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Bhavook Tripathi: Analyzing the stock-picking strategy and philosophy of this market expert

Bhavook Tripathi: Analyzing the stock-picking strategy and philosophy of this market expert
by 5paisa Research Team 12/11/2021

Bhavook is known to have a concentrated portfolio and when he buys, he buys big!

Pune based-Bhavook Tripathi shot into super-stardom when he launched an open offer to acquire 26% of the share capital of R Systems International, a company engaged in providing software product development and BPO services. Tripathi invested Rs 40.81 crore in the open offer in 2011 and still holds the shares to this day. According to the latest corporate shareholdings filed as of September 2021, Tripathi holds 42,539,454 shares of R Systems International (35.6% of its capital) worth Rs 1,012.9 crore.

Looking at his massive stake in the R Systems, it should come as no surprise when we say that Bhavook believes in a concentrated portfolio. When he buys, he buys big. Unlike other investors who invest a bit here and a bit there, hoping that something somewhere will click, Bhavook instead waits patiently for that once-in-a-lifetime opportunity to show up, and when it does, he acts with conviction and pledges a sizeable chunk of his wealth on that bet.

Bhavook Tripathi made his first fortune with FAG Precision Bearing, a company engaged in the business of high-precision ball bearings to leading automobile companies. What he noticed was this blue-chip MNC had a low market capitalization of just Rs 35 crore. This was in 1999 when most of the market was obsessed with high-growth IT companies such as Wipro and Infosys. Unlike other investors, Bhavook had the vision to see that stock was unvalued and invested a huge chunk of his resources into the stock. He was proven right because FAG bearings went on to become a multibagger several times over.

The war chest gained by selling his stake in FAG Bearings was put to use while purchasing his second stock pick – a company called Solvay Pharma. This company was in the news because Abbott Labs was buying over the company in a global deal. A few paid attention to this news but Bhavook was among those that realized that sooner or later, Abbott would have to make an open offer to the shareholders of Solvay. A giant conglomerate buying over assets and willing to pay any sum of money to the Indian shareholders seemed like an obvious investment opportunity in hindsight but Bhavook was among the few that spotted it. There were some fluctuations in the stock price with a lot of uncertainty surrounding the company, but four years later, Bhavook netted a gigantic profit by selling the shares he purchased at Rs 488 to Rs 3,054.

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Astral is gaining momentum after excellent Q2 numbers

Astral is gaining momentum after excellent Q2 numbers
by 5paisa Research Team 12/11/2021

This leading pipe manufacturing company rallied 250% in the last 18 months with strong fundamentals

Astral had a dream run in covid time, the stock rallied from Rs 730 to Rs 2,270 today, registered return of 250% in last 18 months.

Astral Poly Technik Ltd was established in 1996, which is among the fastest-growing piping companies, manufactures plumbing and drainage systems. It has also forayed into the adhesive business over years.

Business model

Piping Division (77% of revenues) -This is the main business of the company, it manufactures pipes and fittings for plumbing, sewerage, agriculture, industries, fire sprinklers. It also manufactures pipes for conduit & cable protection, ancillary products, urban infra and ducting.

Adhesives Division (23% of revenues) - Its adhesives business sells a wide range of products viz. Epoxy adhesives & putty, silicone sealants, construction chemicals, PVA, cyanoacrylate, solvent cement, tapes and other products.

The piping division mainly caters to the infrastructure industry and, Adhesives mainly cater to the automotive and packaging industry.

Competitive strength

1. Strong brand equity - Astral has continuously invested in brand & promotional activities through Bollywood movies, associate sponsor of Indian Premier League teams among others. It also boarded Ranveer Singh (star) as the brand ambassador of Astral pipes for three years.

2. Wide and deep distribution reach - The company has a base of 800+ distributors and 31,000+ dealers for its piping business and a base of 1,300+ distributors and 130,000+ distributors for its adhesives business.

3. Product innovation & Backward integration – Astral is the first company to introduce CPVC pipes in India in 1999 which has more stability and withstand high temperature than PVC pipes. After a few years to save cost they started manufacturing raw materials for CPVC pipes.

Exceptional Financials

In the last ten years from FY10 to FY21, revenue has grown at a CAGR of 23% and profit has grown at a CAGR of 28% which shows the steep growth of the company. The operating margin is consistent and stable in the range of 12% to 20% for the last 10 years. Very few companies have exceptional financials like this, Astral is one among them.

Yesterday the Q2 numbers were out. The stock was more than 2% up after excellent Q2-FY22 numbers. Net sales grew 54% on a YoY basis stood at Rs 1,154 crore, EBITDA grew by 48% on a YoY basis to Rs 219 crore, Net profit jumped 63% on a YoY basis to Rs 143 crore.

