prices we believe has run ahead of its fundamentals.

FMCG: Small is beautiful theme holds good here as well. While FMCG giants like Colgate, HUL, ITC, Marico, Godrej Consumer look aggressively overpriced trading at PE of more than 30. Smaller peers like Bajaj Corp, Jyothy Laboratories etc who have carved out a niche for themselves look much better placed to gain from rising consumerism in rural markets.

Consumer Durables: While Korean giants rule the roost in this segment, companies like IFB Industries and Mirc (maker of Onida) have invested a lot and could yield decent returns for long term investors.

Textiles: To be frank, except for S Kumar and Zodiac, we don’t like their operations a lot. It is more to do with their real estate assets that possess as legacy of yesteryears. Arvind, Bombay Dyeing and Century Textiles, could be the ABC of the theme. Others like Raymond might be beneficiary as well.

Land Banks: While textile hog all the limelight when it comes to embedded real estate value, but there are score of others who own land banks that could be monetized over the coming decade. Just to warn, its expected to be a lengthy process, a really lengthy one. Value hunters could have a look at Atul Ltd, Indian Hume Pipe, MTNL, Tata Communications etc to explore the theme.

There are scores of other themes and companies that we like, but thinking of saving some for our subscribers. After all there should be some incentive to register for our investment research services.  For target price, valuation, investment horizon and other nitty-grittties please feel free to contact us at support@anavaran.com or chat with our support reps.


Markets to stagnate till budget

Ignorance is bliss, so is inactivity many a times. Same has been true for our research desk which has largely been in hibernation mode since mid Jan 2012. As legendary investor Warren Buffett said,

“Stock market is designed to transfer wealth from active to passive investors.”

Since our last article Stand Against Thundering Herd, when analysts @ Anavaran took a contrarian stand against the raging bull, Sensex have slided nearly 10%. Bounce back favorites like BHEL, Sintex, JSW Steel, Educomp, have fallen more than 20% from their February highs sheding nearly one third of their gains in 2012. The fall offers decent opportunity for value investors to accumulate stocks of fundamentally strong companies for the long run.

Short term vibes

Short term prospects continue to be hazy at best. Hence, it would be prudent to defer taking fresh investment position ater the budget. Over the coming weeks markets are likely to remain range-bound as excitement over budget will largely be offset by ruling party’s dismal performance in recent assembly elections, particularly in Punjab and Uttar Pradesh.

Budget continues to be an overrated exercise which attracts undue attention from financial media. With elections over, budget will be the key point of talk for experts over the coming weeks. With contraction in political space and growing unease amongst alliance partners, the coming budget is likely to be more populist than that of earlier years. Reforms are likely to receive a lip service. Little else concrete impacting overall economy or any particular sector is expected to be announced.

Budget, India, income tax

Budgeting grievances

Gazing the crystal ball we foresee following features to be likely incorporated in budget:

  • Deterioration in railway’s financial will drive hike in fares, for both goods as well as passenger.
  •  With rising deficit and falling popularity government is likely to increase taxes, not impacting major segments of society like service tax.
  • This one is bit risky one. Tax burden on IT sector can be increased as it is amongst least taxed sectors of the company. And the risk of losing votes is also minimal over here.
  • For Personal Income Tax, government’s delicate finances leave little room for raising the tax-free income bracket to 3 lakh as recommended by recent parliamentary panel.  A moderate rise in tax exemption limit seems for feasible and probable at the moment.

Our research desk which has been in hibernation mode for most of 2012 is back in action and is in process of revealing several such stock picks.

Glimpses of our stock rating

Despite being bullish on the stock markets @ the turn of the year, the speed of liquidity driven rally did surprise us with most of our stock picks attaining our medium term target price during the first 45 days of 2012. These include Allahabad Bank, Sintex, BHEL, JSW Steel etc. Our Diwali picks did remarkably well with Onmobile reaching 83 levels, a tad below our target price of Rs90, before retracing below 70. Several others like SIntex, BHEL etc breached their target price and faster than expected pace before subsiding back.

Take for example example, Sintex. We rated the stock a BUY with medium term horizon in late 2011 viewing it as a Black Gold. The surge in stock prices surprised us and we reversed rating to SELL in mid Feb when stock crossed 100 mark. The stock is currently hovering below 80.

Rise of the fallen angels

We are in process of valuing fallen heroes like Sintex, BHEL, IFB Industries, S Kumar and several other of our medium term calls with a longer investment horizon. As said, Good dates end with dinner, better ones end with breakfast.

Evergreen Sells

Our list of evergreen Sells continue to grow as we continue to grill the financials of more and more companies. Some of the Mr.Market’s favorite on our SELL List include: Avon Corp, Pipavav,Jupiter Biosciences, Southern Ispat, Cals Refineries, KS Oil, Karuturi and many more.

