What I had done is exited quite a bit of these holdings and moved into Satnam Overseas (to be now called Kohinoor Foods - they informed NSE today). Satnam was hammered by over 70% leading to a very strange situation.
Satnam has sales of about 520 cr, profit of around 21 cr, cash in bank of about 103 cr, and as of today the firm is valued at 103 cr. Trades at about 4.5x 2005-06 PE, and 2x of 2007-08 PE.
Net Net, you are getting a decent enough company for almost free (if you deduct the cash in bank and add some debts it has on books). Mr. Market is indeed very moody, just as Mr.Dodd pronounced long ago.
What I like about the market, it allows me to play games with myself, to pit me against I. If I win, I learn to trust my gut a little more, if I lose, I can always strive to improve my intuition. In the end its a nice game, it keeps me analytically inclined, and as I have always said, its terribly good if you make a fortune in the process (Not that I have done so far, but to be honest, I have not done too badly either).
My bet is by June 07, Satnam should trade at 130 if valued at around 10-12 PE(CMP on 20th June 2006 is Rs.59, and it shall be at around Rs.180 if market values it around 17 PE, though I believe 10-12PE is the right value for such a small nimble fast growing company, its not higher because of the associated risk of being a small player). If this bet works, I shall be a very happy man ;-).....finally you do live for these small little wins.
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2 comments:
hey amitabh, you must be smiling with the satnam punt. Have been trying to call you. Is your number still the same? It's ringing with no answer.
Wonderful blog & good post.Its really helpful for me, awaiting for more new post. Keep Blogging!
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