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basant
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   Posted: 04/Nov/2006 at 10:05am |
Let us say that a large cap has a market cap of US$ 750 million. It is very difficult to get a multibagger in a large cap unless you are stiing at the start of any cyclical rally. For e g. In 2003 we could have made a multibagger out of cement or any metal but not out of Infy. So if we say a company that will grow 10 times in 10 years is it a multibagger in the true sense of the word we want to see it. 10 years is a long period of time and this means a CAGR of 26% only.There are many companies in the Cricket XI section that can do this kind of growth or even better that.
Edited by basant - 04/Nov/2006 at 10:12am
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Equity Buff
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Posted: 04/Nov/2006 at 10:19am |
Basantjee,
I completely agree with you and that is exactly the reason I asked you this question. I also firmly believe that you can find multibaggers in small caps and Mid caps only and it is very difficult to find multibaggers in large caps. So pls clarify, are you saying that chanecs are remote that since Pantaloon and F.T. are already large caps they will not be multibaggers going forward from current level (10 to 15 times in the next ten years) ? Pls clarify.
Thanks & Rgds.
Edited by Equity Buff - 04/Nov/2006 at 10:23am
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basant
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Posted: 04/Nov/2006 at 11:25am |
So pls clarify, are you saying that chanecs are remote that since Pantaloon and F.T. are already large caps they will not be multibaggers going forward from current level (10 to 15 times in the next ten years) ?:
These are unusual situations where the sheer size of the market is about 30 -40 times the current level of penetration. In fact we could see a 10 bbagger in 5 years in both these companies if they are able to execute what they said.
Here we should recall that Bharti Airtel moved from amarket cap of Rs 7000 crores to Rs 100,000 crores in 3-4 years because the market itself was growing so fast. So there could be relaxations to this theory but this relaxation is more of an exception then the norm.
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Equity Buff
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Posted: 05/Nov/2006 at 6:49pm |
[QUOTE=basant]
These are unusual situations where the sheer size of the market is about 30 -40 times the current level of penetration. In fact we could see a 10 bbagger in 5 years in both these companies if they are able to execute what they said.
Basantjee,
This is exactly what even I feel and hence I asked the question. Thanks for clarifying.
Rgds.
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basant
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Posted: 05/Nov/2006 at 7:26pm |
I normally try and look at the market cap in conjunction with the size of opportunity. Some time back there was a discussion on an icecream company but the total size of ice cream as a business is restricted so even a Rs 200 crores market cap does not loook compelling.
Looking at the mcap in absolute numbers has its own inherrent flaws.
Edited by basant - 05/Nov/2006 at 7:27pm
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India_Bull
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Posted: 05/Nov/2006 at 9:47pm |
Hi Basantji,
I have invested some time back in Mount Everest and it has become a halfbagger in a short span of time, looking at the sheer opportunity and some big daddy will buy this company it can still go up. Have you been able to analyse this company?
Secondly Indraprasath Medical also looks promising to me, HDFC has a stake in it.Can you or board memebers throw some light to it?
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India_Bull forever Bull !
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basant
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Posted: 05/Nov/2006 at 10:28pm |
Indraprasth Medical: Guess this belongs to the APollo group. It is an OK stock but no great shakes market does not like two companies from the promoter in the same business.
Mt.Everest: Yes heard that the co. is being sold off at about Rs 150 per share. For the apst two years it has been takeover stock. generally I do not invest in such companies because timing the takeover is very very difficult. SOme companies like Federal Bank and South Indoian Bank are being held by investors for overa decade now only to be taken over but that never seemed toi happen.I think that if the underlying business is tring it would be taken over faster then we think!!!
Edited by basant - 05/Nov/2006 at 10:29pm
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jack
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Posted: 06/Dec/2006 at 2:25pm |
Dear All.
Can any body please throw some light regarding market cap. How to shortlist a stock based on market cap, How to select a stock whether it is cheap or expensive based on market cap.
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