To end the rather long note, here is an ode to those who dare to ride such make belief stocks in hope of quick gains:

A lady from Niger,

Went to a ride on a tiger

They came back from the ride

With the lady inside

& Big smile on the face of tiger.


A stand against thundering herd

Taking stand against a herd though often threatening for the short term, could be highly rewarding over the long run, for those who survive the initial onslaught. The correlation becomes stronger when one is faced against a thundering herd on the stock market.

Research desk at Anavaran dared to be ‘cautiously greedy’ when fear was in high demand on the Dalal Street. In December 2011, market were at sweet spot offering high upside potential with limited risk of downside. However, nearly 20% rise in benchmark indices and more than 50% surge in some of the fallen heroes of yesteryears have bridged the price-value mismatch prompting  a change in our outlook to ‘prudently neutral’ as we saw an end to Great Indian Share Sale.

the coming downtrend

As stated in our last article we still see money making opportunities in the stock market and would not like to be branded a bear, at least not as of now. Since then, Sensex have risen over 8% to cross our base case target of 18,000. Sensex is now inching towards the top end of our forecasted range of 12000-20000 for 2012. However, it would be prudent to reiterate that there are lesser profitable investment avenues than those available at end of 2011 and even these require longer investment horizon of at least 18 months to materialize.

Games that Mr. Market Plays

To get a feel on the market, let us have a look at the investment strategies employed in the share market. In our opinion, at any given time, there are three games being played in the share market; that of investment, speculation and gambling. In investment, gains come from increase in size of cake, while in speculation and gambling usually one persons gain comes from other persons loss.

Investment

Value style of investment, a philosophy that we @ Anavaran adhere to, seeks to find disparity in underlying value of a company and price of the stock. The time horizon is the same time horizon it takes to work out the company’s strategic plan and business cycle to complete, usually 2-3 years.

From Diwali to Christmas of 2011, share markets were ideal for value style of investments. A value investor could find oceans of price value disparity during this period. Some of these stocks that we rated a BUY during this period include Sintex, JSW Steel, Onmobile, Nocil, Punjan & Sind Bank etc.These ocean of disparities narrowed down to rivers in Jan 2012, (BUY-Allahabad Bank) and such disparities are not more than rivulet streams currently. While we like companies such as Atul Ltd, Aditya Birla, Tata Chemicals, Sandesh we think price is not correct to enter these stocks.

Speculation

The speculators, who mostly rely on technical analysis and charts, don’t care a lot about the underlying value of the company. They are largely concerned with the underlying demands of buyers and sellers in the stock. They are looking at the beauty contest aspect of the stock market -wiil people the stock and bid it up or not. It’s judging human nature. There playing field spans from fundamentally strong companies to those which are mostly dubious in nature. PSB which was more of a value play in late 2011, has turned  out to be speculators favorite since news of LIC buying 5% stake in the company hit the markets.

speculators, one mans gain other mans loss

Gambling

Last and also the least are great gamblers of the share market who are just speculating on the speculator, making a wager because they feel they have got a instinct that knows what’s going on in the market. The stigma  of converting the share bazaar to satta bazaar lies on them. With their perpetual search for GREATER FOOL, Evergreen SELL stocks like Avon Corp, Pipavav, Jupiter Biosciences,  Karuturi Global, KS Oil and hordes of other empty promises are gambler’s favorite bet in share market.

Leap to Success offer 

Would like to take this opportunity to introduce our “Leap to Success” offer. Being in a Leap Year we are offering 29% discount on our stock recommendation service plus additional gifts. We promise it to be once in a 4 year offer, so grab it at the earliest. As all our subscription services come with 1 month trial period, with full moneyback guarantee, so its virtually a risk free deal. For more details, please refer “Leap to Success” link.


Leap to Success

Leap to Success offer

Being in a Leap Year, here is once in a four year offer for our readers. Enjoy 29% discount on our stock recommendation service plus additional gifts along with access to our multibagger stock picks.

To avail this mouthwatering ‘Leap to Success’ offer, register with us before 29th Feb 2012 and enjoy following benefits:

For the performance of earlier value stock picks please refer our home page. Our top stock picks revealed for free this Diwali have generated 20% return in three months. Of these, Onmobile’s stock price increased over 50%, while Nocil and Punjab & Sind Bank have risen over 20% since our BUY rating in Oct 2011.
Our research desk is led by Ashish Tripathi, who was ranked 4th amongst world’s leading analysts by Wall Street Journal 2010.  His stock recommendations generated 89% return, compared to industry average of 47%.
ragging bull sensex

Moreover, our premium services come with 1 month trial period. In an unlikely event of subscriber wishing to cancel the subscription we offer 100% money back guarantee during the first 30 days of the subscription. Thus it’s a risk free deal. Hence, no harm in give it a try.

