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Identifying Multibaggers
 The Equity Desk Forum :Market Strategies :Identifying Multibaggers
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basant
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Quote basant Replybullet Topic: Yes bank replaces Suzlon Energy in TheEquityDeskXI
    Posted: 18/Sep/2007 at 8:56pm

I had been thinking of replacing Suzlon Energy for some time now. The company had done some good acquisitions and though the benefits of these acquistions would come over  aperiod of time the opportunity cost of money was being incurred.

The alternative idea in this case was YES Bank. X-Box initiated the discussion on Yes Bank and the company had delivered. Though on traditional valuation basis it does seem expensive because it is being valuations are the same as the King of Banks HDFC Bank and you would be perfectly correct in assuming as to why should one pay a higher muliple to buy something that is not yet tested when you can buy one of India's best managed banks at that kind of a valuation.
 
Yes Bank is a story on whether you expect Rana Kapoor to pull it off or not. It is something like betting on Raghav Bahl and Kishore Biyani so while these two have demonstrated some execution capacity the management at Yes is still being tested. If you know and can bet on the management the stock is good to hold and it is certainly not a PE or Price to adjusted Book valuation stock.
 
 
 


Edited by basant - 04/Oct/2007 at 1:01pm
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s_praharaj
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Quote s_praharaj Replybullet Posted: 18/Sep/2007 at 10:46pm
Basant,
 
Though I am happy with your decission to exclude Suzlon now from TED-XI, I am not very sure, whether Yes Bank will be able to perform as per our expectation. You have correctly analyse Yes Bank, as a poor play on fundamentals, rather a very strong play on enterpreneurship of Mr Rana Kapoor and the able professionals with the pool of knowledge they have.
 
Of late I notice that they have slowed down in their aggressiveness. This quarter is a very important quarter, as like the previous quarters, they don't have many clients with foreign acquisitions.They are redefining some traditional concepts of Banking. Traditionally we think, retail banking is profitable, but they are still showing nice profits with wholesale Banking.
 
There is no doubt about the quality of the Bank, its leadership and its strength in some niche areas of Banking, but still I have a feeling that this is not the right price. I will be  comfortable at 140-150 range.
 
I bought some shares, just after its public issue and still hold half of it.


Edited by s_praharaj - 18/Sep/2007 at 10:48pm
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Quote smartcat Replybullet Posted: 18/Sep/2007 at 11:58pm
Couple of observations -
 
- The only engineering stock Suzlon is now outside the TED XI
 
- Another midcap replaces an existing large cap. The midcap tilt of TED XI is quite visible now. It was not so before when we had AB Nuvo and Suzlon.
 
- We have now 3 proper financials (HDFC, HDFC Bank & Yes Bank) and 2 pseudo financials (Future Capital via Pantaloon and Commodity exchange via Fin Tech) in the TED XI.
 
- With the removal of Suzlon, TED XI is 100% into the 'India growth' story (rather than outsourcing/exports story).
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Quote xbox Replybullet Posted: 18/Sep/2007 at 5:22am
With the removal of Suzlon, TED XI is 100% into the 'India growth' story (rather than outsourcing/exports story).
----------
I guess 'India growth' means 'domestic consumption story'. India story includes all export & import stories also.
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Quote basant Replybullet Posted: 18/Sep/2007 at 7:40am
SUzlon's business model stil seems OK but the results do not show. I think that by the december quarter the conmpany should report improved earnings but the problem is about being in uncertainity.
 
Yes, India is a domestic growth story and that is where most of the money will be made.There are a lesser number of variables affecting domestic consumption rather then compared to the export/import sectors.
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Quote gcpradhan1 Replybullet Posted: 18/Sep/2007 at 8:20am
Finally it's nice to see YEB Bank on the TED XI board. Hope this player will contribute to the team strength as it's predecessor Suzlon and go long way for the Teddies...
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Vivek Sukhani
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Quote Vivek Sukhani Replybullet Posted: 18/Sep/2007 at 8:53am
although the chart is a wonderful trending one, yet the counts are giving me some interesting inputs. My next target is 186, 205 and 236-237. 186 is almost there...and hence it will be jolly well taken out, but it appears the stock has completed 5 sub waves of the primary wave 1 and is now into sub-wave B of primary wave 2. If 205 be taken out with conviction, that will lead to the negation of the entire count studies and in that case the target of 236-237 will be very much on the anvil.


Edited by Vivek Sukhani - 18/Sep/2007 at 8:54am
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Quote smartcat Replybullet Posted: 18/Sep/2007 at 11:52am
The problem with Suzlon is not stock price performance or even the 4 quarters of shocking results for that matter. It was the management that always gives out a rosy picture (We stand by our guidance, 200 MW is stuck in transit - it will show in the next quarter etc).
 
Tanti could take a leaf out of INFY's book by giving a conservative guidance and beating its own guidance by a wide margin. Or better still, not give any revenue/profit guidance at all.
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