PRAJ Investing Cycle!!!

i invest in Praj, after understanding the stock well.

i entered a bit late as i didn't do the entire research myself first hand. i was more of educated by the market.

so i bought late --> at a higher price -- didn't get the returns immediately--> on the contrary was in the red for some time --> played the waiting game --> Co Performed --> Operators noticed it --> the stock moved up --> i booked premature profits.

Although i made close to 70% in a period of 12 months, the returns could have been better.

Whenver operators pick up a stock and take it forward, they don't just dump it. There may be a temporary halt, however it doesn;t me that there will be retracement.

The macro economic factors were and still are in the favour of praj.. The oil prices were high, the economy was nicely humming. It was still a leader and had orders to execute. Thus resutls were guaranteed at the end of 3 months.

Also i had no other stock listed for investment, this fact easily compounds the mistake i made.

Also PRAJ Showing consistent growth in profits and sales. The stock would continue and Continues to show Command the High P/E ratio.

So growth in stock price would be similar to the growth in profit as P/E is maintained.

This holds for all the sector/stocks that have high Growth.

So from now on .. i need not take decision on whether i have made a profit or a loss. It must be based on evaluation of the macro economic environment and prospects of the stock.

This will help me hoard stocks like infy for long periods of time.. preferably decades.. without bothering me the costs.

List of Topics to blog on...

Here is the list of topic on which i will be presenting my views....

1. ICICI Bank IPO & DLF IPO as Special Situations Investing Scheme
2. ZEE, RIL, etc Demerger Gains
3. Trade High Volume Stocks.... Prevent yourself from operators/Insider Trading/Price Mismatch
4. Use of Hedging in Personal life. Eg. 1.Multiple Sources of Income, 2. Multiple Sources of Information, 3. Access to Domain Knowledge in multiple areas

RIL -- Preferrential Allotment, Hiving of Off Shore Business, Merger with IPCL, Dividend

Over a period of last few months a lot of things have been happening in Reliance. The first among it was Hiving off the Off Shore Business. As stated in the papers this can be to derisk the business politically. However how would have they decided the timing is an important question. Is is to Unlock value and for a future listing at Markets Abroad!! Lately a lot of indian corporates have been doing so & it can be natural for reliance too to follow the footsteps.

Now due to hiving of the Assets the Parent Co loses a lot of potential nos on the balance sheet. To manage it it IPCL is to be merged with the parent. This will ensure good balance sheet as well.

Also reliance is planning a preferrential allotment. This can be to Capitalize RIL for its retail venture. To arrange the money reliance opted to distribute dividends for both RIL & IPCL. This ensured it recieved 880 crores out of it. This money will potentially be used for the preferrential allotment.

One would be tempted to ask why such a complicated set of actions to invest the money in Retail Operations. RIL could have directly invested in RRL (Reliance Retail Ltd).

To answer this lets compare the two scenarios. The series of steps ensures that

1. Promoters get an option to increase their stake in RIL.
2. Since promoters now have a higher stake in RIL, they directly get higher stake in RRL.
3. The promoters got to increase the stake while aam reliance shareholder got money
4. The onus of buying shares from the stock market to maintain the share lies with the shareholder, who may not do so.
5.If and when a set of shareholders buy from stock markets to maintain their shareholding, then the share price gets support.
6. The free float decreases, thereby the chances of hostile takeover are reduced.

Thus a win-win game for all the stakeholders.

This all will help reliance to get a lot of Cheap money to fund its ambitions plans.

Since it has high promotor holding the chances of conflict among shareholders for a particular decision is low, so more investor Confidence.

Good stock price ensures better rating of the promotors and hence better financing options.

The Purpose

A lot of things have impact on the markets and particular Scripts. NEWS has impact on the market. However the implications of a particular NEWS are as important as the news itself. This blog will aim at understanding the implications of various happenings in the Micro & Macro Levels.