For the perpetual question of why one should pay, even less than newspaper price, for financial advice when there market is flooded with free investment calls here is an ode to free financial advisor:

 

Professing to be friend, philosopher and guide

My free  financial advisors took me for a ride

Chanting disclosure mantras of ‘nothing to hide’

Was surprised to find them on the other party’s side

Well known, but seldom told truth about free advisors

They are not advisors but well versed sellers

A good point to remember about financial companies

They are here to make profit and not run charities

 

In case of any queries please feel free to chat with our support reps by  clicking on the box at right hand bottom of the site. In case of us being offline, forward your queries to support@anavaran.com.

So, hurry up, don’t miss this once in a blue moon offer.  After 29 Feb, we shall be repeating the offer only in 2016.

 


Season sale ends at Dalal Street!!!

Season sale ends at Dalal Street!!!

The leap year brought the much needed upward leap to share markets. In our New Year Investment note, when Sensex was hovering around 15500, we had highlighted change in our outlook from neutral to ‘cautiously bullish’. Fall in price as well as appearance of green shoots at inflationary and currency fronts were the key reason for the positive stance.

Market Outlook

While the economic front hasn’t changed a lot since the turn of the year, with nearly 15% jump in benchmark indices share market has largely bridged the price-value mismatch gap. Stock prices of some of the companies we liked have risen over 50% from their recent and most of them have breached our bear case target price. The surge has proven to be a double edged sword. While the surge in share prices has surely improved the aggregate return of our recommendations, it has raised the necessity of treading with increased caution henceforth. With the end of Great Indian Share Sale, making money would be much more difficult, though not impossible from hereon.

With bear case target of Sensex, 16500 breached we believe factors like euphoria on budget, tax savings driven investments, easing of inflation and currency rates (purely due to higher base effect) will provide a fillip to benchmark indicies over the coming months. Despite, high probabilities of Sensex attaining our base case target of 18000 by end of this fiscal year we believe it is wise for retail investors with short term horizon to stay away from the markets.

Glimpses of our stock ratings

One of the peculiar features in making investments has been a passion to BUY at high prices and SELL at low. When market was trading around 15500 financial media buzzed with doomsayers and now the same financial community is screaming a BUY at nearly 20% higher prices. Same people who flock at Season sale at malls and bazaars get repelled by low prices in investment arena.

Going by our 2012 investment strategy of “Aiming for 20 thousand for Sensex, but prepared to face 12 thousand. 20-12” We foresee upside from current levels looks limited to 20,000 for Sensex. On the downslide, Sensex could slide to 12000 levels in the worst case scenario and there is string of events in the making which could make this doomsday like scenario come true. Being prudently neutral at the moment we take learning from John Templeton’s following quote:

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria”

For investment opportunities, Small is beautiful still looks good, especially for mid-sized public sector banks. With most of the trading at price-to-book value of and P/E of 0.5x and 5x, their stock prices are poised to double within 2-3 years. Research desk @ Anavaran has been bullish on these banks since October 2011 and has BUY rating on many of these, of which Allahabad Bank and Punjab & Sind Bank are in public domain.

Many of mid-cap IT companies, which formed part of our Small is Beautiful investment theme, have seen sharp rise in share prices prompting us to moderate our positive outlook. Of our BUY calls in IT space, Patni Computers has risen nearly 80% since our BUY rating in August 2011 to attain our target price of Rs475 in Jan 2011.

Onmobile Global, which formed part of our Diwali picks has increased 30% since our BUY call and still offers 20% upside from current levels. Similarly, Nocil’s stock price has risen over 20% and has potential to further rise 30% and more over the coming year.

Outlook on FMCG, a sector we liked for most of 2011, underwent change from positive to neutral largely due to growth in share price. We reversed our rating on HUL from BUY to SELL on 08 Jan 2012.

We have been having a relook at our past ratings like S Kumar, IFB etc of 2009-2010 era who have fallen more than 50% from our previous target price and look good at current level. Hoping to rediscover some cats with nine lives over there.

Right Company, wrong price: Atul Limited, Aditya Birla Chemicals

Evergreen SELL: Pipavav Defence Offshore, Jupiter Bioscience, Avon Corp, KS Oil, Karuturi Global

Pat on the back

“Anavaran seems to be one of the few analysts who have not fallen for promoters hype.” – A moneycontrol user, yardman’s, comment on Anavaran’s article on Pipavav.

To gain full access to our investment calls on potential multibaggers, please subscribe to our investment research services.