Growth drivers – Government infrastructure spending, increasing construction, government schemes like “Housing for all” by 2022, National rural drinking water program would benefit pipe companies, Astral would be a major beneficiary.

Valuation - Companies with strong fundamentals and strong growth prospects will trade in premium. It is trading at a TTM P/E of 87x against an industry P/E of 25x. It is definitely higher in valuation.

Do you feel fundamentals and company performance would justify buying it?

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Superstar stocks for tomorrow!

Superstar stocks for tomorrow!
by 5paisa Research Team 12/11/2021

Looking for stocks that could deliver good returns till tomorrow, here are the superstar stocks for tomorrow selected on a three-factor model.

Many of the time market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be probable superstar stocks for tomorrow.

The superstock stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is the pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters it would flash in our system and as a result, it will help traders to spot the superstar stocks for tomorrow at the right time!

Here are the superstar stocks for tomorrow.

IDFC: IDFC soared more than 10% on Friday. The volume witnessed today was 3.5-fold the 10-day daily average volume. The stock traded firmly in green throughout the day and a strong green candle on the hourly timeframe was witnessed towards the end. The RSI is in the bullish territory on the hourly, daily, and weekly time frame. The stock is an ideal candidate for the BTST trade.

Aavas Financiers: The stock of Aavas rose about 4% on the trading session of Friday. The stock is nearing its resistance level of 2950-3000. It gained good momentum today in the early hours of the trade. It has witnessed strong buying today with RSI at 63. The demand from the bulls is evident from the fact the stock has witnessed above average volumes. The stock has the potential to take out 3000 while the immediate support lies at 2800 which is its 20-DMA.

L&T Technology Services: The stock has risen 2.25% on Friday outperforming the benchmark indices. The LTTS stock is trading strongly for 13 trading sessions and has an RSI of 70 indicating its strong strength on the upside. It has witnessed decent volumes and has had the rejection of its lows showing that the bulls are still interested in the game. The stock could see levels of Rs 5400-5500 very soon.

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Multibagger Alert: Investment of Rs 1 lakh in this sugar stock last year would have turned to Rs 2.28 lakh today! Should you invest now?

Multibagger Alert: Investment of Rs 1 lakh in this sugar stock last year would have turned to Rs 2.28 lakh today! Should you invest now?
by 5paisa Research Team 12/11/2021

The company’s stock price went from Rs 149.15 on 12 November 2020 to Rs 340.1 (as of 11 November 2021). It touched a 52-week high of Rs 398.25 on 18 October 2021.

Balrampur Chini Mills Limited, an integrated sugar manufacturing company engaged in the manufacturing of sugar, ethanol and power, has turned into a multibagger by delivering returns of 128% in the last one year.

The company operates in the segments of sugar, distillery, co-generation and others. Its allied business comprises manufacturing and marketing of ethyl alcohol and ethanol, generation and selling of power, and manufacturing and marketing of organic manure. Its products include molasses and bagasse.

Industry dynamics-

  • Owing to factors like GDP growth, rising disposable income, increasing demand for processed foods etc., sugar consumption in India is expected to grow.

  • Furthermore, prudent government policies, rational cane pricing, setting standard floor prices for sugar by way of MSP, robust ethanol blending program, are other factors that will drive the growth of the sugar industry in India.

Financial highlights-

In Q2FY22, on a consolidated basis, the company’s net revenue stood at Rs 1213.83 crore. It's PBIDT (ex OI) came in at Rs 134.85 crore, an increase of 5.56% YoY, with a corresponding margin expansion of 121 bps. PBIDT (ex OI) margin for the quarter stood at 11.11 per cent. The bottom line of the company increased by 9.67% YoY to Rs 81.12 crore, whereas its corresponding margin stood at 6.68%, representing a YoY expansion of 95 bps. 

Capex and expansion plans-

The company has a strong emphasis on growth through ethanol expansion. It is currently undertaking greenfield/brownfield expansion for a distillery at Maizapur, Balrampur and Gularia. The company is in the process of modernizing and upgrading its sugar factories, which is expected to come on stream from November 2022. Moreover, it is installing incineration boilers as part of the proposed distillery expansion, the surplus power from which can be exported to the grid on finalization of PPA. Speaking about the capex plans for the next year, the capex estimates stand at Rs 363 crore. Of this, the company plans to borrow Rs 140 crore from banks, and the rest shall be procured from internal accruals.

At 3.02 pm, the share price of Balrampur Chini Mills Limited was trading at Rs 341.4, an increase of 0.38% from the previous day’s closing price of Rs 340.1 on BSE.

