MULTIBAGGER

I've written about paradyne infotech in this blog a couple of times. It had since appreciated to 699 before falling back to 219 again in the current meltdown of the  markets. However, its profits are increasing at a rapid pace and it might very well report an EPS of 75 to 80 for FY 2009 and an EPS of 150+ for FY 2010. It is a rapidly growing technology business in the field of RIM, implying that the market should discoint it by 15 times at least, once the dust settles and sanity returns. This should give a share price of 2250 by April 2010, i.e.  18 months from mow, it can be expected to appreciate almost by ten times. Truly a multibagger. The new name of the company is Glodyne Technoserve. Very rarely are such excellent businesses available at such a low price. It has also recently bagged a contract from the Bihar govt. for implementation of the NREGS . Once it successfully executes this assignment, it should pave the way for bagging similar assignments in the other states, thus expanding the business. Moreover, it is scouting for a suitable  acquisition in the RIMS space. In the current recessionary environment, it should be able to acquire a company at a discounted price.

My view is that because of the limited floating stock, market players are using this phase to accumulate this stock. The promoter group holds 68 % of the equity.Further 35 shareholders hold around 10 % of the equity. This leaves just 22 % of the total equity of Rs. 11 crore as the floating stock. The market players are hammering the stock price so as to frighten the small investors out of this stock. The smart investor, who does not allow his mind to be swayed by market swings, will reap handsome rewards by staying invested through the bearish phase.

RIGHT ON TARGET

Remember my post sometime back about Para dyne infotech.The scrip has since appreciated by almost 25 % and should hit my target of 200 by year end.

Interesting article

There is s very good article in the latest issue of Outlook business, titled "Broker Advice". I could not find the article on the web and so am not able to post a link. However I summarize it here :

The author Dhruv Rathi asks you not to invest on the basis of your broker's advice or on the basis of recommendations in the media. He lists numerous cases in the last year where scrips recommended by various brokerage houses and equity research analysts , have lost heavily ( as high as 50 % in some cases ) . The reason which he gives for this is something that I have long suspected . According to insiders at one of the leading brokerages, stock ideas are first used to build proprietary positions, then recommended to big clients - institutions and mutual funds- followed by private banking clients, friends and associates and finally to the media and newswires. Thus the common investor usually gets to see the broker advice/report well after the big moves have taken place and mostly just before the offloading starts. Little wonder then that they make little or no money on brokerage recommendations, as these come into the public domain only after the key clients have made their purchases. Doesn't this sound similar to what I said while recommending "paradyne infotech", in my last post.

So, the moral of the story is that these recommendations should be taken more as food for thought, rather than for making investment decisions without doing your homework.

Multibagger

PARADYNE INFOTECH


This , I think is a multibagger in the making.The company which came out with a public issue just 2 yrs back has been constantly increasing its profits for the last five quarters. Right now, the market pundits are accumulating this scrip , and once they have accumulated suficient nos, they will start throwing recommendations in the newspapers, magazines, tv programs etc. I tink this scrip should touch 200 by the year end. It is a sound investment.

Interesting article.

There was an interesting article in the Economic times today, telling about how an investment of Rs. 30 lakhs through SIP @Rs. 25000/- per month for the last ten years in various mutual funds could have made you a crorepati. It should be an eyeopener for those crores of Indians who still stick to the post office and bank fds, as far as investment is concerned. The following is the link to the article :

http://economictimes.indiatimes.com/Heres_how_to_let_your_money_work/articleshow/2039232.cms