Can one Invest in Inox Wind Stock after Steep Price Correction?

Actual Question:

Is now the correct time to buy Inox Wind shares, as the prices have dropped down to 167 Rs?

Answer:

Dear Friend!

Inox Wind’ shares have tumbled over 19% supposedly on the back of a 36% slide in Q4 net profits.

However, this is not the real reason to keep away from the share.

The main problem with this company is the fundamental change in it’s business model. In the statement announcing the Q4 results the company had admitted this when it said, “The industry is under-going a significant change in market dynamics by shifting from the FIT based market to an auction based market. Under the new scenario, our conventional order book loses its relevance, …”

Further, in the light of such a competitive environment, Inox Wind’s parent company Inox Renewable, it seems, has lost interest in the wind power project setting-up business and is focussing on manufacturing wind turbine. It has sold it’s entire portfolio of wind farms of 260 MW in March.

Inox Wind appears to have performed quite decently in the past and its past financial performance parameters appear to be quite decent.

• The EBDITA Margins in the range of 20-22% is good.
• EBT in the range of 17 -19% is attractive I should say.
• PAT margins of 12–16% is something one can’t complain. 

So where does the it's malady lie?

The company is facing bleak prospects not because of it’s performance but because of fundamental changes in the external environment.

In conclusion, despite the steep correction in the price and whatever maybe the reasons for the company’s future prospects, in the prevailing scenario of auction based bidding for wind farm development projects resulting in ever falling tariffs and other reasons discussed above, as per value investing principles, Inox Wind shares should not be considered for investment.

Thank you,

With Best Regards,

Anand

What is the Minimum Sum to Invest in Algorithmic Trading?

Actual Question:

How much money minimum can be invested in algorithmic trading?

Answer:

Dear Friend!

“Zero” is the minimum and maximum amount that can be invested in algorithmic trading. If this were not true, the software will be as popular as Microsoft’s Windows and all the world’s richest will be doing only the business of algorithmic trading.

My dear friend there are no shortcuts when it comes to investing.

At the same time there is a sure and certain path to significant invest success through the path of ‘Value Investing’ shown by Benjamin Graham. Please read the book, “The Intelligent Investor”.

I had answered a couple of questions relating to algorithmic trading in the past, maybe you would like to read them too?

• Is Algorithms Based Trading Safe?
• Is There A Mathematical Formula for Option Trading?

To conclude not a single penny should be invested in algorithmic trading. One should pursue proven, safe and investment protecting strategies.

Happy, safe and enjoyable investing!

Thank you,

With Best regards,

Anand

Is Amtek Auto’s Share Worth Investing?

The short and immediate answer is a big NOOOOOO!

It is not safe to invest in Amtek Auto. 

Unfortunately the already bad condition is rapidly deteriorating.

The losses are mounting and key profit and loss account related ratios are falling.

All the key balance sheet ratios like current, quick and TOL/ TNW ratios are declining.

Even the market conditions are not favourable.

Amtek Auto Market Snapshot:

The EPS and PE Ratio are negative, indicating losses. Dividend yield is zero. Price to book ratio is tempting at 0.17 (discount of 83%) but still please do not fall for it.

The share price is in doldrums. After a brief rally in 2014–16 where the price touched about Rs.215, it is languishing at the bottom at Rs.37. Amtek Auto stock’s five year price graph below vindicates my stand:

In conclusion Amtek Auto's share is not a good investment option, so please do not invest.

Stocks Worth Keeping Forever

Actual Question:

Which Indian stocks would you keep in your portfolio forever, starting from April 2017?

Answer:

Dear Friend

A very interesting and valuable question.

My guru, Warren Buffett repeats again and again that buying stocks is like buying the entire business. You don’t start and sell your own business with every movement in the price of the stock on the stock market. He also says that if a stock is not worth keeping for the lifetime, it should not have been bought in the first place.

Now let us address your question.

All the stocks listed in my academic portfolio, ‘Portfolio 2K15’ , except NTPC and SBI, are very good and worth keeping. Kindly note that for the past two years since starting this portfolio in February 2015, I have not sold a single share. However, my real darlings are:

1. NMDC Ltd.
2. Hindustan Zinc Ltd.
3. SJVN Ltd.
4. Rural Electrification Corporation (REC) Ltd.
5. Power Finance Corporation (PFC) Ltd.
6. Great Eastern Shipping Co. Ltd.

I think I will keep these stocks forever, unless something fundamentally alters the situation like change in ownership/ management, M&A , etc.

Related:

• Hold Outstanding Stocks Forever
• Buy Stocks to Hold for Very Long

In conclusion every stock in which we have made an investment should be worth keeping forever, but out of the 15 odd stocks of our Portfolio 2K15, six are certainly my darlings and they are worth keeping forever.

Thank you,

With Best Regards,

Anand