Vikas Query

May 16, 2011   ·   0 Comments

vikash kumar gupta wrote:

Dear sir/Madam,
i bought 150 shares of AcroPetal Technologies Ltd through my broker at an average price of RS. 120 now as you know the share’s value is almost none.Sir what should i do now should i wait for some gain or sell the existing shares.
Please reply as soon as possible.

@ Vikas

www.stockssavvy.comQuoted from Acropetal IPO Analysis from the Link: http://stockssavvy.com/?p=2569

“Coming on to the valuations of the primary offering, at the upper band of 90, share is being issued at pre-money PE multiple of 4.74x, based on estimated FY11 EPS of Rs. 19, given Rs. 14.20 has been earned on per share basis in first nine months of fiscal 2011. This is not very attractive given that other smaller IT companies such as Nucleus Software and Omnitech are ruling at PE multiples of 3-4x, thus not leaving much on the table for the IPO investors. ”
Savvy View:
Vikas,  We understand your concern of losing your capital by getting caught in a Operator trap. I still remember that while the IPO was out, we recommended the stock for risky traders as there was full chance of Operator Play in the stock because of the small issue size.
Strategy going forward: We won’t advise to invest at this point in time in the stock. But even getting out at such cheap price will be foolishness. The capital erosion has been done now & Taking 1/5 of your money by selling the stock and investing in some other counter in hope that will cover your loss will be too risky & not advisable. EPS of 19 gives the counter a fair valuation of around 55 Rs. You need to keep a long term perspective & should hold the stock. Remember nothing else in the market but Patience. There  will be a certain time when stock will again shoot in some bull run & you need to make sure you ride that bull run to make the most on your investment.

Let me know if you want to discuss any further.:)

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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