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9StockPortfolio
Senior Member
Joined: 10/Sep/2008
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Posts: 479
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   Posted: 26/Jan/2009 at 5:13pm |
Originally posted by vijayM
9STOCK JI,
what is comfort buying level for HDFC bank? Give details of calculations.
vijayM |
I am afraid that i can't evaluate Banks & Finance companies. I never understood their financial. I can have a look on capital goods or engineering company and understand their books. But when i see a bank with Debt/Equity ratio as high as 8-10-12 times.. I get confused. Usually any bank has Debt/Equity ration in this range. The filter criteria which i use for L&T, Suzlon or Thermax can not be applied to HDFC, SBI or Rel capital. Sorry Vijay. I can't comment on HDFC bank. I would think of it once it comes below PE 13-14.. as of now it's approx 20.
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Pursuit of Value
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vijayM
Senior Member
Joined: 21/Dec/2007
Location: India
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Posts: 649
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Posted: 26/Jan/2009 at 5:32pm |
Dear 9stock ji,
I am not an expert. Broadly, I am extremely bullish on HDFC bank for next 3 years. I expect it to grow at 30% cagr and a PE re-rating to 30 implying a 3-4 bagger in 3 years. Presently I am agressively buying this stock with every fall. Basant ji is an expert in above stock.
vijayM
Edited by vijayM - 26/Jan/2009 at 5:33pm
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If a business does well, the stock eventually follows:Warren Buffett
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kumardiwesh
Senior Member
Joined: 26/May/2008
Location: India
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Posts: 721
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Posted: 26/Jan/2009 at 6:10pm |
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It's difficult to do a DCF for each and every company.
Rather, based on some measures we try to figure out whether the stock is cheap or not.
Margin of safety would also depend on our understanding of the business of a company.
For example, if we are more sure about company A than company B, we can have a lower margin of safety for A.
Risk also comes from not knowing enough about a company.Discount rates will vary from person to person.
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"History does not tell you the probability of future financial things happening" - Warren Buffett
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HallaBol
Senior Member
Joined: 26/Mar/2008
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Posts: 186
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Posted: 26/Jan/2009 at 6:54pm |
Originally posted by kumardiwesh
It's difficult to do a DCF for each and every company.
Rather, based on some measures we try to figure out whether the stock is cheap or not.
Margin of safety would also depend on our understanding of the business of a company.
For example, if we are more sure about company A than company B, we can have a lower margin of safety for A.
Risk also comes from not knowing enough about a company.Discount rates will vary from person to person. |
We were more sure about PRIL/TV18 some 2 years back, what happened to them. Being more sure does not increase margin of safety, that is just the mindset comfort.
Since we were wrong about "being more sure" in the past, why it can't happen again ??
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The future is never clear, you pay a very high price in the stock market for a cherry consensus. Uncertainty actually is the friend of the buyer of long-term values. - Warren Buffet
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HallaBol
Senior Member
Joined: 26/Mar/2008
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Posts: 186
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Posted: 26/Jan/2009 at 7:01pm |
Originally posted by vijayM
Dear 9stock ji,
I am not an expert. Broadly, I am extremely bullish on HDFC bank for next 3 years. I expect it to grow at 30% cagr and a PE re-rating to 30 implying a 3-4 bagger in 3 years. Presently I am agressively buying this stock with every fall. Basant ji is an expert in above stock.
vijayM
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Growing at 30% is understandable, but re-rating to 30 p/e that something I could not digest.
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The future is never clear, you pay a very high price in the stock market for a cherry consensus. Uncertainty actually is the friend of the buyer of long-term values. - Warren Buffet
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kumardiwesh
Senior Member
Joined: 26/May/2008
Location: India
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Posts: 721
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Posted: 26/Jan/2009 at 7:06pm |
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Yeah, we can be wrong.
It's highly subjective.
And since we're less sure now, margin of safety has to increase.
The value of a company may change over a period of two years.
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"History does not tell you the probability of future financial things happening" - Warren Buffett
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basant
Admin Group
Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 26/Jan/2009 at 8:07pm |
Its amazing to see how much of a dent PRIL has made to the investors who bought it and the ones who did not In fact the protests are more from the latter then the former. Its become social cause to protest against Biyani but that should not matter to me since I made my capital out of that man only.
One of the successful aspects of investing (value or no value) is to exit a stock when the situation gets bad.
We all know what happened to Abhimanyu in Mahabharat surprisingly what looks value today can be over valued tomorrow and people who have no exit strategy will find it tough to protect capital at that time.
My 2000 losses really taught me that taking a capital loss as large as 50%+ is also a part of the game as making a 35 bagger. In this case I see reason why a trader should be distinguished with an investor a trader takes a loss if prices move against him an investor takes a loss if fundamentals move against him.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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rapidriser
Senior Member
Joined: 18/Nov/2007
Location: India
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Posts: 966
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Posted: 26/Jan/2009 at 8:29pm |
Originally posted by basant
My 2000 losses really taught me that taking a capital loss as large as 50%+ is also a part of the game as making a 35 bagger. In this case I see reason why a trader should be distinguished with an investor a trader takes a loss if prices move against him an investor takes a loss if fundamentals move against him.
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People who claim to be "long term investors" should have this statement pasted on their wall in bold. Too many of us hang on to stocks even when it is clear that the premise on which we invested in a stock no longer holds true. What Basant ji learnt in 2000, I have learnt in 2008, and I've paid heavy tution fees for this lesson.
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