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Want to invest like the much loved celebrities? Lets take a peek into their portfolios

by 5paisa Research Team 12/11/2021

Nykaa’s blockbuster listing on stock market made many investors millionaires, among these investors there are a few well known celebrities like Katrina Kaif and Alia Bhatt who reaped over 10X benefits on their investments. Katrina Kaif entered into a joint venture with the company way back in 2018, to set up Nykaa-KK beauty. According to the DRHP, she invested around Rs.2.04 crores in Nykaa which has now increased substantially to Rs.22 crore as per Wednesday’s closing price.

Alia Bhatt had also invested Rs.4.95 crore in the parent company of Nykaa- FSN E-commerce ventures, in July 2020. This investment is now worth a whopping Rs.54 crore. She also holds a minority stake in a Mumbai based fashion tech startup called StyleCracker.

This is just one of the examples of our much loved celebrities investing wisely. Lets look at a few more:

1. Amitabh Bachchan- One of the most loved celebrities of all times, Amitabh Bachchan made a huge profit of 46 times his investment in the company Justdial in 2013. He didn’t stop there, the actor went on to invest in other low profile companies. He currently holds 1.49% stake in Birla Pacific Medspa (16,75,000 shares). The actor has invested in Fineotex Chemical and holds a stake of 3.97%, that is around 4,45,482 equity shares. He had increased his holding by 0.07% when the stock price was lower by 15%. Bachchan also has a holding of 2.3% (5,50,000 shares) in Mand B Switchgears and 1.71% stake in Neuland Labs, consisting of 92,530 shares.

2. Very recently, Kareena Kapoor Khan also announced that she has partnered with Instagram so as to rescue a Ahmedabad based small business called myBageecha.

3. Veteran actor Suniel Shetty has always been known as a serial investor in startups. His most recent investment was in Sai Estate Management and Skills Institute, in June 2020. He also invested in startups like the Kochi based Veiroots, Fittr (now backed by Sequioa Capital India’s Surge) and a Pune based startup called Squats.

4. One of the most loved actresses in recent years, Deepika Padukone, has investmented in a learning and community platform called FrontRow. As of now, the company has raised around $3.2 million through initial investments from various investors like Lightspeed and Elevation and Deepika Padukone’s Family Office. The young actress forayed into the investment world in 2019 through her investment in Drums Food International, the parent company of the well known brand, Epigamia. Her portfolio also contains brands like Purplle and BluSmart.

5. Cricketers like Yuvraj Singh and Shikhar Dhawan aren’t far behind. It has been reported that they have invested Wellversed and SARVA, this year itself.

6. Virat Kohli has invested in multiple companies to date, including Mobile Premier League, and online gaming platform and Digit Insurance.

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These stocks are likely to be in focus on November 15

These stocks are likely to be in focus on November 15
by 5paisa Research Team 12/11/2021

The benchmark indices ended the week on a cheering note and traded higher throughout Friday’s trading session.

At close, the Sensex was up 767.00 points or 1.28% at 60,686.69, and the Nifty was up 229.20 points or 1.28% at 18,102.80. About 1556 shares have advanced, 1628 shares declined, and 143 shares are unchanged.

On the sectoral front, IT, power, capital goods and realty rose 1% each. In the broader markets, the BSE midcap and smallcap indices ended higher.

Watch out for these stocks for Monday’s trading session - 

Hindalco Industries- The stock of Hindalco Industries has zoomed by 3.06% in Friday’s trading session. The stock is 13.9% down from its 52-week high price hit in mid-October 2021. On the charts, the stock has shown a bounce back from the current support level and is likely to be on traders or investors radar.

On Friday, the company declared quarterly results for Q2FY22. Consolidated net profit stood at Rs 3,417 crore against Rs 387 crore reported in Q2FY21 whereas consolidated revenue was recorded at Rs 47,665 crore in comparison with Rs 31,237 crore in the same quarter previous year.

Indiabulls Housing Finance- In the declared quarterly results for Q2FY22, the company’s board approved the issuance of unsecured and/or secured, listed and/or unlisted, redeemable non-convertible debentures, for an aggregate amount up to Rs 5,000 crore on private placement or public issue basis or otherwise. The company reported an 11.42% lower consolidated profit and an 11.88% decline in revenue in Q2FY22 on a YoY basis. The stock has ended 4.8% higher in Friday’s trading session.

52-week high stocks – From the BSE 100 index, the stocks of ACC, Bharti Airtel, Cholamandalam Finance, InterGlobe Aviation and Page Industries have made fresh 52-week high prices. Keep a watch on these stocks on Monday.

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