Wednesday 16 December 2009
Post Result Advice - 16 Dec 2009
BAJAJHIND @ 206 (161209) : You must buy it only after some fall from this level for safety. If the sugar scene gets bad on account of very high cane prices, it may fall heavily (ref 938: 241/39 : 33/0)
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3 comments:
Totally disagree with you on Bajaj Hind and sugar scene.
Apart from the 'only' risk of stupid govt intervention for vote-bank considerations, Indian Sugar Industry, in the present era of global shortages doesn't face much problem -- be it higher sugar-cane prices (millers would increase the end-product prices accordingly), less supply (will be augmented by imports of raw-sugar) and so on.
BTW, BajHind's working has been quite good.
I wonder why you have reservations against this sector.
Pl elaborate.
You must also take in to account the fact the Indian private sugar mill owners are not investor friendly and they have listed their stocks to benefit out of the severe fluctuation in sugar industry fortunes. You may be ware that 'bajajhind' people alloted them sweet equity only about six months back at about 60 per share, so did the 'dhampursug' people. Further they have a tendency to allot liberally to institutions when they have some financial trouble on hand. The profits also seem to evaporate whenever there is high profitability, it is either on account of providing expenses liberally in times of profit and leaving some expenses uncovered when in loss. There may be other means also to do the trick. They are averse to leaving profits in the company for they fear that they will be pressurised into paying to farmers if they have rich treasury. This sector is only good for investment when the times are very bad for industry and not to be keeping it when the times are good. I hope you catch what I mean. If you want to be brave, please be brave. The one like 'balramchin' management which had some praiseworthy practices, has decided to go out of business in sugar and rightly so because this industry is going to be OK for long term investment only when govt decides to leave it alone and there is formation of bigger companies through mergers.
I agree with you that like many companies, sugar sector will show only as much profit as the honesty of its promoters allows it to show.
In terms of dividend yield, they are poor paymasters to the shareholders.
Let's see how they behave in the future, any differently from their past.
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