Is It the Right Time to Invest in ‘Welspun India Ltd.’ Shares?

Full and Actual Question: Is It the Right Time to Invest in ‘Welspun India Ltd.’ Shares?

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Dear Mr.Abhishek Dubey

You seem to have put a lot effort behind your question. I appreciate very much.

Your question seems to springing out of the steep fall of nearly 50% in the price of the share from around Rs.100 level to the present Rs.49.70 and perhaps also the news about M&A activity surrounding the company.

Unfortunately, in ‘Value Investing’ such a situation is not the fundamental criterion on which investment decisions are made. It does not figure in my ‘ Value Investing: Portfolio 2K15’ which suggests that the company’s fundamentals prima-facie do not meet the first filter criteria of market capitalisation of a bare minimum of Rs.500 crores (US$ 75 million) and a ‘Price to Earnings Ratio’ below 10. Further, I am not happy about the company’s present focus on solar energy, which is very good for the country and the world at large but not for the companies engaged in the business, on account of cut-throat competition and poor margins.

I sincerely urge you to please read the book ‘The Intelligent Investor’ by Benjamin Graham, become a successful and safe value investor. Please do not bet on short term events, hunches and tips which will certainly will prove costly in the long run.

Thank you,

With Best Regards

Anand

Please Note: This is almost a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.