Investment lessons for indian stock market investors

Stock markets always teach us many lessons if we are willing to learn by closely observing changes in the business / sector / business environment in general. My belief is that markets are wrong most of the time (stocks are overvalued / undervalued). That is why you get wonderful buying and selling opportunities due to these high / low valuations in which stocks are traded most of the time.

I rarely invest in stock markets, but I keep a close eye on several companies and their prices. The stock markets test your financial knowledge, mental strength, analytical skills and thought processes. Stock markets are not for the weak souls and the people of herd.

Note: this article is not for investment advice. I'm just sharing my observations. I am a retail investor in Andhra Pradesh.

Lessons from investment in the Indian Stock Exchange:
Small cap stars:

Page Industries: This is one of the few listed companies in India that shows a steady improvement in sales, EBITDA and net profit in the last 5 years.

Duration	Stock Price	EPS	P/E
April-May, 2010	800-900	35	23-25
April-May, 2011	1500-1700	52	28-32
November 16, 2011	2540	73	35

TTK Prestige: net profit doubled in just 18 months. Good morning is coming. The administration expects 50% CAGR for next year as well.

Duration	Stock Price	EPS	P/E
April-May, 2010	500-600	46	12-14
April-May, 2011	2,200-2,300	74	29-30
November 16, 2011	2520	92	27

Investment lesson: You can find wonderful companies even among small capitalizations. Never lose the investment opportunities in this type of stock when the prices of your shares fell due to the general feeling of the market.


Retail stars:

Bata India: the retail sector may be in trouble but well-run companies like Bata are reporting good growth numbers.

Duration	Stock Price	EPS	P/E
December, 2009	250-270	9.7	25-27
December, 2010	550-640	13.7	40-46
November 16, 2011	662	33	20

Jubilant food: Jubilant investors must prepare for reasonable growth. Those days of very high growth may have ended. Is it able to sustain the current crazy valuations?

Duration	Stock Price	EPS	P/E
April-May, 2010	250-330	5	50-66
April-May, 2011	550-800	11	55-72
November 16, 2011	770	13	60

Titan Industries: Titan at reasonable prices is a dream action. You need to invest in good companies run by great managers but with the right valuations.

Duration	Stock Price	EPS	P/E
April-May, 2010	100-120	2.8	35-42
April-May, 2011	190-210	4.8	40-44
November 16, 2011	212	5.8	36

Banking stars:

HDFC Bank: Best bank and world class management.

Duration	Stock Price	EPS	P/E
April-May, 2010	360-410	13	27-31
April-May, 2011	420-480	18.5	22-25
November 16, 2011	465	21	22

IndusInd Bank: wonderful management.

Duration	Stock Price	EPS	P/E
April-May, 2010	170-210	8.7	19-24
April-May, 2011	240-290	12.9	18-22
November 16, 2011	252	15	17

Investment lesson: always look for companies run by good administrations. Invest in such companies in correct valuations.


Stability of solid rock:

GSK Consumer: Stable performance - stable stock. This action of "Horlicks" may be suitable for conservative investors.

Duration	Stock Price	EPS	P/E
December, 2009	1300	55	23
December, 2010	2100-2300	71	30
November 16, 2011	2556	83	30

Fallen star:

Zydus Wellness: A bad quarter is enough to destroy the stock price of an overvalued stock. You must stay alert when you invest in an overvalued stock. Companies need to report stellar numbers to maintain those ratings.

Duration	Stock Price	EPS	P/E
April-May, 2010	380-460
April-May, 2011	570-630	15	35-42
November 16, 2011	480	16	30

Unfortunate actions of infra:

VA Tech Wabag: When the sector is in trouble, it is difficult to maintain high ratings. One must monitor this type of actions for future investment opportunities.

Duration	Stock Price	EPS	P/E
April-May, 2010	470-530	18	26-29
April-May, 2011	490-530	21	23-25
November 16, 2011	345	25	14

Bad management:

Education Everonn: growth is not enough; The quality of management is also important.

Duration	Stock Price	EPS	P/E
April-May, 2010	380-400	30	13
April-May, 2011	550-620	40	14-15
November 16, 2011	335	29	11.5

Debt crisis:

Shree Renuka Sugars: Acquisition through debt means you are playing with fire. When things do not go according to plan, investors will pay the price. Management was successful in its previous risk investments, but this time they went too far. Is he able to recover?

Duration	Stock Price	EPS	P/E
September, 2009	70-80	7	10-11
September, 2010	55-62	10.5	5-6
September, 2011	33	-4.5

Disorder NPA:

State Bank of India: when investors give high valuations, they will pay the price when the companies do not have sufficient operational freedom and need to work under political influence. If SBI has a type of HDFC management quality, the stock price can be around 5,000-6,000.

Duration	Stock Price	EPS	P/E
April-May, 2010	2,000-2,200	144	14-15
April-May, 2011	2,600-2,800	130	20-21
November 16, 2011	1765

Management mess:

IVRCL Infra: Investors must have vision. You should always think ahead to escape serious losses.

Duration	Stock Price	EPS	P/E
April-May, 2010	160-180
April-May, 2011	70-80
November 16, 2011	35

Hype / real:

Reliance Industries: this overvalued commodity company now trades at realistic valuations. It has high cash reserves and presence in high growth sectors such as retail and broadband. But…

Duration	Stock Price	EPS	P/E
April-May, 2010	1000-1100	50	20-22
April-May, 2011	900-1050	62	14-17
November 16, 2011	848	68	12.5

Note: this article is not for investment advice. I'm just sharing my observations, sorry for (if there are) errors in the data.

Final note: the valuation of an action makes or breaks your investment. Always ask an important question before investing in an action "Is there a risk to valuation?" Please consult experts before investing in the stock market.