Stock which eroded 99% from its highs

July 27, 2012   ·   0 Comments

 

 

Sel Manufacturing is a Ludhiana based textile based company. The stock price has eroded 99% from the highs it made in 2008.  Company came with an IPO price of 90 rs. After 2 years of hovering in the range of 65 – 130, the stock started shooting. In 2008, when whole of the market was plunging, this was one stock, which gave multiple fold returns. This is one stock to invest in India in 2012. 

 

Personally, I started booking the stock after it crossed 220 and sold out the stocks allotted to me in IPO till the mark of 300.

 

Sel Manufacturing though didn’t look back and kept on rising. By the year-end it reached to levels of 750 Rs. I was sure that stock has become a bear trap and kept away from it.  I was proved right by the eratic stock movement. After trapping in lot of investors, stock plunged to dismal level of 70 Rs. till 2010. People who kept on averaging made huge losses as stock lost 90% from the highs.

 

I personally bought few when it came to 52 rs. In the last 2 years, stock has plunged again and now is trading at 6.50 Rs. which is about 1% from its highs.

 

Company Financials:

One does wonder what has gone in the company, which has taken the stock price drastically down.  Let us check the Company balance sheet a  little:

 

MARKET CAP (RS CR) 228.3
*P/E 3.18
*BOOK VALUE (RS) 39.27
DIV (%) 0.00%
MARKET LOT 1
INDUSTRY P/E 14.52
*EPS (TTM) 2.17
*P/C 1.56
*PRICE/BOOK 0.18
FACE VALUE (RS) 10

 

With a market capitalization of 230 crores, company is not a small company. Even the management was all set to bring in another IPO of its subsidiary. But due to dismal performance of stock market decided against it. Now they are raising 200 million $ through FCB route. 

 

Verdict:

Sel manufacturing is a company, which is dealing in profits and is trading much below the levels of Price to book of about 40. Even if the stock comes to Price/Book ratio of 2-3, it would still be 15 times from the stock price right now. The company at current valuations is still the third largest textile company in India.

 

I do believe the company can prove to be a multi bagger at these levels in coming years. If a person has a time frame for 5 years, then he should buy small amount of this stock.

I would accumulate the stock in this range of 5-7 rs.

Let me know what are your views on it?

Incoming search terms:

  • sel manufacturing share price going down

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...

More Posts - Website

Follow Me:
TwitterFacebookLinkedIn

By

Recommend on Google