Views on Midcap Stocks

Investing

The mayhem in the market is continued. Midcap stocks have witnessed correction up to 50 percent. Though, market as a whole has not corrected much, midcaps and smallcaps have been ruthlessly butchered.

Dilip buildcon, a leader in road constructrion, has seen massive correction. Though,company has posted steller quarter. Unconfirmed rumours about auditors resigning and other issues went heavily on it.

There is, however, no difference in the fundamentals of the company. It’s a good opportunity to buy the company at this price.

Prakash Industry is not a great company, but its also at attractive price. International steel prices are still high and it will give a good return in 1 year.

Vakrangee, i accept my mistake, fell like a pack of cards. I promise to stay away from such stocks in future.

I added some stocks of Edelweiss at 299 and sure that its a high quality management. Also added Jindal Saw, Future Consumer Limited, TCS, Indusind Bank and Jindal Steel and Power.

Overall, I lost big money as DBL was 33% of my portfolio. I reziged my portfolio and reduced the weight of infrastructure,added some largecaps, consumer stocks.

 

Should You Buy Vakrangee Limited Shares Now

Investing

The shares of Vakrangee Limited have fallen by 50 percent in the last 3-4 days after Mumbai Mirror published a story on the alleged manipulation of stock. The company has been a darling of investors as it has given 9000% returns in the last 10 years, which is huge by any standards. Now many investors are finding it very attractive, but they are afraid to take any decision.

Should You Buy Vakrangee Now? Though I’m not advising to you and neither I have capacity to do that, but only thing I can say is to tell you my decision. I’ll buy Vakrangee Limited in some amount on Monday if the price stabilizes and there are some logical reasons behind this.

The profits of the company are not fake as they are continuously paying dividend to investors. Apart from that they pay 35% tax to government from their profit. They have a clean balance sheet.  So they are not Unitech or Satyam.

The news report is also vague as it says that SEBI has not find anything material behind the volume increase of the share of Vakrangee Limited and they don’t intend to carry out investigation. The Vakrangee Infra that is mentioned in the story has already been sold in 2014 to Kuldeep Jain and how Vakrangee can be liable for what the new promoters are doing with it.

Till now SEBI has not send any show cause notice to company to explain their position on the alleged manipulation.

Vakrangee Limited has been a very consistent performer quarter over quarter and it has grown at the rate of 30-40% for the last 10 years and that’s amazing from any standards.

My View

Another thing is that their balance sheet is real with real profit and cash flow unlike Satyam and other real estate company who fudged the balance sheet extensively. What I feel that they had wrongly sold PC Jewelers’ scrip in the huge chunk and that led to the fall of PC jewelers stock by 60%, which eventually recovered to some extent.

The maximum they can be guilty of bad treasury policy or some amount of insider trading. They bought 20 lacs PC Jewellers stock @560 Rs/ share and they sold it at 250 as they feared more loss in the stock. They should not have done this as they could have easily hired a professional company to provide sound advice. However, we can give this company a benefit of doubt as this has given 9000% return!!! This is not a crappy third rated penny stock mere bhai!!

And can you find  a 100% pure company in India? If this will be the parameter, people won;t find a single stock.

This is impossible!

So this should eventually recover. This is not such a massive scam in the company and I certainly believe that stock market has over reacted, which always happens.

I may be wrong as well, however, I’ll invest some amount in couple of days if correction stops and this price sustains for some time.  The only thing that can change my stance is any material development that affects it poorly.

I tried to search for the views of any eminent analyst, but could not find any except SP Tulsian. You should see both videos and decide yourself:

Now See this one:

(Disclaimer: I’m not a SEBI registered advisory and this in no way recommendation to the stock. Understand the risk and take position accordingly after consulting your advisor.)